Virgin West Coast Open Access Application

LNW-GW Joint

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There's yet another aspect to this.
Virgin have submitted a proposal to the Williams review for rail paths to be allocated in bundles to TOCs rather than in a franchise monopoly as now.
Similar to how Italo operates in Italy, with a batch of services in competition with Trenitalia, on the same routes.
It's also how long distance services in France are supposed to open up.
Virgin may have its eye on HS2 services in competition with WCP, rather than on the congested WCML.
Otherwise, why would SNCF be interested?
It would be a real conundrum for ORR and DfT with a viable and experienced operator bidding to run non-franchised services on HS2.
In the meantime, it throws the current competition into chaos!
 
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Heads up, this is a long post. Read time somewhere in the region of under 10 minutes. Sorry about that!

The more I think about this, the more respect for Virgin I gain about this particular venture. Whilst I'm not a Virgin fan boy or anything close to it, there's so many layers to what has just happened today and I think this is a game changer for the rail market. It's a massive political statement and also an attack on other West Coast operators. The main weapon they've used here is purely data and knowledge they've gained in 20 years.

I can't help but think of a more cynical plot behind this, but I could honestly be reading between the lines too much. If we look at this in detail in how they managed to potentially create this service and also what their motives are:
  • They're in it for the long run, and no matter how many attempts you try to get rid of them from the West Coast they'll use any means possible to use this iconic and flagship line to continue making a profit in the Virgin Rail Group business.
  • This is also a political statement to the DfT and trying to prove that their proposal for 'airline style' travelling experience (with compulsory reservations, no walk-on passengers) works that they submitted to the ORR a few weeks ago. This OA service effectively acts as a test-bed, and if this does work, they'll try push this agenda onto any future franchises they accumulate through the DfT - however short or long away that is.
  • From running the franchise for 20 years they know that London to Liverpool has had insufficient capacity in recent times. Up until the latest timetable change, such a big city and region was only being serviced by 1 train an hour. They knew there was untapped demand and that running a service to Liverpool would make a killing in terms of revenue. I'm interested to see whether this demand will be sufficiently met as this new, current timetable has brought a new 1.5 trains an hour (very complex timetable introduced by WMT) going direct from London to Liverpool at £12 advance singles. The obvious advantage here is that Virgin has the direct route to Liverpool and won't go via Birmingham.
  • However, this is also interesting because they've made a pledge to be the cheapest service in the market by at least 10% against all other operators. This means going from London to Liverpool is going to have to cost £10.80 on advance tickets if they want to compete with West Midlands Trains. I imagine this price for obvious reasons would work well and could sell like hot cakes, but will this cover the cost of operation? Will their supply meet demand?
  • This is also another jab at West Midlands Trains, who are obviously their cheap and cheerful rivals and have been for 12 years. The two of them have been on political warfare for the past decade trying to compete with each other. They've seen immense success on their Trent Valley service and are taking measures to add capacity where possible (8-car trains instead of 4-cars, and rumours of a new Northampton to Crewe via Trent Valley service to make 2tph along the Trent Valley). This means demand is outweighing supply here and that Virgin Trains could effectively provide the shortfall in supply at a competitive price if they want price-savvy customers to take them seriously.
  • They also have a strong hunch here that the application will be successful. The stations were chosen very carefully in this application. This is partially knowledge not just gained in-house, but also the fact that the original GNWR application from London to Blackpool North originally proposed calling at Nuneaton, Tamworth and Lichfield Trent Valley in 2015. This was approved by the ORR. However this fell through as they weren't able to source the stock needed to operate the service in time. When they did, it wasn't the anticipated 125mph stock and instead stock that was limited to 110mph. To compensate for the shortfall in speed and to maintain a competitive journey time they cut out the stops at Tamworth and Lichfield Trent Valley. Virgin know that it *should* be a shoe-in to get ORR approval for services to stop at Tamworth and Lichfield Trent Valley and pass the revenue abstraction on that front.
  • The stations chosen also were carefully done to try and pass revenue abstraction too. Stopping at the likes of Milton Keynes or Crewe, whilst popular interchange stations, are probably nearly guaranteed to fail here. West Midlands Trains operates 3 trains an hour in and out of Crewe, of which two continue to London and Liverpool and Northern, albeit an indirect service, also operates 1 train an hour to Liverpool Lime Street. The WCP franchise holder will also have trains that stop at Crewe going to Liverpool and London. Nuneaton, Tamworth and Lichfield Trent Valley don't have a 'direct' service to Liverpool Lime Street outside of the peaks, although you can buy cheap advances (and even day returns) to go Liverpool from these stations. The inclusion of a Liverpool South Parkway call can act as an advocate for better connections to London and the Trent Valley (for which there is a 4h direct service to London or no direct service to the Trent Valley).
Milton Keynes is also to be serviced by the revised GNWR service and therefore would become a) more difficult to stay competitive whilst making a profit as there would be four providers from London. This could cause a loss to the OA service if they stop here at Milton Keynes. b) overkill, quite frankly. Supply is exceeding demand here.​
  • Alstom were included in this bid because they have a maintenance facility in London which is where I am presuming these trains will be maintained. They may also be able to supply some existing trains (class 180s anyone? :)) and overhaul / maintain them for the first few years before swapping out to class 390s post-HS2. Given their good relationship in supplying and maintaining the Pendolino trains and also more recently during the rocky times helping out on the Southeastern bid, this is their way of retaliating and trying to cash in on the UK rail business. This will also help reduce the overhead costs when setting up this business, which is what may allow them to get away with making claims such as '10% cheaper than our competitors'.
Lots of political and brave business moves made here and it's actually very interesting to watch. I still maintain that it's unrealistic to see this launch in 2021 with the lack of capacity and suitable rolling stock but I genuinely am interested in seeing how this pans out and will listen closely to any developments made.

