Virgin Franchise Extended

[dk1]

People in Sheffield still refer to London services as the Midland Mainline one - it takes a long time to change perception, and I don't think the "average" passenger pays too much attention to that kind of thing (as long as their train turns up).

People still refer to Liverpool trains out of Norwich as Central. Drives me mad :mad:

 

[pemma]

There was someone on here earlier this week asking about when "GNER" would be getting new trains for the East Coast franchise, apparently not appreciating that its been a long time since GNER operated that service.

People in Sheffield still refer to London services as the Midland Mainline one - it takes a long time to change perception, and I don't think the "average" passenger pays too much attention to that kind of thing (as long as their train turns up).

While some people may still get it wrong I think the majority do get it right. I've not heard anyone refer to the TPE North West and Scottish services as First North Western services since the 185s were introduced or for that matter North and South TPE services as Arriva services. Maybe the huge mismatching blue vinyl put on the 158s soon after the start of the new TPE franchise did enough to inform passengers that the operator has changed.

 

[jopsuk]

(useful figures)

Cheers fella, I'm collating this, using what i can frind from the occasionally poisoned font of all knowledge (wikipedia) as well and I'll make a new thread. Some surprising ratios!

 

[ajdunlop]

How many pendos would it take to completely replace all voyagers under OHLE?

 

[LNW-GW Joint]

How many pendos would it take to completely replace all voyagers under OHLE?

You would need 9 for Birmingham-Scotland, and 6 for Euston-Chester.
But as soon as you extend beyond Chester into North Wales you need more.
And this is operational trains, you will need some redundancy.

The current timetable also includes Voyager workings from Lancaster and Birmingham to Euston, and Birmingham to Holyhead.

They are also key to weekend working away from the wires all along the WCML during blockades (still several times a year).

VT has a pool of 21 Voyagers I think.

 

[Badger]

VT has a pool of 21 Voyagers I think.

20 and a spare pair of driving cars; one was broken up to add extra coaches to the others.

 

[pemma]

They are also key to weekend working away from the wires all along the WCML during blockades (still several times a year).

Once electrification of Chat Moss and the Bolton corridor is complete there shouldn't be any need to have Voyagers for the non-North Wales/Chester to London services.

 

[Philip Elliott]

Once electrification of Chat Moss and the Bolton corridor is complete there shouldn't be any need to have Voyagers for the non-North Wales/Chester to London services

Whilst wiring Chorley & Chat Moss will be of HUGE benefit for diversionary benefits, there are plenty of non-wired routes - S&C, G&SW, Westhoughton, Frodsham, Water Orton, Shotts etc. etc.

 

[tonytrainsfree]

It is already in progress at relevant stations over the length of the WCML...

what stations are they doing it to

 

[WatcherZero]

Interview with Stagecoach, they said they only expect to make £10m profit on their 49% share over the extension period because the Government has set very aggressive revenue targets with cap and collar of 80%. They expect to be recieving subsidy over the franchise duration because they dont believe the Governments revenue targets are achievable.

Its interesting, my immediate thought is that the Government has included the complete cost of running the longer and extra trains in its revenue model, saying they have to pay for themselves in operation and the Toc wont be allowed to make a profit from revenue volumes until they do.

 

[HH]

A £20m profit when receiving Revenue Support? Sounds like a good deal for Virgin Trains. Most TOCs in Revenue Support are breaking even at best.

 

[dk1]

A £20m profit when receiving Revenue Support? Sounds like a good deal for Virgin Trains. Most TOCs in Revenue Support are breaking even at best.

There are most TOCs & then there is Virgin Trains. Give me the latter any day.

 

[WatcherZero]

Well revenue is £753m per annum this year, so on a 9 month extension £20m profit. Thats a profit margin of just 3.4%. It will also continue to make franchise payments to the Dft.

 

[tbtc]

Well revenue is £753m per annum this year, so on a 9 month extension £20m profit. Thats a profit margin of just 3.4%. It will also continue to make franchise payments to the Dft.

Good point - the profits made by TOCs look massive, but are only a small percentage of the total revenues - all needs to be put into perspective.

If it means a 3.4% profit to the TOC, with the Government getting the other profits then fair enough,.

 

[martinsh]

There are most TOCs & then there is Virgin Trains. Give me the latter any day.

You're welcome to take it off my hands !

 

[Bungleboo]

Why only until the end of 2012? If they are good enough to have the franchise for another year why can't they have it for another 10 years? In my opinion they are the best TOC and deserve their extension.

I agree 100% .. a quality organisation .. a quality brand .. and in my view; a quality TOC.

 

[exile]

Good point - the profits made by TOCs look massive, but are only a small percentage of the total revenues - all needs to be put into perspective.

