Grand Union Trains bought by First Group?

[Haywain]

Does Avanti make any decisions?

Yes, they will make the day to day operational decisions and those about who to employ.

 

[alistairlees]

Yes, they will make the day to day operational decisions and those about whom to employ.

Yes, I know. I should really have asked the question regarding FirstGroup. In any case, Avanti is able to independently make only a limited set of decisions, within a tightly-constrained straitjacket set by the DfT. FirstGroup has no skin in the game and Avanti (a company partly owned by FirstGroup) has no real freedom of action; certainly, it's a long way from what might be understood as "privatised". So, even today, there can't really be any true conflict of interest with an open access operator also owned by the same owning group.

 

[Clarence Yard]

As long as you don’t have the same people involved in Avanti as involved in the OA operation, there is no conflict of interest.

As I said above, if Avanti was still a risk taking franchise rather than just a fee based management contract subject to DfT decision making, then there would be a situation which would interest the CMA.

 

[HerneHill]

No, Avanti does. But it is a management contract which involves no revenue risk.

Does Avanti make any decisions?

It’s important to distinguish between the Owning Group staff at First Rail, vs the TOC staff at Avanti.

Avanti TOC staff (except MD and FD) have their paychecks covered entirely by DfT. Avanti management run the actual recruitment process, but ultimately every hiring decision needs to be signed off by DfT. Avanti’s operational decisions are set by its TOC Directors, guided by a pre-agreed strategy with DfT Markets team with whom they would have signed annual Business Plan Commitments.

First Rail staff / Directors will try to chip in and support the above process by having meetings with the TOC Directors (mainly just to parrot the same Revenue targets etc that the DfT have set, if you were to ask my honest view), but ultimately have little influence over the running of Avanti.

Not with full operator nationalisation around the corner, they might be preparing to offload Avanti/GWR onto the government when the provisions of the Passenger Railway Services Bill start being used and then use the new operator as a open access competitor to the former TOCs they just stopped running

First Rail have been coming across as treating the DfT TOCs as an afterthought for quite a while now. They barely say anything about DfT TOCs in their investor materials, annual reports etc beyond commenting on how they represent a “stable, low-risk revenue stream”, while committing a LOT of airtime talking about their Open Access ambitions. So I would say this is not at all a surprising direction to take!

 

[Clarence Yard]

In the case of Avanti, the wages of the MD and FD come from Avanti, without any funding from FG. If they didn’t do it that way, it could become problematic.

Directors at FG TOCs tend to be fully funded by the TOCs themselves and are TOC, not FG staff.

 

[LNW-GW Joint]

What's to stop the government doing away with open access as well by just not renewing the permits as they expire?

Because there is legislation that permits new entrants to the railway, and a level playing field of costs (access charges etc) when they start up.
The DfT doesn't licence OA operators, that's done by the independent regulator ORR, based on capacity available.
The Labour policy papers don't appear to want to change that.
Competition is not always a bad thing - see how it works on high speed lines in France, Italy and Spain.

First Rail staff / Directors will try to chip in and support the above process by having meetings with the TOC Directors (mainly just to parrot the same Revenue targets etc that the DfT have set, if you were to ask my honest view), but ultimately have little influence over the running of Avanti.

I happened to engage with the team who were doing the first-day launch of the 805, and the AT300 introduction generally.
It was quite obvious they were being led by FirstGroup, not the Avanti day-to-day TOC.
Probably linked to their expertise with 80x trains from GWR, TPE, HT and Lumo.

 

[Clarence Yard]

First Group has a very large HQ consultancy operation and it sells services to the FG TOCs (as well as others) so you would see a lot of FG HQ staff involved with different aspects of Avanti.

The Open Access operations are managed, at HQ level, as a completely separate unit from the Consultancy operation. No FG Rail HQ staff apart from the very few directly involved in the First Stirling decision have had any knowledge of this move.

 

[anthony263]

Makes me wonder now how affects the Carmarthen to london service

 

[Russel]

Virgin CrossCountry ran several direct trains per day between London Paddington and Birmingham New Street and vice versa.

Ah yeah, forgot about those services.

 

[HerneHill]

In the case of Avanti, the wages of the MD and FD come from Avanti, without any funding from FG. If they didn’t do it that way, it could become problematic.

