Virgin’s fare fight with FirstGroup

FIRSTGROUP is on a collision course with Virgin Trains after being given the green light to run a rival rail service between London and Edinburgh.

Virgin is considering a possible legal challenge after the rail regulator approved FirstGroup’s application to operate five trains a day each way with average fares of less than £25, free Wi-Fi and on-board catering. The 10-year open access rights deal will run from 2021.

Plans by Virgin – a consortium of Sir Richard Branson’s company and Stagecoach – to run new services on the line were also approved by the Office of Rail and Road.

Virgin expects to pay £3.3billion in premiums up to 2023. It is likely to generate annual revenue of about £1billion by 2021, but competition from FirstGroup could make a £24million dent.

The ORR said the new services will benefit passengers travelling to Middlesbrough, York, Newcastle, Lincoln, Leeds, Bradford, Harrogate and Stevenage.

FirstGroup’s chief executive Tim O’Toole, pictured inset left, said: “We will offer genuinely low fares at half the average price, while adding significant benefits to the UK economy.

“Our new trains will be cheaper than other rail services, greener than the plane, quicker than the coach and will get passengers from London to Edinburgh earlier, all for an average fare of less than £25.”

Stagecoach boss Martin Griffiths, inset right, said it was cutting journey times, expanding its timetable and improving on-board services.

But he added: “We do not believe the granting of these services within the franchised system and without a level playing field is in the best interests of passengers, taxpayers or communities. We will assess the ORR decision and implications in detail and review our options.”

A Virgin spokesman said: “We have concerns over the granting of the open access services, which the ORR acknowledges will have a significant impact on the money received by taxpayers.”