“High stan­dard”

Vir­gin Trains East Coast MD DAVID HORNE tells PAUL STEPHEN how the fran­chise is work­ing hard to de­liver on its cus­tomer ser­vice and in­vest­ment com­mit­ments, amid claims of de­clin­ing stan­dards

Rail (UK) - - Contents -

Vir­gin Trains East Coast MD DAVID HORNE re­veals the com­pany’s plans to de­liver on cus­tomer ser­vice com­mit­ments.

When Vir­gin Trains East Coast emerged as the win­ning bid­der for the eight-year In­ter­city East Coast fran­chise in Novem­ber 2014, it was with a bid built on growth.

Com­menc­ing in March 2015, the new op­er­a­tor promised growth in the num­ber of ser­vices it would pro­vide, growth in the value of pre­mium pay­ments it would make to Govern­ment, and (crit­i­cally) growth in the num­ber of fore­casted pas­sen­gers it would carry.

On an An­glo-Scot­tish route where more than 90% of travel is dis­cre­tionary (and not made up of com­muter flows), VTEC had based its sums on tempt­ing pas­sen­gers away from the buoy­ant mar­ket for air travel be­tween Lon­don and Ed­in­burgh. It was also look­ing to cap­ture a strong but la­tent de­mand for its ser­vices else­where on the East Coast Main Line, a de­mand that was widely as­sumed to have been kept away by a lack of ca­pac­ity.

The an­swer there­fore ap­peared quite sim­ple to VTEC. It promised to op­er­ate an ex­panded timetable by run­ning ex­tra ser­vices to des­ti­na­tions in Eng­land and Scot­land (in­clud­ing Ed­in­burgh and Sun­der­land), as well as ad­di­tional ser­vices to new des­ti­na­tions such as Hud­der­s­field and Mid­dles­brough.

It also pledged £140 mil­lion to re­fresh the tired in­te­ri­ors and im­prove the re­li­a­bil­ity of its in­her­ited fleet of Class 91/Mk 4s and High Speed Trains, while also de­liv­er­ing a range of sta­tion en­hance­ments. A host of new tech­nol­ogy was also lined up to im­prove the cus­tomer ex­pe­ri­ence, in­clud­ing a new web­site, smart apps, uni­ver­sal pro­vi­sion of WiFi and on-board me­dia stream­ing. How­ever, the pièce de ré­sis­tance was a fleet of 65 new Azu­mas or­dered from Hi­tachi. It has now been con­firmed that these trains will en­ter ser­vice from De­cem­ber 2018 ( RAIL 837), of­fer­ing more seats and help­ing to bring down jour­ney times through its su­pe­rior tech­ni­cal per­for­mance (such as Lon­don-Ed­in­burgh in less than four hours). These prom­ises will have a com­bined ef­fect of pro­vid­ing im­proved fa­cil­i­ties, faster jour­neys and a 50% in­crease in ca­pac­ity (equiv­a­lent to 12,200 ex­tra seats) by 2020. Based on VTEC’s pro­jec­tions for rev­enue growth, this has en­abled the

op­er­a­tor to com­mit to de­liv­er­ing £ 2.3 bil­lion in pre­mium pay­ments be­tween 2015-23.

All well and good, but VTEC was also go­ing to be heav­ily reliant on Net­work Rail and its in­fra­struc­ture to ful­fil these am­bi­tions. This ul­ti­mately led to the op­er­a­tor’s ma­jor­ity stake­holder Stage­coach de­cid­ing to re­turn to the ne­go­ti­at­ing ta­ble with the De­part­ment for Trans­port ear­lier this year, in or­der to dis­cuss the on­go­ing com­mer­cial terms of its fran­chise.

The an­nounce­ment was made on June 28, in the com­pany’s full-year fi­nan­cial re­sults for the year end­ing April 29. These re­vealed that VTEC’s profit and rev­enue was lower than an­tic­i­pated, while warn­ing that the “cur­rent con­trac­tual ar­range­ments give rise to an oner­ous con­tract”.