Directors at FG TOCs tend to be fully funded by the TOCs themselves and are TOC, not FG staff.

Thanks for the correction! I have seen more than one TOC MD and FD salary being paid for by owning group (been told that is how DfT gives the owning group a semblance of “imposing their will” on TOC operations) and assumed it was the same everywhere - clearly not the case!

I happened to engage with the team who were doing the first-day launch of the 805, and the AT300 introduction generally.
It was quite obvious they were being led by FirstGroup, not the Avanti day-to-day TOC.
Probably linked to their expertise with 80x trains from GWR, TPE, HT and Lumo.

Interesting - yes I had totally neglected the aspect of new fleet implementation projects, makes total sense to leverage the same pool of expertise for those.

 

[popeter45]

Makes me wonder now how affects the Carmarthen to london service

that seems to be its own company and so far nothing changed on that end by the looks of it

 

[Snow1964]

FirstGroup doesn't run Avanti, GWR or SWR. The DfT does, and has done (with increasing levels of control) since March 2020. FirstGroup is just the name on the door.

Does DfT employ the staff?

Although there appears to be nothing stopping staff currently on First payroll not TUPE to GBR national rail, and opting to join a First open access operator instead.

Actually thinking about it any open access operator could try and poach any staff or managers they wanted, effectively headhunting those that will help them make money by innovative working.

 

[Ghostbus]

It's clearly a conflict of interest in the broadest of terms. It produces a situation where operational staff in one company could feel obliged or even compelled to take an action that delays their own passengers and benefits those of a supposedly rival operator, if doing so is the best thing for FirstGroup, or their career within it. They might do this under secret instructions, or off their own back.

It's also just daft. Competition is competition. Common ownership is common ownership. Unless we've entered some time warp and this is a throwback to internal competition in a sectorised railway?

 

[HerneHill]

Although there appears to be nothing stopping staff currently on First payroll not TUPE to GBR national rail, and opting to join a First open access operator instead.

From a worker rights perspective, that is surely fair game? If anything that forces the government to try as hard as they can to put together enticing T&C packages I would think.

From a benefits perspective I struggle to see why anyone would want to work for an OA operator over a proper TOC… no RST perks for a start! And are OA staff part of RPS?

 

[Snow1964]

Interesting - yes I had totally neglected the aspect of new fleet implementation projects, makes total sense to leverage the same pool of expertise for those.

In theory, there is nothing to stop First Group (or anyone else with deep enough pockets), making an offer to the LeaseCo to buy something like the 222s outright, so they are free to use them on any of their open access routes

Also I am not sure if some or all of the IET fleets have first refusal renewal options on their leases, or if an Open access operator can outbid what current operator pays when lease expires to grab a fleet. Presumably those with short leases haven't committed to pay to lease them for long period so available to best bidder.

 

[HerneHill]

It produces a situation where operational staff in one company could feel obliged or even compelled to take an action that delays their own passengers and benefits those of a supposedly rival operator, if doing so is the best thing for FirstGroup, or their career within it. They might do this under secret instructions, or off their own back.

Avanti TOC staff ultimately answer to DfT, not FG though, so struggle to see why anyone would do that.

 

[dk1]

Why on earth would they bring Virgin into the mix?

I think somebody else has explained that for you.

 

[BlueLeanie]

What's to stop the government doing away with open access as well by just not renewing the permits as they expire?

It would take a very brave PM to ban the beloved "Harry Potter" train running to Mallaig, the SNP would have a field day denouncing "Westminster's attack on the Scottish tourist industry"

 

[Tazi Hupefi]

From a worker rights perspective, that is surely fair game? If anything that forces the government to try as hard as they can to put together enticing T&C packages I would think.

From a benefits perspective I struggle to see why anyone would want to work for an OA operator over a proper TOC… no RST perks for a start! And are OA staff part of RPS?

That's also incorrect. Open Access staff get full rail staff travel benefits. The pension schemes for some of the newer open access operators that I've seen isn't RPS - but is still extremely generous in comparison to other industries, with matching contributions rates well into double figure %. Arguably the scheme is also more affordable for staff compared to RPS as the contributions aren't eye wateringly high. Far too many "proper" TOC staff opt out of RPS because it's unaffordable.

 

[YorkRailFan]

Makes me wonder now how affects the Carmarthen to london service

Also the Cardiff-Edinburgh service.