Good post

One thing to think about though;

Wherever you've said West Midlands Trains, remember that they are only the current operator of the LNR franchise.
Does that franchise have a long future?

The Bletchley-Bedford service would become part of East-West Rail if that goes ahead.
Or could Chiltern go for it in a similar way to Bicester-Oxford? (Bicester/Aylesbury-Bletchley)
Or if TfL get more of the metro routes, do the southern LNR routes go to Southern?

Or Northern collapses & gets broken/divvied up to existing franchises & PTAs. eg LNR pick up Stoke-Manchester, & stop running Stafford-Crewe direct. That opens up a few paths on that section of WCML.
 

Chester1

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There's yet another aspect to this.
Virgin have submitted a proposal to the Williams review for rail paths to be allocated in bundles to TOCs rather than in a franchise monopoly as now.
Similar to how Italo operates in Italy, with a batch of services in competition with Trenitalia, on the same routes.
It's also how long distance services in France are supposed to open up.
Virgin may have its eye on HS2 services in competition with WCP, rather than on the congested WCML.
Otherwise, why would SNCF be interested?
It would be a real conundrum for ORR and DfT with a viable and experienced operator bidding to run non-franchised services on HS2.
In the meantime, it throws the current competition into chaos!
SNCF are not part of this. A new company was created for the franchise bid, split 3 ways. That company is redundant unless the legal battle over the WCP bid is successful. This bid is by the Virgin Trains holding company (that owns the west coach franchise company). The ownership of the open access opperator would therefore be 51% Virgin group, 49% Stagecoach (unless Alstom become shareholders too).
 

Bletchleyite

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SNCF are not part of this. A new company was created for the franchise bid, split 3 ways. That company is redundant unless the legal battle over the WCP bid is successful. This bid is by the Virgin Trains holding company (that owns the west coach franchise company). The ownership of the open access opperator would therefore be 51% Virgin group, 49% Stagecoach (unless Alstom become shareholders too).
So this would be a continuation of Virgin Rail Group (effectively) rather than the branded Stagecoach operation (plus a bit of SNCF input) that would have been WCP?
 

700007

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Good post

One thing to think about though;

Wherever you've said West Midlands Trains, remember that they are only the current operator of the LNR franchise.
Does that franchise have a long future?

The Bletchley-Bedford service would become part of East-West Rail if that goes ahead.
Or could Chiltern go for it in a similar way to Bicester-Oxford? (Bicester/Aylesbury-Bletchley)
Or if TfL get more of the metro routes, do the southern LNR routes go to Southern?