Of­fi­cially the blame was laid with “macroe­co­nomic and ex­ter­nal fac­tors be­yond our con­trol”, but namely it was un­cer­tainty over the de­liv­ery of planned en­hance­ments (such as grade sep­a­ra­tion at Wer­ring­ton and the ad­di­tion of a fourth track near Peter­bor­ough) as well as the creak­ing con­di­tion of in­fra­struc­ture on the East Coast Main Line. This in­cludes the route’s over­head line equip­ment, which is near­ing the end of its de­sign life and which has his­tor­i­cally been sus­cep­ti­ble to dam­age caused by high winds, owing to the method of con­struc­tion cho­sen in the 1980s.

As well as pre­vent­ing VTEC from mak­ing full use of its track ac­cess rights in the sec­ond half of its fran­chise ( by not pro­vid­ing the in­creased ca­pac­ity that is needed for planned ex­tra ser­vices), the fail­ure of OLE and other age­ing Net­work Rail as­sets is prov­ing to be a con­tin­ual thorn in the side of VTEC’s tar­get Pub­lic Per­for­mance Mea­sure of 90%.

Ne­go­ti­a­tions are on­go­ing, but mean­while Stage­coach says that VTEC is con­tin­u­ing to meet con­trac­tual pay­ments to Govern­ment that are es­ti­mated to be 30% more than those made by pre­vi­ous fran­chisee Di­rectly Op­er­ated Rail­ways (DOR).

In 2009, DOR had stepped in to run ser­vices on the ECML on an in­terim ba­sis, af­ter Na­tional Ex­press East Coast had handed the keys back to DfT due to the fi­nan­cial pres­sure of fall­ing rev­enue as the UK econ­omy en­tered into re­ces­sion. NXEC had it­self sought talks with the DfT for fi­nan­cial as­sis­tance which was ul­ti­mately un­forth­com­ing.

Draw­ing on the past ex­pe­ri­ence of NXEC has in­evitably led to spec­u­la­tion in some quar­ters that VTEC could choose to do the same thing, should it be un­able to rene­go­ti­ate its fran­chise terms with the DfT.

This in­cludes RAIL colum­nist Philip Haigh who wrote in RAIL 835 that “qual­ity is crum­bling” on VTEC ser­vices be­fore con­clud­ing that “I sin­cerely hope it doesn’t fol­low the de­press­ing path that Na­tional Ex­press East Coast took a decade ago, when it found its fi­nan­cial bur­den grow­ing”.

Specif­i­cally, Haigh pointed to his ex­pe­ri­ences on Au­gust 31 when catch­ing the 1830 from King’s Cross, which was de­layed due to what he de­scribed as the op­er­a­tor’s short­age of stock.

He also re­ferred to a grow­ing num­ber

We’ve al­ready in­vested a pretty sig­nif­i­cant fig­ure, and that’s in ad­di­tion to pay­ing 30% more back to DfT per month than the pre­vi­ous fran­chise. David Horne, Man­ag­ing Di­rec­tor, Vir­gin Trains East Coast

We have track ac­cess rights for ad­di­tional ser­vices, we are get­ting the trains, and now we just need to get on and make it all hap­pen. David Horne, Man­ag­ing Di­rec­tor, Vir­gin Trains East Coast

of Tweets com­plain­ing about on-board ser­vice (in­clud­ing a lack of staff and hot food), while also high­light­ing sev­eral de­fi­cien­cies in VTEC’s newly re­vamped web­site, in­clud­ing re­ported dif­fi­cul­ties in mod­i­fy­ing ex­ist­ing book­ings and cy­clists find­ing that they are un­able to book their bikes onto trains.

RAIL put these re­ported is­sues to VTEC Man­ag­ing Di­rec­tor David Horne, and the wider sug­ges­tion that the op­er­a­tor’s lack of prof­itabil­ity was lead­ing to stan­dards be­gin­ning to slip.

