Franchise failure - Stagecoach has 3 main routes to the North?

[gazthomas]

I am prepared to be shot down but I have searched the forums.

How, beyond different contracts with the Dft does having Stagecoach running West Coast, East Midlands and East Coast?

Yes, the former has a larger Virgin shareholding but Stagecoach are doing the work I'm sure.

Yours regrettably

Gary

 

[thealexweb]

The monopoly will strengthen if Stagecoach obtains TransPennine Express later in the year.

 

[higthomas]

It is simply that they judge each set of bids based on what they contain, not who runs them, and I think that they are in fact judged blind. I'd personally rather better bids rather than different operators, especially since there id basically no overlap between those three franchises.

 

[swt_passenger]

How, beyond different contracts with the Dft does having Stagecoach running West Coast, East Midlands and East Coast?

What is your point?

The above is an incomplete statement, you need to add a bit to the end.

You did say you were prepared to be shot down, after all...

 

[gazthomas]

What is your point?

The above is an incomplete statement, you need to add a bit to the end.

You did say you were prepared to be shot down, after all...

My point is that 3 franchises run by 1 parent cannot possibly have "Chinese walls" to ensure there is fair competition. I do not believe that human beings can operate so transparently - profit will win the day!

 

[Murph]

Other than egg on collective faces, no big deal even if Stagecoach were to go completely tits up (which doesn't seem terribly likely to me). DfT would just step in and keep the operation going until they could organise another round of franchising.

GNER's parent basically went bust, ECML services were pretty much unchanged. NXEC made a monumental balls up of it, services continued as per timetable. The only thing which suffered, as far as I'm aware, was some reduction in level/quality of the catering operation, and extra costs to DfT (who have infinitely deep pockets for the purpose of this discussion, due to the political catastrophe if trains actually stop running).

 

[ag51ruk]

My point is that 3 franchises run by 1 parent cannot possibly have "Chinese walls" to ensure there is fair competition. I do not believe that human beings can operate so transparently - profit will win the day!

There isn't any real competition between these three routes though (except Glasgow/Edinburgh from London, where the real competition is from air, or London - Leeds, but very few direct trains now on the MML)

 

[swt_passenger]

My point is that 3 franchises run by 1 parent cannot possibly have "Chinese walls" to ensure there is fair competition. I do not believe that human beings can operate so transparently - profit will win the day!

That much is assumed, but your original post as written leaves that for people to guess.

The point is that as per the DfT contracts there actually are 'chinese walls'. GoVia operated Southern, Southeastern, and London Midland independently, and have now added Thameslink/Great Northern, formerly FCC. What's the difference between that and the three Stagecoach routes?

 

[gazthomas]

That much is assumed, but your original post as written leaves that for people to guess.

The point is that as per the DfT contracts there actually are 'chinese walls'. GoVia operated Southern, Southeastern, and London Midland independently, and have now added Thameslink/Great Northern, formerly FCC. What's the difference between that and the three Stagecoach routes?

The difference is start and end points.

 

[Murph]

My point is that 3 franchises run by 1 parent cannot possibly have "Chinese walls" to ensure there is fair competition. I do not believe that human beings can operate so transparently - profit will win the day!

Fares, timetables, and overall service offering are all constrained by the franchise contracts. There isn't ever any real competition (other than the small number of open access services) after the franchising awards are made.

 

[talltim]

The competition is in the franchise bidding, not for the end user

 

[swt_passenger]

The difference is start and end points.

The only real 'competition' is between the bidders before the franchise is awarded. For most users of the ECML or WCML or MML they don't have a three way choice, and fares are still regulated by DfT.

Ignoring MML for a moment (because it doesn't go all the way north), it has always been possible for ECML and WCML to be held by the same franchisee, even though it hadn't happened yet. Franchises are not actually 'shared out' on a buggins' turn basis.

This discussion happens every time a franchise is awarded that implies an apparent loss of competition; and the discussion for this route happened already back in November...

 

[gazthomas]

The competition is in the franchise bidding, not for the end user

Makes a mockery of completion then! Has anyone at the Dft studied Economics -I'm sure they have!

 

[Saint66]

Sometime ago, we had this little thing called British Rail.... Weren't the MML, ECML and WCML all run by said organisation? And people love saying that it worked well! I don't particularly see Stagecoach's role in these three now a major issue.

 

[Murph]

Makes a mockery of completion then! Has anyone at the Dft studied Economics -I'm sure they have!