Or Northern collapses & gets broken/divvied up to existing franchises & PTAs. eg LNR pick up Stoke-Manchester, & stop running Stafford-Crewe direct. That opens up a few paths on that section of WCML.
1) The current assumption is that the franchise would operate stand alone when renewed in 2026 (or however many extensions down the road?). We know the status of the franchise up until the HS2 planned opening date - so about 7 years?

2) At the moment I will say yes, the Marston Vale local Bletchley to Bedford is staying with LNR. That's something that obviously we don't know post-EWR and HS2. There is a lot of different infrastructure works taking place at both ends of the line so anything goes really. Not a bad shout to send it to Chiltern... If they want it. Although has nothing to do with, and would not affect the Virgin OA service.

3) I know it has been suggested in the past here and there but I don't think I would ever see TfL take on any current West Midlands Trains service. There's literally only three stops they genuinely want / have a remit in / care about and that's London Euston, Wembley Central and Harrow & Wealdstone. They only run to Bushey and Watford Junction at present for the simple fact that the Watford DC can't magically be cut at Hatch End and would cause a lot of upset anyways if that happened. To go Tring or technically at least Bletchley as that's where the sidings and crew depot are, especially given their poor finances, would be a no starter. Would also see a lot of local opposition.

4) Northern is an interesting one because the rumour is doing the rounds that they're possibly in financial trouble and may collapse. If this is the case and the services are split up and devolved to other franchises to make it more manageable, then yes I could see the likes of West Midlands Trains pick up small tidbits of work around Crewe, Manchester and Liverpool. I don't know how much they would want to radicalise the network (by absorbing these into longer distance trains to free up paths) though at the risk of jeopardising the already poor punctuality on those lines.
 
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Bletchleyite

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3) I know it has been suggested in the past here and there but I don't think I would ever see TfL take on any current West Midlands Trains service. There's literally only three stops they genuinely want / have a remit in / care about and that's London Euston, Wembley Central and Harrow & Wealdstone. They only run to Bushey and Watford Junction at present for the simple fact that the Watford DC can't magically be cut at Hatch End and would cause a lot of upset anyways if that happened. To go Tring or technically at least Bletchley as that's where the sidings and crew depot are, especially given their poor finances, would be a no starter. Would also see a lot of local opposition.
The only way they are likely to get involved in "mainline" WCML services would be if the "Crossrail to Tring/Watford" proposal ever happened - but as noted there is indeed a fair bit of opposition to that among current users of the south WCML, many of whom do actually like boarding at a terminus as it makes things rather less of a bunfight.

I suppose they could run a 2tph 25kV Watford shuttle instead of LNR calling south of there (using LO units rather than Desiros), but I can't see that happening.
 

nuneatonmark

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An incredibly cynical and hypocritical move by Virgin. They do everything then can to make life difficult for other open access operators then decide that open access isn’t that bad after all. Then, despite screwing all the Trent Valley stations for the last 11 years, decide they are our friends after all despite the fact they could have easily run many more services to Nuneaton (That small town of nearly 100000 people), Tamworth (another small town of 60000) and Lichfield (a really small town of about 30000). I hope they are told to eff off! Not that I think they have any chance of pulling it off though, just sounds like sour grapes.
 

s'land

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Yes, then use the paths and stock for this Liverpool service. Possibly close down the North East bit if it isn't making money, keep it if it is (and they can compete with LNER too :) )
The Sunderland route makes money, or it certainly used to, but I don't know how the Bradford services are financially.
 