“We are a Vir­gin com­pany and peo­ple ex­pect a high stan­dard of ser­vice,” he replies.

“It [slip­ping stan­dards] would be ab­so­lutely the wrong thing to do in terms of this busi­ness, when you have so much rev­enue that is dis­cre­tionary. Peo­ple gen­er­ally aren’t trav­el­ling for work, they are trav­el­ling on busi­ness or for leisure and they have the choice of fly­ing or jump­ing in their car. That is why we can’t let stan­dards slip, and which is why we’re so in­cred­i­bly fo­cused on our im­prove­ment plans.”

Horne con­firms to RAIL that £ 74m has so far been in­vested of the £140m com­mit­ted at the start of the fran­chise for im­prove­ments, de­spite VTEC only be­ing just over a quar­ter of the way through its eight-year term.

He also says that the op­er­a­tor is on track in the de­liv­ery of sev­eral other im­prove­ment pledges: “We’ve al­ready in­vested a pretty sig­nif­i­cant fig­ure, and that’s in ad­di­tion to pay­ing 30% more back to DfT per month than the pre­vi­ous fran­chise, so it’s fair to say that it’s been a busy two and a half years in in­vest­ment terms. The strat­egy was al­ways to do it in two key phases - the first three years when you have the ex­ist­ing trains and sta­tions, and then the sec­ond phase comes with the new [Azuma] trains.

“We’ve done sev­eral things ahead of plan, and in­tro­duced some new ser­vices ahead and above of those en­vis­aged by the fran­chise. For ex­am­ple, in De­cem­ber we’re launch­ing an 0440 week­day ser­vice from York to Lon­don by ex­tend­ing a ser­vice which orig­i­nally started in Newark. The re­turn work­ing is the 2257 from King’s Cross, which again wasn’t en­vis­aged at all.

“From De­cem­ber, we’re go­ing to put an­other 24 trains in the timetable on Satur­days when the fran­chise plan was to do it in May 2020, so you’ll have a six-day-a-week stan­dard timetable. We’ve been through a process of look­ing at where we can en­hance ser­vices and, so far, it has paid off.”

De­spite Stage­coach’s profit warn­ings for the fran­chise, Horne re­ports that VTEC’s mar­ket share of travel be­tween Ed­in­burgh and Lon­don (at the ex­pense of the air­lines) has in­creased since 2015 from 30% to 44%.

He also re­ports that pas­sen­ger num­bers rose by 8% be­tween Lon­don-Ed­in­burgh in the last fi­nan­cial year, and 3% across the en­tire fran­chise, vin­di­cat­ing VTEC’s as­sump­tion that pro­vid­ing ex­tra ca­pac­ity would lead to growth.

In terms of cus­tomer sat­is­fac­tion, he says that VTEC’s own cus­tomer sur­vey score is now three times higher than in 2015, while the lat­est Na­tional Rail Pas­sen­ger Sur­vey compiled by Trans­port Fo­cus gave VTEC an over­all sat­is­fac­tion score of 91% in spring 2017, plac­ing it two per­cent­age points above the av­er­age score for long-dis­tance op­er­a­tors.

The con­ver­sa­tion turns to Philip Haigh’s spe­cific al­le­ga­tions, with on-board food and trol­ley ser­vices the first to be scru­ti­nised. Horne replies that a new on-board struc­ture was in­tro­duced in March which has taken time to bed in, but says it will ul­ti­mately pro­vide a higher qual­ity of cus­tomer ser­vice.

“87% of our cus­tomers are in Stan­dard Class, so we wanted to en­sure that we had a struc­ture on board which pro­vided that fo­cus and en­abled us to run a Stan­dard Class trol­ley on all of our ser­vices.

