Why has National Express Group lost so many franchises?

Discussion in 'UK Railway Discussion' started by thenorthern, 20 Aug 2015.

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  1. thenorthern

    thenorthern Established Member

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    This may seem a strange question by why has National Express Group lost so many franchises since privatisation compared to all the other companies. I know they basically surrendered the National Express East Coast franchise early but some others have included:

    Wales & Borders
    West Anglia Great Northern
    ScotRail
    Wessex Trains
    Midland Mainline
    Silverlink
    Gatwick Express
    Central Trains
    National Express East Anglia

    None of these were surrendered they just didn't get them renewed when they came up for re-franchising. I know with Central Trains they were criticised for delays although much of that stemmed from the type of lines they were running rather than being a bad operator. Currently of course they only operate C2C.
     
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  3. MCR247

    MCR247 Established Member

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    I don't think its necessarily that they have lost more franchises than others, more that they just haven't gained any?
     
  4. Bletchleyite

    Bletchleyite Veteran Member

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    Most probably simply because their bids were not cheap enough (give or take other factors), that's all.
     
  5. Clip

    Clip On Moderation

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    Looking at the list haven't most of those now been folded into other franchises?
     
  6. MCR247

    MCR247 Established Member

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    And its not particularly unusual for franchises to change hands at the end is it? (Ignoring post-WCML!)
     
  7. dorsetman

    dorsetman Member

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    They ran Wessex Trains very well and maintained a loyal work force.
     
  8. dgl

    dgl Member

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    Wasn't it due to the surrender of the east coast franchise and the fact that meant they would not be allowed to keep most of their franchises as a penalty, hence AGA being introduced temporarily on the GA franchise.



    And as for Wessex/wales and west they got absorbed into other franchises.
     
  9. swt_passenger

    swt_passenger Veteran Member

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    No, because the supposed penalty was found to be unenforceable.
     
  10. thenorthern

    thenorthern Established Member

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    The Wessex yes but the Wales and Borders was awarded to Arriva in 2003.
     
  11. 455driver

    455driver Veteran Member

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    Because they p+ssed off the DaFT!

    Just like First did when they bought outright 5 (I think) HST rakes and haven't won anything since, this DOO 'thing' is so they can get back into DaFTs good books and start 'winning' some more franchises!
     
  12. dk1

    dk1 Established Member

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    I still sing "Goodbye National Express" to the Divine Comedy track as was so pleased at the announcement they where losing their East Anglia franchise. Didn't enjoy working for them one bit. Unfortunately they might come back :|
     
  13. cjmillsnun

    cjmillsnun Established Member

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    To be fair they did win West Coast, but DafT didn't get their sums right so Beardy had a valid challenge.
     
  14. 3141

    3141 Established Member

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    I think National Express were unlucky that several of their franchises got reorganised and combined with something else, but they failed to win any of the reorganised franchises as I'm sure they hoped to, probably for the reason given by Neil Williams above.
    --- old post above --- --- new post below ---
    An amusing conspiracy theory, but disproved as pointed out earlier by the fact that they did win West Coast.
     
  15. HH

    HH Established Member

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    They did retain C2C and I think you'll find their price was very keen on that. It should also be noted that it is now being run by many ex-First people...
     
  16. 455driver

    455driver Veteran Member

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    Probably the lesser of the 2 evils, First or Virgin?
    What a choice!

    TBH the DaFT can chose who they want to run a franchise simply by deciding (after the bids are in) what they are going to base the franchise on, ie new trains, more services, bigger 'return' etc so they can chose whoever they like just by putting the goalposts in the right place, unfortunately they got the positioning of the goalposts wrong on the WCML.
     
  17. Robertj21a

    Robertj21a Established Member

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    While understanding that neither First or Virgin were everybody's favourite [I would have preferred Stagecoach anyway.......], I'm not sure that First could have achieved the returns that they were committing to in their franchise documentation.
     
  18. Envoy

    Envoy Established Member

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    I think that when they ran Wales & Borders that they were not in favour of running Cardiff to Holyhead services. This can't have helped their case with Welsh politicians who see the direct trains as a way of trying to unite Wales.
     
  19. thenorthern

    thenorthern Established Member

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    Prior to Wales and Borders taking over in 2003 I know First North Western ran the Llandudno to Manchester trains but who ran the Holyhead to Birmingham and Cardiff trains?
     
  20. aformeruser

    aformeruser Veteran Member

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    North Wales to Birmingham was also First North Western. There were no Holyhead to Cardiff services, although did used to be Liverpool to Cardiff services.

    I think at one point Virgin services to/from Holyhead had FNW conductors meaning everything along the North Wales Coast had a FNW conductor.
     
  21. HH

    HH Established Member

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    I'm bloody positive that they couldn't. They couldn't even carry all the passengers they were claiming by the end of the franchise.

    I'm convinced it was a cock-up, although they'll never admit it.
     
