Stagecoach eyeing Government compensation over East Coast and poor passenger demand?

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AJG3

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http://www.telegraph.co.uk/business...eing-government-compensation-over-east-coast/
Stagecoach could receive “material” compensation from the taxpayer after rival rail operator FirstGroup was given the green-light to run competing services on the East Coast main line.

The bus and train company has started talks with the Government about potential compensation, following the decision of the Office of Rail and Road (ORR) last month to allow FirstGroup onto the London to Edinburgh route from 2021. Virgin Trains East Coast (VTEC), which is 90pc owned by Stagecoach, is also looking at a judicial review of the ORR’s ruling, Martin Griffiths, the chief executive of Stagecoach, confirmed.

Asked how much compensation Stagecoach may be entitled once FirstGroup begins its services, he said: “I don’t think we would be wise to put a numbers around that other than to say it would material enough to the franchise.”

Mr Griffiths was speaking as Stagecoach posted a 1.3pc increase in pre-tax profits, before exceptional items, to £187.4m...
Will be interesting to see how this one pans out...
 
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Shall I be the first to point out the incorrect use of the train in the picture being in the wrong livery? ;)

Not sure how far they would get with this as the amount of services they provide compared to the First offering in a few years time at that, is vastly different enough to not really make a dent I would've thought.
 

3141

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I cannot remember the details of the case Sea Containers brought in respect of Great Central in about 2006, except that they didn't win it, and it will be interesting to see whether that has any impact on what Stagecoach are reported to be considering.
 

swt_passenger

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I thought the ECML ITT explicitly warned bidders that there would be open access competition?
 

fandroid

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I know that there is another thread concerning the Telegraph article on Stagecoach and East Coast, but the Times has a totally different story based on the company's latest report to the Stock Exchange. They are apparently admitting that annual passenger growth is only 5.2% when their very ambitious franchise bid requires 8 to 9 %. I have found the external rebadging of the trains to be absolutely dreary and uninspired. The internal makeover is a lot more effective, but marketing depends to a great extent on the external appearance, even though it makes zero difference to passengers.

It may be just the business journalists being over pessimistic, as no-one could reasonably expect any special growth rate until the new trains are in service. However, hubris may have inspired optimism from Stagecoach relying on a bit of brand magic from the Virgin name. They may have mistakenly thought that the growth of the West Coast traffic was due to the Virgin name rather than the more mundane attractiveness of new tilting trains and the end of the the West Coast upgrade restrictions.
 

LNW-GW Joint

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The Telegraph article is just about the Open Access implications, not about current VTEC performance.
If you read the small print in the Stagecoach results (page 11 for UK Rail): http://m.stagecoachgroup.com/~/medi...Attachments/media/press/pr2016/2016-06-29.pdf it doesn't look too gloomy.
My interpretation of the results is that the financial trouble lies with SWT; VTEC is still settling in, and EMT (new franchise) and Virgin Trains are doing very well.
The step change in VTEC revenue starts this year, not last.

We began operating the Virgin Trains East Coast franchise in March 2015, in which we have a 90% interest, and have made significant strides in the delivery of our planned £140m programme of investment to transform customer journeys. Although, as expected, our initiatives have yet to have a significant impact on revenue, the business’ revenue did grow by 5.2% in the year.
 

Tetchytyke

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Stagecoach suing the government because they got their sums wrong?

If you ignore the fact that they did exactly the same thing with Virgin Trains, South West Trains and East Midlands Trains, that's completely unexpected and unforeseen.

But remember that Brian believes in the free market :lol:
 

WatcherZero

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Government was reportedly quite annoyed when ORR approved open access on East Coast as they saw this coming.
 
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