FirstGroup vies with Virgin in west coast rail bidding war

[34Short]

This report makes me laugh, considering all bid staff and respected departments are required to have a 'media blackout' on the entire matter.

 

[Bridge189]

DfT have made it very clear now that this would not happen again, due to a change of policy
There can be overlap for up to a maximum 5 years, and consider other bids "unfavourably"

However the original franchise process was flawed as it was hoped each franchise would have its own unique operator, but that never happened
Furthermore, this has greatly reduced over the last few years

Correct,

The breaking of the WC and XC franchises in some cases was a logistical nightmare. Even when they ran together it was not plain sailing with heavy differences in the products between the two franchises. The DFT no longer want any co-branded TOCs/ franchises. Even if virgin retain WC and gain EC they would still be different TOC brands.

 

[transmanche]

The nearest we've ever got to any anti-competition issues was First being awarded the Scotrail franchise in (2004?) when it was referred to either OFT or Comp Comm, on the basis that First had the majority of bus share in the central belt, plus trains = anti-competitive.

In the end, nothing happened. More enthusiast wibble re competition as per usual.

Back in 1998, when National Express held the ScotRail franchise and owned Scottish Citylink - the Competition Commission ordered them to sell Citylink. The reason being that NatEx held a monopoly on long-distance Scottish rail and coach services.

 

[whhistle]

"Aberdeen-based FirstGroup is vying with Virgin despite announcing last year that it is handing back its Great Western rail contract three years ahead of schedule, avoiding more than £800m in payments to the government."

these Fat Cat Transport Chiefs, they're as bad as Jimmy Carr! :roll:

Their excuse I believe is because they wanted to get the bidding done and over with sooner so they potentially could enjoy a longer franchise sooner.

Which, if you're involved with the business does make sense. While their underlying sneakiness of not paying the £800 million back may be a contributing factor, you cannot blame them for not taking what I always understood was an optional extension.

RMT is probably the best union out there for getting results for its members, and that is what it is supposed to do.

This is true and I agree with you completely. However in getting it's members what they want, they also tarnish relationships with governments and the general public, all for an extra few quid a year extra.

The bigger question is, if you had 100 rail workers in the union, 100 out of the union and 100 people of the general public, would the results show that the union does more harm than good in the overall scheme of things?



The other interesting point is with Virgin Rail Group.
While some have suggested the Government would give the East Coast to them but they would loose the West Coast, if VRG doesn't have any operations in the UK, would there be a company to give the EC to?

Perhaps the Government will look at swapping First and Virgin around?

- finally clarification is being sought for on many aspects of one of the bids, which is generally a good indication that the bid is favourable. If the railway journos and insiders are correct with their carpark watching, that bid is not that of the incumbent operator.

Although I do know that similar questions were being asked to the Virgin Rail Group.

Partial corroboration of the Guardian story has come from Alstom with them confirming the catering options being discussed.

Doesn't Alstom say they haven't been in talks with any of the bidders about this, therefore poo pooing the RMT's claims? Yes it does in this source:
However, Alstom denied that it has been discussing the details of the bids. A spokesman said: "We do not know about the future catering proposals of the West Coast Main Line franchise. There has been no meeting with the RMT on the subject.”
So someone is telling a rather large porkie pie, or at least bending the truth to suggest something which isn't real. However, this source says that Alstom has "entered discussions" with all four bidders.

Basically horses for courses.

The main concern I would have is First Group being involved in three franchises which overlap and effectively remove all competition -
FTPE / West Coast : Preston to Edinburgh / Glasgow
FTPE / West Coast / ScotRail : Carlisle to Glasgow

This competition thing is a non-argument.

I've said this before:

What if I wanted to travel from Coventry to Wolverton, I have only one choice.
Rugby to Tamworth - (logically) One choice.
Leicester to London, Derby to Market Harborough, Bristol to London, London to Sunderland... they all have only one logical choice.

 

[Stats]

13th August.
--- old post above --- --- new post below ---


That is my understanding. The nearest we've ever got to any anti-competition issues was First being awarded the Scotrail franchise in (2004?) when it was referred to either OFT or Comp Comm, on the basis that First had the majority of bus share in the central belt, plus trains = anti-competitive.

In the end, nothing happened. More enthusiast wibble re competition as per usual.

Yes it did. Firstgroup had to agree to accept a number of undertakings to proceed with the Scotrail franchise.