  22. craigybagel

    craigybagel Established Member

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    In national express days there was a very limited (once or twice daily) through service between Holyhead and Cardiff, sometimes via Llandudno. They used their own crews for this, not FNW's.

    Virgin certainly used FNW drivers, until Voyagers cane in and they started taxiing in their own from Liverpool and Manchester instead, but I'm not sure about the conductors.
     
  23. Robertj21a

    Robertj21a Established Member

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    The escalating figures, when heading towards the end of the franchise, looked ridiculously high. How on earth the senior management at First Group could have possibly thought they looked achievable is rather worrying - but then they wouldn't be the future senior managers who had to pick up the pieces !
     
  24. Clarence Yard

    Clarence Yard Member

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    The numbers were quite easy to achieve. Bidders had to enclose train by train loading figures in their bid so it was simple to see where the revenue figure was coming from.

    The base loading figures for the franchise were surprisingly low so growing the revenue to those numbers wouldn't have been that hard. Virgin made a big public play of the First Group figures but they didn't know the thought behind them.

    Virgin can't afford to be so conservative in their bidding again. The next time the process might not be so open to challenge.
     
  25. najaB

    najaB Veteran Member

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    Quite the difference in views!
     
  26. 3141

    3141 Established Member

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    Even if that was possible to some extent until the West Coast franchise bidding in 2012, it would be very difficult since then, because the DfT wouldn't want to risk any sort of repetition of what then happened.

    But even before then, as details of the winning bids are published, any other company that had bid in accordance with the Invitation to Tender and then saw the franchise awarded to someone who hadn't probably wouldn't take it lying down.

    However, I admit I don't have your inside knowledge of DfT procedures, so anything must be possible.
     
  27. Clarence Yard

    Clarence Yard Member

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    When you run franchises and then have to bid for them, you do get stuck in a rut of thinking the existing ways just need tinkering with. Then somebody else comes along with different ways of filling the trains, new products, better yields and then looks at your cost base with a fresh, unfettered, eye.

    Suddenly you are in a losing position as your business model doesn't look so good. If you don't do something about it fast, you will lose the next one, the one after that and you end up with just one franchise, if you are lucky.
     
  28. Robertj21a

    Robertj21a Established Member

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    Yes, quite understandable. I don't have the figures readily available but weren't the sums to be paid by First Group quite incredibly high in the last few years of the franchise? I recall looking at them for the first time and thinking that someone couldn't have calculated correctly.
     
  29. HH

    HH Established Member

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    As I worked for a bidder I had access to quite a bit more information than was available to the public and I analysed the FirstGroup figures in depth. When I say that they couldn't have carried the number of passengers needed for that revenue I do so on the following basis:

    1. Their bid did not achieve the 10% CAGR revenue growth through increased yield, it was largely through increased patronage, around 7.5% CAGR IIRC.

    2. They admitted that the numbers required them to achieve an average occupancy of 75% by the end of the franchise (and they kept growing in the possible two year extension as well). Their argument was that TPE had 65% and well 75% isn't that much bigger. However ICWC is a completely different railway to TPE, e.g. the most crowded day is Sunday for a starter.

    3. I'd seen our crowding analysis and knew that you needed more seats as soon as you reached about 5% CAGR. Virgin bid just over this and put in a little extra seating capacity. The difference between 5% CAGR and 7.5% over 15 years is huge (roughly speaking 5% would double occupancy and 7.5% treble).

    4. The small number of additional units in their bid was insufficient to carry this extra patronage.

    There's one other reason why 10% CAGR was an overbid. There is zero chance of having no economic downturn over 15 years (17 years if you factor in the extension). As soon as you have just one bad year the rest of your bid is bad.

    Of course First have form here - they overbid for FGW. Luckily for them Dean Finch did a smart deal which allowed them to cut and run. Dean is now at National Express...
     
  30. Clarence Yard

    Clarence Yard Member

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    HH, I think we are going to have to agree to disagree on the FG bid for ICWC. I recognise some of your figures but not others and as the franchise is now effectively "in play" I'm not at liberty to give away something of the previous FG bid strategy which may well be reused in the future!

    I think it is fair to say that FG and Virgin had completely different approaches to filling the trains and it showed in the respective bids. It was quite easy to carry the number of passengers that FG predicted with the capacity they were providing and their crowding model, which I was very well acquainted with, clearly showed that.

    After the event one bidder thought the other was over optimistic and the other thought they had been 'done over '. The rematch, if it happens, will be fun.
     
  31. HH

    HH Established Member

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    I'm not sure what figures you don't recognise. The loading figures came from answers given by Tim O'Toole and Vernon Barker when questioned by MPs.

    Three bidders thought one had put in a bid that was impossible to deliver (a bit more than over optimistic).

    Anyway, if DfT had asked for the proper level of guarantee, First would never have been able to find the money.
     
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