In the latest addition to the neverending saga that is rail franchise financial problems, Abellio is reportedly in talks with the DfT over the "CLE" funding formula.
Sorry if this has been mentioned before...
http://www.eadt.co.uk/news/dutch-taxpayers-subsidise-greater-anglia-1-5740230
Any reason why Abellio/NS has had to pump money in and not Mitsui?
Sorry if this has been mentioned before...
http://www.eadt.co.uk/news/dutch-taxpayers-subsidise-greater-anglia-1-5740230
Now one of the owners of the rail franchise, which was awarded two years ago, are holding urgent talks with the government in a bid to change the funding formula that has forced this subsidy.
They say that a complicated way of trying to reduce the peaks and troughs of revenue – the “Central London Employment” (CLE) mechanism – no longer works because the pattern of commuting has changed.
Greater Anglia is jointly owned by Abellio – part of Dutch State Railways – and Japanese investment company Mitsui.
The revelation that Abellio has had to pour £80m into the franchise has led to reports that British and Dutch transport ministers are heading for a showdown meeting to try to change the funding formula.
A spokesman for Abellio said the situation was totally different to the funding crisis that prompted Virgin Rail and Stagecoach to hand back the East Coast Main Line to government control during the summer.
In that case the companies overbid for the right to run trains between London and Scotland, the North East and Yorkshire. They were unable to operate profitably and handed back the franchise.
Abellio says that in Greater Anglia’s case, the funding formula has fallen out of sync with commuting patterns causing the financial hole to open up.
The spokesman said the financial discussions should not affect passengers at all and would have no effect on the roll-out of new trains, which are due to start arriving in the region by the end of the year.
He said: “The agreement for the East Anglia franchise includes a risk sharing measure known as the CLE mechanism. This was intended to provide protection for the operator and the Department for Transport against revenue fluctuations as a result of dramatic changes in the London economy.
“However, it is now widely accepted that CLE is a flawed mechanism that does not deliver on the intended aims. We are therefore working with the DfT to develop and implement more effective risk sharing models.”
The CLE formula has already been changed for rail franchises awarded since 2016 – and Abellio hopes the government will change it retrospectively for its franchise which is due to run until 2025.
Any reason why Abellio/NS has had to pump money in and not Mitsui?