When Virgin bid for the East Coast franchise in 2004 there were no competition concerns in overlapping ICEC and ICWC flows. The OFT did view that were concerns in the North-East England to which Virgin would have to accept some undertakings. Virgin and Stagecoach offered not to re-bid for the XC franchise should they have won the East Coast franchise.
http://www.oft.gov.uk/OFTwork/mergers/decisions/2004/virgin

 

[rail-britain]

Alstom has "entered talks" with all four bidders

Alstom has to enter talks with all four bidders, as the Class 390 fleet (and I assume the Class 221 fleet) is under a service contract with West Coast Trains until 2022
In turn, this would include any modification to the existing internal layouts required, and this is probably where the leak has occured
--- old post above --- --- new post below ---

What if I wanted to travel from Coventry to Wolverton, I have only one choice.
Rugby to Tamworth - (logically) One choice.
Leicester to London, Derby to Market Harborough, Bristol to London, London to Sunderland... they all have only one logical choice.

Yes, all these journeys are limited to one or combinations of TOC

However, in the case above there are two or more TOC available;
Example, Preston to Glasgow
At present the choice is FTPE or Virgin Trains
Example, Carlisle to Glasgow
At present the choice is FTPE, Virgin Trains, or ScotRail
In both cases, the services may become operated by First Group owned companies, so there would be no choice, even though they are operated by two or more TOC

---
Back to the original point
If the catering is simplified and the Shop removed
How will First Class passengers put up with the Trolley passing through all First Class coaches to get to Standard?
Equally, will Standard passengers be expected to walk the entire length of the train to get to the buffet (currently the Kitchen in Coach K)?
This is impractical!

A more practical solution is to remove the Kitchen in Coach K (dead space and/or storage) and swap Coach C into Coach U
However I do not see this being possible either as this move the PT1/PT2 arrangement (pantograph and transformer vehicles)

 

[tbtc]

Yes, all these journeys are limited to one or combinations of TOC

However, in the case above there are two or more TOC available;
Example, Preston to Glasgow
At present the choice is FTPE or Virgin Trains
Example, Carlisle to Glasgow
At present the choice is FTPE, Virgin Trains, or ScotRail
In both cases, the services may become operated by First Group owned companies, so there would be no choice, even though they are operated by two or more TOC

Both of those flows are pretty small compared to the Manchester to London market which has precisely one TOC. Or Ipswich to London. Or Leicester to London. Or (currently) Oxford to London... so why is Preston to Glasgow so important?

 

[rail-britain]

Both of those flows are pretty small compared to the Manchester to London market which has precisely one TOC. Or Ipswich to London. Or Leicester to London. Or (currently) Oxford to London... so why is Preston to Glasgow so important?

I am using a comparison where at present there are two or more TOC, which in turn affects current prices and service levels
A similar situation exists between Glasgow and London, East Coast or Virgin Trains, and several other journeys (London - Doncaster, Crewe - Chester, etc)

I am using Preston - Glasgow, as this route also includes other affected stations (included Carlisle as well as a further example) where a similar situation will arise, where there is currently choice but this may cease

 

[142094]

This is true and I agree with you completely. However in getting it's members what they want, they also tarnish relationships with governments and the general public, all for an extra few quid a year extra.

The bigger question is, if you had 100 rail workers in the union, 100 out of the union and 100 people of the general public, would the results show that the union does more harm than good in the overall scheme of things?

Obviously to get better terms and conditions for members is going to be unpopular, but then again a union that sits quietly and does nothing is as much use as a chocolate teapot. The problem I have is that no-one knows how far it will go, with people saying that a some point it will be more cost effective to bring in automatic operation or get rid of staff.

 

[YorkshireRider]

This report makes me laugh, considering all bid staff and respected departments are required to have a 'media blackout' on the entire matter.

Indeed, and can someone please explain how the DFT can go ask for clarification on a matter within a bid, if the bids are supposed to be blind. How would they know who to ask?

 

[rail-britain]

Indeed, and can someone please explain how the DFT can go ask for clarification on a matter within a bid, if the bids are supposed to be blind. How would they know who to ask?