If true, won't this mean First competing with...themself? Over the West Coast

First don't receive revenue from tickets sold for Avanti services, they only receive management fees from the DFT. One could say that First were competing with themselves when they launched Lumo. With both Lumo and Avanti providing London-Edinburgh services.

 

[Mcr Warrior]

Judging by this companies house name change Grand Union, or at least the portion which was due to operate the Stirling to London service, has been brought by First Group. Does anyone know anything about this?

What does the acquiring party get for their money if the change of ownership wasn't for some token consideration? First Rail Stirling Ltd (= Grand Union Trains Ltd - as was) seems not to have ever traded and just to have accumulated losses since it was (originally) incorporated in 2018.

Makes me wonder now how affects the Carmarthen to london service

Business and assets relating to same seem to have been carved out into a separate company (= Grand Union Trains No..2 Ltd) a year or so ago. Presume First Rail Stirling Ltd will now be owners of this subsidiary entity.

 

[alistairlees]

What does the acquiring party get for their money if the change of ownership wasn't for some token consideration? First Rail Stirling Ltd (= Grand Union Trains Ltd - as was) seems not to have ever traded and just to have accumulated losses since it was incorporated in 2018.

Paths from London to Stirling

 

[jh64]

I happened to engage with the team who were doing the first-day launch of the 805, and the AT300 introduction generally.
It was quite obvious they were being led by FirstGroup, not the Avanti day-to-day TOC.
Probably linked to their expertise with 80x trains from GWR, TPE, HT and Lumo.

Interesting - yes I had totally neglected the aspect of new fleet implementation projects, makes total sense to leverage the same pool of expertise for those.

Brings to mind the original Grand Union proposal of an 802 fleet from all the way back in 2019:

Grand Union Class 802s to serve Llanelli from 2023?

Hitachi bi-modes form part of long-term plan for Grand Union's open access plans in Wales

www.railmagazine.com

Prospective open access operator Grand Union could use new Hitachi Class 802 bi-mode trains to run an hourly service between Llanelli and London Paddington by 2023, replacing the Class 91s and Mk 4s it initially wants to use between London and Cardiff two years before that.

Best laid plans, eh.

 

[Haywain]

I think somebody else has explained that for you.

I took your comment to suggest that First might try to bring them in on the Stirling operation - is that not what you meant?

 

[12LDA28C]

It would take a very brave PM to ban the beloved "Harry Potter" train running to Mallaig, the SNP would have a field day denouncing "Westminster's attack on the Scottish tourist industry"

Surely this is classed as a charter train just like others operated by WCRC, it just happens to run in a regular path. Not what I would call an Open Access operation.

 

[Tazi Hupefi]

Surely this is classed as a charter train just like others operated by WCRC, it just happens to run in a regular path. Not what I would call an Open Access operation.

West Coast is a full TOC.
The Jacobite has permanent, confirmed, scheduled paths.

It is exactly an open access operator. No different from Lumo or Grand Central other than the market demographic is obviously radically different. Some of the contract conditions reflect this.

Charter paths and operations are completely different.

 

[dk1]

I took your comment to suggest that First might try to bring them in on the Stirling operation - is that not what you meant?

No not at all. Just that Virgin wants to enter the OA market on the WCML.

 

[43096]

Surely this is classed as a charter train just like others operated by WCRC, it just happens to run in a regular path. Not what I would call an Open Access operation.

Charters are Open Access. Freight is Open Access. You're just thinking of Open Access as being non-Government controlled passenger operators.

 

[renegademaster]

Lots of the regulations around this came in via the EU. Since Brexit, it is possible to create new legislation, but, especially for the Labour party, is politically difficult and could potentially be challenged in court by potential operators as an unlawful , anti competitive state monopoly.

Plus if we diverge too much from EU regulations, theyll put trade barriers on us,so we wont

 

[12LDA28C]

West Coast is a full TOC.
The Jacobite has permanent, confirmed, scheduled paths.

It is exactly an open access operator. No different from Lumo or Grand Central other than the market demographic is obviously radically different. Some of the contract conditions reflect this.

Charter paths and operations are completely different.

Of course it's a 'full TOC', just like LSL is, for example. When I think of OA operations I don't immediately think of charter operators. Perhaps you do. Bravo.