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So this would be a continuation of Virgin Rail Group (effectively) rather than the branded Stagecoach operation (plus a bit of SNCF input) that would have been WCP?
VTWC's announcement yesterday explicitly stated "The partnership will involve Virgin, Stagecoach, SNCF and Alstom."

https://www.virgintrains.co.uk/abou...d-and-customer-focussed-train-service-2884484
The access application is by Virgin Trains Ltd which was previously used for rail related commercial stuff but not as a ToC. As of last years accountants it was soley owned by Virgin Rail Group, which is 51% owned by Virgin Group and 49% Stagecoach. Virgin Rail Group is also the sole owner of Virgin Trains West Coast i.e. the ToC. Virgin Trains East Coast was not owned by it but instead directly by the two parent companies (10% Virgin Group and 90% Stagecoach). Alstom and SNCF may become shareholders in Virgin Trains Ltd but they may just be commercial partners of some sort.
 

jzw95

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Or at a future date, Virgin Group could sell some of its shareholding in Virgin Rail Group to SNCF and Alstom. They’ve done this with other companies they used to have a majority shareholding in (eg selling some of their 51% in Virgin Atlantic to Air France-KLM).
 

glynmonhughes

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Is this simply an attempt by Virgin to stay in the West Coast market by any means now? I feel like this is an 'attack' on London Northwestern Railway, who have seen huge success with the Trent Valley services, and their launch of direct London to Liverpool trains last month with advances of £12 one way. It is also a future attack on the future West Coast Partnership operator, using knowledge that they have learnt during their 20 years of operating the same franchise - it can be deduced that London to Liverpool may be one of the most money lucrative and profitable markets they currently operate on and acts as a cash cow to the franchise.

I don't know where they will fit the paths in and what stock they will use that is tilting, 125 mph. Could it be redundant Hull Trains 180s that will be overhauled (possibly with tilting functions if they're willing to pay for this and it works out to be cheaper than new) and maintained by Alstom? However raises the issue of diesel under the wires which I imagine would incur a heavier track access charge if I understand it correctly (please correct if I am wrong). Only existing stock I can think of that would work but even then needs some work.

My two cents on this, the impression I am reading is a mixture of things. They're clearly desperate to stay on the West Coast mainline. They're smart for using knowledge they have accumulated for 20 years to plan and achieve this. They're also smart in trying to appeal to irregular 'I am off to the other side of the country to see my nan this Bank Holiday' sort of customer who adores airline style travelling and is more likely a car driver. They're however coming across as heavily unrealistic with their expectations that they will be enforcing reservations on literally every train and could lose out on walk up customers particularly on quiet trains. Also unrealistic they haven't any stock at all to do this officially speaking.

This will be an interesting and clearly political development, potentially a very expensive one but I wait with an open mind to see what the outcome of this is.
Why would you necessarily lose walk-up customers? I have frequently used TGV services in France - though in recent years I've booked online - but prior to the online service it was possible to buy a ticket and check at a concourse ticketing machine whether a seat was available for the particular train you wished to use up to a few minutes before travelling. I don't know whether this service is still available in France but it is not that much different, surely, from self-check-in facilities available at airports where, if you have not checked in online, you are able to select a seat for the flight on which you are travelling. Just a thought . . .
 

glynmonhughes

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Did the Virgin Manchester to London flights ever take off?
Or was that just a rouse to threaten them not winning in 2012?

Can't help but draw similar comparisons here.
They did and they were not successful. That have now been withdrawn. Notably, BA services Manchester to Heathrow are a shadow of their former selves and really only serve as feeders to long-haul out of LHR. There was a time, of course, when BA and BMI ran almost an hourly service from MAN to LHR. (There's also no longer a service from MAN to Gatwick, but that's another story . . . )
 

Old Yard Dog

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In my experience, flights from MAN to LHR and LGW were always very unreliable punctuality wise, particularly later in the day. We have missed international connections in London twice flying from MAN. So the first thing I check for in any travel insurance policy is coverage against "Missed international departure". The airlines only cover you if you have a through ticket from Manchester to your final destination. Me and the missus have taken to National Express coaches in recent years due to the near impossibility of getting to LHR by rail without multiple changes and/or being ripped off for peak fares.
 

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I find its hardly worth flying to LHR from MAN due to check in slow, queues ,traffic on motorway to get there. Its easier to jump on train at Runcorn to London then.over to Paddington.
 
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mark-h

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Why would you necessarily lose walk-up customers? I have frequently used TGV services in France - though in recent years I've booked online - but prior to the online service it was possible to buy a ticket and check at a concourse ticketing machine whether a seat was available for the particular train you wished to use up to a few minutes before travelling.
Were these dynamically priced? I would be very reluctant to start a journey without knowing what the cost of my return trip would be.
 