The initial process is blind, all the company details are removed
The Selection Committee then make a short list, which is then passed to the companies in order that they prepare their bid for consideration

The next stage requires the company representatives to answer questions, if required
The Selection Committee then pass these to DfT representatives who then prepare these questions, present them to the company representatives, and report the answers back to the Selection Committee
During this stage the DfT representatives will know the name of each company, but this does not get passed back to the Selection Committee
These DfT representatives are then free to report on which companies have been invited to answer such questions

Typically the questions will be conducted over several days and can take several weeks to be completed, quite often with follow up questions

The company representatives may also make a recorded formal presentation, initially shown to the DfT representatives and once approved is then shown to the Selection Committee
Any and all company branding information is removed from the presentation
Equally, company directors may not make the presentation

Finally, the existing franchise operator cannot make references to its existing operation, the new franchise is based on its own merit
However this does place them in a stronger position as they will be more aware of specific factors, but the Selection Committee will most likely pick up on these points

 

[tbtc]

I am using a comparison where at present there are two or more TOC, which in turn affects current prices and service levels
A similar situation exists between Glasgow and London, East Coast or Virgin Trains, and several other journeys (London - Doncaster, Crewe - Chester, etc)

I am using Preston - Glasgow, as this route also includes other affected stations (included Carlisle as well as a further example) where a similar situation will arise, where there is currently choice but this may cease

There's "competition" between Preston/ Carlisle and Glasgow, sure, but that's a pretty tiny market compared to routes like Manchester/Liverpool - London which only have one TOC. Yet Manchester/Liverpool - London still sees plenty discounted tickets which blows a hole in the "competition" argument.

If "competition" is so important why is the competitive London - Gatwick - Brighton market seeing all services merged into one TOC? Why was competition between Ipswich and London abolished? Or Oxford and London? Big markets, yet merged into just one TOC. So why does Preston - Glasgow matter?

 

[rail-britain]

So why does Preston - Glasgow matter?

You've missed the point being raised; no change in the number of franchises, two or more franchises overlapping and all operated by the same Group company
DfT had already stated they would not allow this; bending the rules now...
Equally, I had not taken into account the new ScotRail Sleeper franchise (won't know details until the end of next year)

 

[Philip Elliott]

There's "competition" between Preston/ Carlisle and Glasgow, sure, but that's a pretty tiny market compared to routes like Manchester/Liverpool - London which only have one TOC. Yet Manchester/Liverpool - London still sees plenty discounted tickets which blows a hole in the "competition" argument

Competition between VT and LM has seen various "VT only" and Supersaver LM tickets on offer. Had the SRA merged the two as proposed, passengers will almost certainly be lower due to higher fares.

 

[tbtc]

You've missed the point being raised; no change in the number of franchises, two or more franchises overlapping and all operated by the same Group company
DfT had already stated they would not allow this; bending the rules now...
Equally, I had not taken into account the new ScotRail Sleeper franchise (won't know details until the end of next year)

The Government merged franchises to eliminate competition on some busy routes, cheap advance tickets still exist on routes with only one TOC, so why would there be a problem with one company having a monopoly of the Preston - Glasgow flow?

Competition between VT and LM has seen various "VT only" and Supersaver LM tickets on offer. Had the SRA merged the two as proposed, passengers will almost certainly be lower due to higher fares.

There's no competition between London and Manchester/ Liverpool/ Sheffield/ Newcastle (and only very token competition to Leeds), yet all of these routes see bargain advance tickets (I can get a train from Sheffield to London for less than the price of a packet of fags). So even if there was only one TOC running between London and Birmingham there would still be cheap advanced tickets.

 

[Zoe]

There's no competition between London and Manchester/ Liverpool/ Sheffield/ Newcastle (and only very token competition to Leeds), yet all of these routes see bargain advance tickets (I can get a train from Sheffield to London for less than the price of a packet of fags). So even if there was only one TOC running between London and Birmingham there would still be cheap advanced tickets.

In the case of a route like London to Bimringham though, London Midland offer some quite cheap walk-up fares allowing people to go on a day trip without having to plan the exact times they will be travelling to and from Birmingham in advance. I am not sure how many people take advantage of this though as the services are quite slow when compared to Virgin.

 

[HH]

An alternative explanation of First's involvement given to me by someone with good links to DfT:

Virgin are in pole position and SNCF were second. However SNCF were removed (possibly for being non-compliant, something about extra length trains and SDO was mentioned), and that put First into second place. Until the leading bidder has agreed terms, DfT like to keep a second bidder in play.

 

[telstarbox]

Today's Guardian states that FirstGroup have made the highest bid (sorry if this has been mentioned already - I have looked through the thread):

FirstGroup has lodged the highest bid for the west coast rail franchise, making it the frontrunner to take over the prestigious London-to-Glasgow route.