It's the necessary practical reality. There's limited capacity on the main lines which needs to be close to saturated to provide the services needed to keep the nation moving, as well as limited rolling stock available. It's simply not realistic to enable a completely open market. Building additional capacity, sufficient to allow anyone to have a go at running a TOC and compete for passenger revenue, would be incredibly expensive.

It works for bus/coach services and airlines because it's feasible to have the capacity at or near the destinations, and the route capacity doesn't have the strictly limited paths of the railways.

 

[LNW-GW Joint]

Makes a mockery of competition then! Has anyone at the Dft studied Economics -I'm sure they have!

Franchises are inherently limited monopolies for their duration.
Competition is at the bidding stage.
What you seem to think as "competition" between franchises on the ground is entirely secondary to the contract which will have an agreed timetable and fare structure set by DfT.
There is just a little room for manoeuvre at the edges on non-regulated fares.

What inter-franchise competition is there between London and Swindon/Norwich/Dover for instance?
The Competition and Markets Authority has reviewed all this and has never intervened in any franchise award, except to place conditions on ownership of some local bus services by the winner.
Remember that passenger rail services never leave the ultimate ownership of the DfT, whereas bus services (and rail freight) are wholly privatised.

 

[47802]

I am prepared to be shot down but I have searched the forums.

How, beyond different contracts with the Dft does having Stagecoach running West Coast, East Midlands and East Coast?

Yes, the former has a larger Virgin shareholding but Stagecoach are doing the work I'm sure.

Yours regrettably

Gary

So what exactly is your issue? two of those franchises are up for renewal in the next couple of years, so the franchise map could look somewhat different in 2017, there is a limited amount of competition on the East coast from the 2 open access operators and on the Northern section from TPE and XC, similarly on the West coast you have some limited competition from TPE, London Midland and Chiltern.

 

[hemsl]

Makes a mockery of completion then! Has anyone at the Dft studied Economics -I'm sure they have!

I'm assuming you mean 'competition', not completion.

If so, I think you're missing the point. The competition element in our privatised railway system comes in the from of competitive tendering to win the right to run the franchises. Stagecoach just happened to have been involved in successful bids on similar franchises. This shouldn't be a surprise: their experience in running long-distance routes will place them in a good position to construct the most competitive bid for other franchises of this type.

From a passenger's perspective, there is little to be lost from the same firm being involved in both the west and east coast mainlines. The routes serve different cities (with the exception of London/Edinburgh), so passengers will select a provider based on where they want to go rather than because of the company that runs either franchise. Only passengers travelling between London and Edinburgh have a choice - but with the journey on the east coast around an hour and twenty minutes quicker than on the west coast a traveller's choice is unlikely to be influenced by the TOC owner.

The only competitive risk I see from concentration is of companies that have been unsuccessful in previous bids choosing not to bid again in future tenders. There remain enough players in the market to suggest this isn't an immediate concern.

 

[talltim]

Makes a mockery of completion then! Has anyone at the Dft studied Economics -I'm sure they have!

Why? How is running a competitive franchise bidding process not competition?

 

[Gareth]

The idea that Great Britain's railway system is privatised is a common-held myth. This is why we, quite understandably, have people asking why there's only one operator on their local line and no competition. In reality, the Government franchises out operations but ultimately retains ownership of the infrastructure. It also dictates terms and conditions on things like fares and service patterns.

It's similar to the old ITV network which was also a system of regional franchisees. The Government gave to private companies licenses to broadcast but they were subject to terms and conditions. The Government owned the broadcast frequencies and the transmitter infrastructure. Whilst there was some geographical overlap, most parts of the UK only had one ITV company. Granada, Thames etc were mostly in competition with the BBC and not so much each other. TOCs are similar in this respect. They mostly compete with cars, coaches and planes, rather than each other; for the most part, at least.

 

[tbtc]

If I had a pound for every time I've heard an enthusiast say that one company can't have both the ECML and WCML franchises... yet they clearly can be run by the same organisations (semantics re 90/10% split and a 49/51% split notwithstanding).

If one company can have a monopoly on Brighton - London, one company can have a monopoly on Ipswich - London, one company can have a monopoly on Basingstoke - London, one company can have a monopoly on Kent - London, one company can have a monopoly on Manchester - London, one company can have a 99% of Bristol - London, one company can have 99% of Glasgow - Edinburgh, the idea that there needs to be competition on every flow bears no relation to the facts.