Bletchleyite

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Were these dynamically priced? I would be very reluctant to start a journey without knowing what the cost of my return trip would be.
SNCF have just switched to dynamic pricing, but previous to that they had different sort-of-yield-managed fares with different change/refund conditions. There does however seem to be a "maximum fare" a bit like the Anytime that while it does require reservations allows unlimited changes or a refund. So you do know what the most it'll be is, it's not like Sleasyjet or Ryanair who can crank it up to ten grand if they feel like.
 

takno

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Were these dynamically priced? I would be very reluctant to start a journey without knowing what the cost of my return trip would be.
I suspect they were just reservation systems with a normally-priced ticket. In principle that takes away the issue of not having to pick your train in advance. In practice however you'd probably turn up 10 minutes before your train to discover that all the seats had been sold at dynamic prices and the first train you could actually get on was a next Tuesday, so see you then.
 

Bletchleyite

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I suspect they were just reservation systems with a normally-priced ticket. In principle that takes away the issue of not having to pick your train in advance. In practice however you'd probably turn up 10 minutes before your train to discover that all the seats had been sold at dynamic prices and the first train you could actually get on was a next Tuesday, so see you then.
The way you work with compulsory reservations is to book the latest train you are likely to need, then move earlier if this later becomes possible. That way you don't get stranded.
 

takno

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The way you work with compulsory reservations is to book the latest train you are likely to need, then move earlier if this later becomes possible. That way you don't get stranded.
That may be the way you work with compulsory reservations. I don't work with them at all thank you
 

Class 170101

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Regarding the Class 390s are they not up for grabs come the end of the end of the current franchise? If Virgin make a good offer to the owner of the trains then it wouldn't matter what the WCP bidders said if their offer for the Pendolinos wasn't enough?
 

Chester1

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Regarding the Class 390s are they not up for grabs come the end of the end of the current franchise? If Virgin make a good offer to the owner of the trains then it wouldn't matter what the WCP bidders said if their offer for the Pendolinos wasn't enough?
It is highly unlikely that an open access operator could afford to outbid whoever wins the franchise. By the time the application has been accepted or rejected the new opperator will have signed leases on all of them. For tilting stock its new build or nothing.
 

CosherB

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Regarding the Class 390s are they not up for grabs come the end of the end of the current franchise? If Virgin make a good offer to the owner of the trains then it wouldn't matter what the WCP bidders said if their offer for the Pendolinos wasn't enough?
Pendolinos have ‘protected’ status AFAIK for the first couple of years of the WCP franchise. Rumours are that the MTR consortium wants total fleet replacement.
 

coppercapped

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An incredibly cynical and hypocritical move by Virgin. They do everything then can to make life difficult for other open access operators then decide that open access isn’t that bad after all. Then, despite screwing all the Trent Valley stations for the last 11 years, decide they are our friends after all despite the fact they could have easily run many more services to Nuneaton (That small town of nearly 100000 people), Tamworth (another small town of 60000) and Lichfield (a really small town of about 30000). I hope they are told to eff off! Not that I think they have any chance of pulling it off though, just sounds like sour grapes.
As I posted earlier in this thread, the DfT in the franchise contracts require that the incumbent franchisee objects to any Open Access applications. The rationale is to protect the premium payments made by the franchisee to the DfT, or alternatively to stop the subsidy from increasing. Virgin had no alternative than to oppose the applications.

Equally the stopping patterns and number of seats offered by the franchisee are defined by the DfT in the franchise contract. TOCs have very little, if any, freedom to modify their offerings.

I find it remarkable that people still have not understood these basic truths although they have been posted many times in this and other forums and magazines.
 

ainsworth74

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RAIL (so the usual health warnings apply) have reported that Virgin intend to use 91s and shorter rakes of Mk4s to give higher acceleration but a top speed of 110mph on their new service.
 

Darandio

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RAIL (so the usual health warnings apply) have reported that Virgin intend to use 91s and shorter rakes of Mk4s to give higher acceleration but a top speed of 110mph on their new service.
Looks like Richard Clinnick has been reading the forum again.
 

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