The bus, rail and coach group is believed to have pushed incumbent Virgin Rail into second place on price with an offer that is 15 to 20% higher than the nearest contender.

FirstGroup and Virgin had been vying for the contract after the other two shortlisted bidders, Dutch-owned Abellio and a bid backed by SCNF, the French rail group, slipped out of contention.

 

[WatcherZero]

Goes a bit further, says First have offered a premium of £6.5 to £7bn over 14 years while Virgin have offered the more realistic £5bn, £7bn would be £500m premium per year while Virgin currently pays a premium of £140m per year. First are rumoured to be cutting staff by 20% including cutting catering staff from 800 to 300. First may struggle to raise the capital for the deal having already £1.8bn in debts and the £100m sale of bus operations coming off the rails so to speak with the prospect of every disposal being vetted by the competion commission.

 

[fgwrich]

Today's Guardian states that FirstGroup have made the highest bid (sorry if this has been mentioned already - I have looked through the thread):

Which is funny, as i keep hearing things concerning and involving things to do with First's bid for the GW franchise - Something on the lines of Stagecoach telling first to 'Up their Game / Bid' if they want to keep it. So possible back room talks between Stagecoach and First on GW?, Whilst First is obviously pushing hard for WC.

 

[SkinnyDave]

Will we hear who the winner is this week?

 

[David10]

Will we hear who the winner is this week?

Not likely, government will pretty much shut down for the next 2 weeks.

 

[Manchester77]

When abouts in August will we hear who the successful bidder is? I know the ITT said that it will be announced in August but when or which week?

 

[MidnightFlyer]

Will we hear who the winner is this week?

When abouts in August will we hear who the successful bidder is? I know the ITT said that it will be announced in August but when or which week?

From further up the thread:

13th August.

 

[SkinnyDave]

Worries me that First may be trying too hard to get this and whilst they are a better company than National Express we don't want another East Coast debacle.
We can only hope if they are offering that amount of money they can back it up without adversely affecting service.

 

[anthony263]

Worries me that First may be trying too hard to get this and whilst they are a better company than National Express we don't want another East Coast debacle.
We can only hope if they are offering that amount of money they can back it up without adversely affecting service.

Yes and we dont want First putting all their efforts into bidding for the west coast franchise and neglecting their GW bid since the majority wish for First to retain the franchise

 

[chuckles1066]

Article on the Guardian's website today (15/07/12)......
I think we've got to take everything with a pinch of salt at the moment. There seems to be so many rumours at the moment and there's only going to be more over the next 4 weeks but still interesting nonetheless.

A genuine question from a rail-layman: Is FirstGroup FirstGreatWestern?

If so, why is there even a debate?

FGW/First Group aren't fit for purpose and no grown up body is ever going to award them any sort of contract.

 

[tbtc]

we dont want First putting all their efforts into bidding for the west coast franchise and neglecting their GW bid since the majority wish for First to retain the franchise

If I were a First shareholder I might be concerned at them "betting the farm" on the West Coast franchise (whilst trying to get tens of millions of pounds from selling of bits of their stagnant bus business).


The buses may not be as glamorous as running Pendolini but they are at least a stable business.

Still, if they are willing to spend extra millions each year in treasury premiums then that has to be a good move (even if it comes at the cost of providing restaurants on most services). All these unprofitable branches have to be paid for somehow, and if one TOC pays a big premium then that's go to help.

 

[sprinterguy]

Yes and we dont want First putting all their efforts into bidding for the west coast franchise and neglecting their GW bid since the majority wish for First to retain the franchise

Separate teams will be responsible for putting together the GW and EC bids for First Group, so unless First failed to put sufficient human resources in place for the GW bid in the first place then there's really very little chance of one being given preference over the other.

I agree with SkinnyDave and tbtc that I am concerned at the possibility of First Group "betting the farm" on the lucrative West Coast franchise, and then us suffering another East Coast debacle. Although I am more concerned about the seemingly strong possibility of Virgin losing all presence in the rail industry (No doubt dependent on the future outcome of the East Coast bidding process).

 

[WatcherZero]

I always feel sorry for Virgin, they try to play the nice guy and are usually penalised for it. Camelot won the last auction of the National Lottery franchise by offering to pay the Government more when Virgin were pledging to run it as a not for profit and give far more to charity!