New Open Access Operators - Set up for Sale?

[Masbroughlad]

In the early days, OA operators had lots of innovative ideas and set up independent companies.

Hull Trains sold out to First, Grand Central to Arriva. It could be said that when they did, the founders made a tidy sum? The service was then dumbed down.

Now with Grand Union's Stirling to Euston operations, they've sold before a train even turned a wheel. Will the same levels of comfort and service proposed continue, or have First essentially just bought the paths?

Are there now two types of OA applications?

Those that seriously want to provide a new, passenger focused service;

and

those who want to propose and win paths and then just sell them on?

I am not saying either is right or wrong. I guess the transition to Great British Railways totally changes the playing field.

What do people think?

Will GBR leave innovation to OA operators or will they chase new service opportunities?

Very difficult and very interesting - passenger demand driven? And who will research, chase and deliver for that demand? State or OA? Or both?

Will OAOs compete with GBR? Will they be allowed / encouraged to? Or will they plug gaps in the market?

 

[Bletchleyite]

It will be very interesting to see what concept First choose for the Stirling operation - i.e. whether it's "Stirling Trains" or somesuch as a full service but a-bit-cheaper-than-Avanti TOC like Hull Trains, or whether it's a Lumo service.

 

[Clarence Yard]

Hull Trains didn’t sell out to First, GB Railways did. They were the then owners of Anglia, Hull Trains (80%), GBRf and at least one foreign interest.

The minority shareholders (John Nelson and Mike Jones) stayed with Hull Trains for a few years before both sold their interests to First Group.

So it wasn’t comparable to the GU Stirling situation.

 

[Masbroughlad]

Hull Trains didn’t sell out to First, GB Railways did. They were the then owners of Anglia, Hull Trains (80%), GBRf and at least one foreign interest.

The minority shareholders (John Nelson and Mike Jones) stayed with Hull Trains for a few years before both sold their interests to First Group.

So it wasn’t comparable to the GU Stirling situation.

No, but GB Railways were a small.company. They ran Anglia. Hull Trains was developed by Renaissance Trains. Still small fry, selling to a large corporate.

And as I said, GUS sold before a wheel is even turned.

That was my point- selling an established service vs selling paths. Very different scenarios.

I'm just wondering what the future is for OAs.

 

[DarloRich]

I don't understand the question. What are we being asked to comment on?

 

[Masbroughlad]

I don't understand the question. What are we being asked to comment on?

A few questions really, amongst my ramblings.

Are OAs different these days? Set up by new entrant entrepreneurs for sale and a quick profit or set up for passenger benefits?

Basically, a research and planning organisation, designing a concept or a serious rail operator? Are they selling a concept/ service plan or an actual concrete service?

As an additional point - who will chase untapped markets in the new World? GBR or OAs?

It has also made me think - if the service has been allowed and given rights, can the purchaser buy it and then make changes as they wish? Or do they have to apply to the regulator?

Eg. Totally far fetched (?) If GUS proposed high class, high comfort Trains, with catering and exquisite service, but First changed it to bog standard, crammed in, as cheap as chips Trains, but used the same paths. Would that be allowed from the get go?

 

[Clarence Yard]

No, but GB Railways were a small.company. They ran Anglia. Hull Trains was developed by Renaissance Trains. Still small fry, selling to a large corporate.

And as I said, GUS sold before a wheel is even turned.

That was my point- selling an established service vs selling paths. Very different scenarios.

I'm just wondering what the future is for OAs.

Hull Trains was promoted by Renaissance but they needed a vehicle to both finance and run it. So they went to GBR and asked if they were interested. That vehicle was Hull Trains, 80% owned by GBR, 10% by John Nelson, 10% by Mike Jones. Renaissance remained with John Nelson and Mike Jones, in order to promote further schemes.

The actual development work on Hull was carried out by Anglia Railways staff in 1999, firstly undercover for Renaissance and then, after the first ORR hearing, more overtly.

The GU scheme is far more developed so FG are inheriting a worked up scheme rather than having to start it virtually from scratch.

Although the Government is saying warm words about Open Access, several key players in GBR are known to be very hostile so it will be interesting to see how it all pans out. What is certain is that the existing access contracts must be honoured until expiry or paid off (as per Part J of the Network Code) - they cannot just be confiscated without compensation.

 

[DarloRich]

designing a concept or a serious rail operator?

Is it not both? Surely you start as a concept, develop it, prove it works then run the service and then sell it on to someone looking for more profit

Eg. Totally far fetched (?) If GUS proposed high class, high comfort Trains, with catering and exquisite service, but First changed it to bog standard, crammed in, as cheap as chips Trains, but used the same paths. Would that be allowed from the get go?