3 franchises run by 1 parent cannot possibly have "Chinese walls" to ensure there is fair competition. I do not believe that human beings can operate so transparently - profit will win the day!

Maybe it'd help the thread if you could tell us what collusion you think that there's going to be between the franchises?

Is there a conspiracy that they'll all cut their services back to just one train a day to "the north", so that they can charge megabucks fares?

Since franchises are so carefully structured and worded, I can't see much scope for Stagecoach to cut any services just because they have a share in three franchises from London to "the north" - why would they when the railway is growing and growing?

They may not offer so many cheap fares, yet there are always cheap fares to be had on flows like London - Manchester when there's only one TOC - if Stagecoach can flog off unused seats cheaply then they generally will (e.g. using MegaBusPlus to transfer coach passengers onto quieter EMT services).

We've had plenty of past examples of one company running parallel franchises (PRISM running Valley Lines and Wales & West, National Express running Central Trains and Midland Mainline, Connex running SouthEastern and SouthCentral, Virgin running XC and WCML) - and a few examples of "competition" eliminated by merged franchises (Thames Trains and FGW meaning just one TOC on the line from the Thames Valley into London, Anglia and FGW meaning just one TOC on the line from Ipswich to London) that I'm amazed that people still think that the Government have any "problem" with this kind of thing. They clearly think it's okay for one company to run multiple TOCs, as the competition is in the blind bidding process.

The competition is in the franchise bidding, not for the end user

The only real 'competition' is between the bidders before the franchise is awarded. For most users of the ECML or WCML or MML they don't have a three way choice, and fares are still regulated by DfT

^^ This ^^

This discussion happens every time a franchise is awarded that implies an apparent loss of competition; and the discussion for this route happened already back in November...

True

Sometime ago, we had this little thing called British Rail.... Weren't the MML, ECML and WCML all run by said organisation? And people love saying that it worked well! I don't particularly see Stagecoach's role in these three now a major issue.

That's the funny thing - enthusiasts complain about the fact that things aren't like they were in the Good Old Days with one big operator, yet complain that there's not enough competition these days... :roll:

 

[ainsworth74]

That's the funny thing - enthusiasts complain about the fact that things aren't like they were in the Good Old Days with one big operator, yet complain that there's not enough competition these days... :roll:

I had been idly wondering if there would be complaints about 'lack of competition' if the Government had announced that it wanted DOR to run ICWC, ICEC and EMT. Or whether this has more to do with people not liking franchising than anything to do with the lack of 'competition'...

 

[cjmillsnun]

TBQH apart from Brian Souter's politics, I'd welcome Stagecoach running as many TOCs as possible.

They generally make a good job of it.

 

[Bletchleyite]

Why? How is running a competitive franchise bidding process not competition?

Exactly. What makes sense in a subsidised environment, or one where you wish to restrict access (ish) such that cross-subsidy may be arranged, is for competition to take place at the point of tendering. On-rail competition is silly bickering about, what, <10% of travellers? More sensible is for the railway to act as one to hit the car, and hit it hard.

Neil
--- old post above --- --- new post below ---

That's the funny thing - enthusiasts complain about the fact that things aren't like they were in the Good Old Days with one big operator, yet complain that there's not enough competition these days... :roll:

Is that because enthusiasts by and large want to be able to take advantage of rock bottom fares to travel around the place, and inter-TOC competition has tended to bring that?

Personally I think it makes little sense.

Neil

 

[Geezertronic]

I am prepared to be shot down but I have searched the forums.

How, beyond different contracts with the Dft does having Stagecoach running West Coast, East Midlands and East Coast?

Yes, the former has a larger Virgin shareholding but Stagecoach are doing the work I'm sure.

Yours regrettably

Gary

As far as I am concerned, Stagecoach only currently "run" the MML franchise as East Midlands Trains. Virgin Group "run" the Virgin Trains brand on the WCML (not sure what input Stagecoach actually have in the running of this one) and Stagecoach will "run" the Virgin Trains East Coast brand on the ECML when that franchise kicks in.

 

[yorksrob]

That's the funny thing - enthusiasts complain about the fact that things aren't like they were in the Good Old Days with one big operator, yet complain that there's not enough competition these days... :roll:

Is that any more peculiar than those who harp on about how important private sector competition is, then suggest that the form of private sector competition most likely to provide competition for passengers (i.e. open access) isn't really worth bothering with because it gets in the way of running an efficient private monopoly !