If it means a 3.4% profit to the TOC, with the Government getting the other profits then fair enough,.

Profit as a %age of revenue isn't very meaningful - return on capital is more so. For example, all big supermarket chains make a tiny margin on sales - but a good return on capital.

 

[WatcherZero]

About 5.5% margin on sales (tesco), but yes as a supermarket buys and sells several times in a year it produces a very different return on capital employed (14%).

For example:
Buy crate of beer for 10
Sell crate of beer for 10.50
5% profit margin on sales, 5% return on capital employed

but as it has huge volumes
Buy crate of beer for 10
Sell crate of beer for 10.50
Buy crate of beer for 10
Sell crate of beer for 10.50
Buy crate of beer for 10
Sell crate of beer for 10.50

Still a 5% profit margin on sales, but now 15% return on capital employed.

However a Rail Franchise isnt the same, you dont make a return on each service operated. You lease the stock for 5 years, employ the staff for a year, use up fuel, have fixed overheads. Theres also the bond you give to the Dft in case of failure, insurance, etc. You operate a fixed number of services, with only a tiny bit of flexibility for special services or line closures. You can put on a train, take the profits and use them to put on two trains next time.

The result is that your capital is effectivley tied up for years on end, you cant just reinvest it in new stock, you also return all the assets you purchased and face depreciation costs as infrastructure, stations, uniforms wear out.

Anyway my point is they are far far from comparable, TOCs capital is upfront and locked away for decades.

Edit: Looking at Virgin Groups figures it has around £33m capital invested and made £65m profit in 2010. Meaning a 197% Return On Capital employed for that year on paper, but it cant access that capital for thirteen years, factor in inflation and half that capitals value has been eroded before it returns. You also have to factor in risk, If a supermarket goes belly up its stock still has value, if a rail franchise goes belly up it has no assets and the Dft takes the performance bond in compensation. You also have the risk of making a loss as revenue is outstripped by costs (very likely on a small margin). The Government has set the Performance bond for the next WCML franchise as £50m, meaning that £50m locked away before the costs the Toc will sink into the franchise itself (management, branding, uniforms, equipment, etc).

 

[tbtc]

Profit as a %age of revenue isn't very meaningful - return on capital is more so. For example, all big supermarket chains make a tiny margin on sales - but a good return on capital.

True - I was just trying to put the figures into some kind of context (though I appreciate that there are different ways of doing this).

Saying "£10m profit for TOC" sound like a disgrace (I can imagine some people suggesting that this money could be used to cut fares, buy hundreds of new trains...).

But,"5% profit for TOC" doesn't sound anything like as dramatic, especially when they could get a better rate of return investing their money in the bank.

All of this supposes that a Government run TOC would be just as efficient and not waste any money etc etc

 

[Yew]

Buy crate of beer for 10
Sell crate of beef for 10.50

I work at tesco, and can assure you that we NEVER turn beer into beef.

 

[WatcherZero]

I work at tesco, and can assure you that we NEVER turn beer into beef.

Lol typo, mind you I looked at the ingredients on a pack of Turkey Rashers and it listed Milk. You can ask how theres Milk in Turkey slices? I did
(presumably binding agent)

 

[Eagle]

I work at tesco, and can assure you that we NEVER turn beer into beef.

Having said that it's not unknown for beer to contain beef-derived ingredients such as gelatin and glyceryl monostearate (although the most common way beer fouls being vegetarian is fish-derived isinglass).

 

[pemma]

I'm not sure if that has already been mentioned. Virgin have reportedly said the DfT's expected target revenue for the franchise extension as 'challenging' and expects to qualify for revenue support from DfT:
http://www.railnews.co.uk/news/general/2011/10/27-revenue-warning-as-virgin-wins.html

 

[HH]

I'm not sure if that has already been mentioned. Virgin have reportedly said the DfT's expected target revenue for the franchise extension as 'challenging' and expects to qualify for revenue support from DfT:
http://www.railnews.co.uk/news/general/2011/10/27-revenue-warning-as-virgin-wins.html

That's what was being talked about. How a 49% stake meant a £10m profit (hence a £20m profit overall) while in revenue support.

To put this in perspective, a bid profit of 4.0% is typical.

So yes, 3.4% profit, while in Revenue Support, seems a pretty sweet deal to me.

 

[pemma]

That's what was being talked about. How a 49% stake meant a £10m profit (hence a £20m profit overall) while in revenue support.

To put this in perspective, a bid profit of 4.0% is typical.

So yes, 3.4% profit, while in Revenue Support, seems a pretty sweet deal to me.

For some reason when I opened the thread it opened on something like the 6th page out of 8 and I didn't notice so I missed that the most recent replies related to revenue support before posting.