Yes - as long as the trains used meet the performance requirements of the allocated slot.

who will chase untapped markets in the new World? GBR or OAs?

TBC - it is unclear at this time. Although open access seems to be protected in the discussions coming out around the future of UKRail.

 

[Clarence Yard]

A few questions really, amongst my ramblings.

Are OAs different these days? Set up by new entrant entrepreneurs for sale and a quick profit or set up for passenger benefits?

Basically, a research and planning organisation, designing a concept or a serious rail operator? Are they selling a concept/ service plan or an actual concrete service?

As an additional point - who will chase untapped markets in the new World? GBR or OAs?

It has also made me think - if the service has been allowed and given rights, can the purchaser buy it and then make changes as they wish? Or do they have to apply to the regulator?

Eg. Totally far fetched (?) If GUS proposed high class, high comfort Trains, with catering and exquisite service, but First changed it to bog standard, crammed in, as cheap as chips Trains, but used the same paths. Would that be allowed from the get go?

The easiest answers are for the last two paragraphs. The rights given are for quantum only, with a stopping pattern. They are not usually for timed paths although the original applicant would have provided specimen paths in its submitted business plan to the ORR. So if you want to move outside of those rights, you need to go back to the ORR. Retiming existing rights is not done through the ORR - that is the normal timetabling process through NR.

The type of train is up to the successful operator. There is nothing to stop anyone running the service with a lesser train, as long as it meets the timetable.

In OA land, you can get just a promoter (as in the case of Renaissance) who must team up with an existing operator to fund and/or start up services, or a self starting proposition, which could be sold on or taken over (subject to Competition Act constraints) or just operated as a new entrant, or an existing OA operation branching out into something new. There is no one model that seems to be in favour.

In the case of Hull Trains, it was a basically a concept and outline plan (with 125mph stock) that was being promoted to a funder but Grand Union Stirling was a detailed plan that was originally intended to be operated by themselves but then got got sold on after approval.

In OA land, you do get some people come to you with some wild OA proposals but these are usually interest groups rather than consultants or research organisations. There are very few OA proposals that will make serious money and availability of suitable rolling stock is always a constraint.

 

[Bletchleyite]

I don't understand the question. What are we being asked to comment on?

I guess it's slightly analogous to what some people do - buy a piece of land, get plans drawn up for a house and planning permission obtained, then sell the whole package to someone for more than you paid for it all as a pre-packaged development project - popular with self-builders. It isn't zero risk, but to profit you have to take risk to some extent.

 

[DarloRich]

I guess it's slightly analogous to what some people do - buy a piece of land, get plans drawn up for a house and planning permission obtained, then sell the whole package to someone for more than you paid for it all as a pre-packaged development project - popular with self-builders. It isn't zero risk, but to profit you have to take risk to some extent.

or if you have the skills develop the site and sell on. Same as with an OA: either sell the concept or the developed service.

 

[Bartsimho]

Although the Government is saying warm words about Open Access, several key players in GBR are known to be very hostile so it will be interesting to see how it all pans out. What is certain is that the existing access contracts must be honoured until expiry or paid off (as per Part J of the Network Code) - they cannot just be confiscated without compensation.

Thing is I'd say abandoning the idea of OAOs would be very poor as they can offer different types of service. While a National Operator can benefit from economies of scale an OAO can go against the grain and bring new ideas. Like Lumo and being very budget or identifying an underserved area and building the market up.

Also if you want to please Europhiles you can point out it is consistent with what the EU requires to me done

 

[fishwomp]

Essentially it starts to look like other industries with a prospecting followed by an extraction phase. There are companies that can find oil without drilling (ie. seismic surveys), and companies that can extract it. There is a lot of value in both.

If an "exploration" company finds a market then open access approval says "that's not primarily nicking other TOCs revenue" - essentially they have found oil/gold - which is a valuable contribution.

Us railforums timetable crayonistas should get together and start making a fortune from Speculative Ideas..

 

[LNW-GW Joint]

In OA land, you do get some people come to you with some wild OA proposals but these are usually interest groups rather than consultants or research organisations. There are very few OA proposals that will make serious money and availability of suitable rolling stock is always a constraint.

It's one of the reasons rolling stock should not be bought out by the government for sole GBR use.
At least the Roscos give the OA boys some level playing field over stock availability.
BR was known to scrap locos to prevent potential new entrants using them in competition.