If we're going to have a monopoly, my preference will be for an accountable public one.

My preference would also be for things such as a standard brand with standard peak restrictions, fare offers and catering, so that I have some idea of when I can travel, what it's going to cost, whether I need to bring a packed lunch etc. And the InterCity timetable, which was available in my student days would be handy as well.

--- old post above --- --- new post below ---

Is that because enthusiasts by and large want to be able to take advantage of rock bottom fares to travel around the place, and inter-TOC competition has tended to bring that?

Personally I think it makes little sense.

Neil

I'm not convinced that Inter-City competition at tender has brought that actually. I suspect it has more to do with the way franchises are required to run certain trains and fill those seats for the maximum return regardless, rather than having to "cut their cloth" to the grant available. I don't see why you need franchises to achieve this rather than a change in what the Government requires from the train operator.

You've hit the nail on the head in one way. As a passenger, the only competition I need is in price, and in the main for my journey, this is achieved between the franchised operator and its open access competitors, so arguably rather than expending billions of pounds with each refranchise (where does this money come from I wonder - the railway ultimately) I could get price competition between a reconstituted InterCity operating the a standard service across the country and open access operators.

 

[sparks2000]

extra costs to DfT (who have infinitely deep pockets for the purpose of this discussion, due to the political catastrophe if trains actually stop running).

That is the taxpayer - extra costs to taxpayers - or the economy as tax is used to support the system rather than awarding to a less "competitive" but ultimately better bid.

 

[Murph]

That is the taxpayer - extra costs to taxpayers - or the economy as tax is used to support the system rather than awarding to a less "competitive" but ultimately better bid.

Correct, that cost always ultimately comes from a combination of fares and taxes. My point was really that (in the context of the slightly unclear original post), in the unlikely event of the franchises failing, the trains will keep running.

 

[Bletchleyite]

TBQH apart from Brian Souter's politics, I'd welcome Stagecoach running as many TOCs as possible.

They generally make a good job of it.

Stagecoach generally seem to me to be the best of the big groups by some margin, both in operational terms and in terms of appearance. You never see a Stagecoach bus covered in muck with dented panels, for instance.

Neil
--- old post above --- --- new post below ---

You've hit the nail on the head in one way. As a passenger, the only competition I need is in price, and in the main for my journey, this is achieved between the franchised operator and its open access competitors, so arguably rather than expending billions of pounds with each refranchise (where does this money come from I wonder - the railway ultimately) I could get price competition between a reconstituted InterCity operating the a standard service across the country and open access operators.

Thing is, we can't stop Open Access as the EU won't let us. But to me it is primarily abstractive, i.e. it causes passengers not to use the subsidised / cross subsidy source of the tendered operator, which causes an increase in subsidy / reduction in cross subsidy.

So I'm not convinced *any* on-rail competition[1] is a benefit. The car is the competitor. Stop competing between train companies and get on with making the train so good you'd never want to drive. There is a *long* way to go there, and the train companies would achieve that better together.

It's like buses. More people would be attracted onto buses if they were operated in a coordinated system like a German Verkehrsverbund or TfL. First bickering with Stagecoach, or a smaller cut-price operator barging in for a bit, is just distracting everyone from the real issue, which is that the vast majority of journeys are made by car (over 70%, if I recall) and that is what the public transport industry as a whole needs to get together and solve.

Regulation is one way there. But to me another would be to abolish all competition regulation in the area of public transport entirely - it's an industry in which cartels[2] viably can actually serve the passenger quite well. After all, monopoly bus companies tend not to take the mickey on fares - they could, but they don't. So who's to say a cartel couldn't be trusted?

[1] I wouldn't necessarily abolish cheaper tickets on slower trains and the likes, provided the capacity was there for that - after all, DB has this as well. But that's more price discrimination than competition - you have first and standard class, you can also have IC and regional as a way of charging someone who needs a faster journey more but being able to attract a price sensitive but time insensitive passenger as well.

[2] Cartels, not regulation, are how the German Verkehrsverbund system came about.

Neil

 

[GrimsbyPacer]

The monopoly will strengthen if Stagecoach obtains TransPennine Express later in the year.

That looks possible as the DaFT have cut all of First's contracts up for grabs recently as have the Scottish government.
If Stagecoach get Transpennine we might aswell give then the whole network!

On another note, Virgin are to cancel a few flights from London to Edinburgh and Manchester to Aberdeen later this year.
So competition is set to be reduced.