“Over the sum­mer weeks we’ve had some teething chal­lenges get­ting it up and run­ning, and we’ve been go­ing through a process of re-train­ing our train man­agers to give them new cus­tomer ser­vice skills. The pre­vi­ous role was very op­er­a­tionally fo­cused, and we’ve cre­ated a role where that is re­tained but they are also re­spon­si­ble for look­ing af­ter the cus­tomer ser­vice on the train.

“We’ve had some crew short­ages over the sum­mer that has had an im­pact on some of the ser­vice de­liv­ery which Philip Haigh has picked up on, but it’s not de­lib­er­ate cost­cut­ting. It’s just a tran­si­tion from the pre­vi­ous struc­ture which has been in place for a num­ber of years.

“In the past six weeks, we’ve taken on 40 new on-board hosts to fill the gaps we had in the ros­ter, and we’re hop­ing that over the key au­tumn/win­ter months we will now get to where we are look­ing to get to with a trol­ley al­ways in Stan­dard Class, the buf­fet al­ways open and at-seat ser­vice in First Class.”

In terms of VTEC’s web­site, Horne ex­plains that its re­vamp was guided by feed­back gath­ered from pas­sen­gers, and that it is still in de­vel­op­ment. This should mean the restora­tion of all its pre­vi­ous func­tion­al­ity.

“There’s been a lot of com­ment on Twit­ter about the web­site, but we try and be re­ally ob­jec­tive about how we look at it. We send emails to 2,000 cus­tomers a day ask­ing for their thoughts, and 80% of them have come back and said to us that the new web­site is bet­ter than the old one.

“Yes, it’s fair to say that at present we have re­moved the func­tion­al­ity that Philip Haigh refers to, but we’ve tried to build a web­site that ap­peals to the ma­jor­ity. And from the feed­back we’ve re­ceived, we’re con­fi­dent that we’ve done it suc­cess­fully.

“We’ve made it eas­ier to nav­i­gate the site in the way that peo­ple are ac­cus­tomed to with other main­stream web­sites, and made it eas­ier to find fares and buy sea­son tick­ets, which the old site couldn’t do.

“The new web­site has also en­abled us to launch M-tick­ets and the Seat­frog app [which en­ables pas­sen­gers to bid for an up­grade from Stan­dard Class to First Class], which we would not be able to of­fer with­out launch­ing a new web­site.”

Horne adds: “We’re cur­rently go­ing through the de­vel­op­ment cy­cle, and restor­ing the pre­vi­ous func­tion­al­ity is on the de­vel­op­ment roadmap for the new web­site. There are only seven TOCs that of­fer on­line cy­cle book­ing, so it is not a uni­ver­sal fea­ture, and in the mean­time, we’re telling peo­ple where they can go to book. There has been no dip in us­age fig­ures so we’re re­ally pleased with how users have re­sponded so far.”

As for the ap­par­ent stock short­ages on Au­gust 31, Horne says it was a sim­ple mat­ter of in­fra­struc­ture fail­ures.

He adds: “The fact is we have more rolling stock than we started with. We have leased spare HST sets from East Mid­lands Trains to re­source some ad­di­tional ser­vices, and two Class 90s to pro­vide re­silience and en­able us to take a Class 91 out of ser­vice to do re­li­a­bil­ity mod­i­fi­ca­tions.

“The Class 90s have worked 796 ser­vices this year [as of Septem­ber 29], so it’s wrong to say we have in­suf­fi­cient stock as they have pre­vented can­cel­la­tions that would oth­er­wise have re­sulted.

“As for Au­gust 31, we had all the trains in ser­vice that were due in ser­vice, and we weren’t run­ning short of trains that day. What hap­pened was a bro­ken rail at Ret­ford, a bro­ken-down freight train and two level cross­ing fail­ures which in­evitably meant that stock was out of po­si­tion.”

Fi­nally, RAIL turns back to the sub­ject of the con­tin­u­ing rene­go­ti­a­tions with DfT. With VTEC de­liv­er­ing on its fran­chise com­mit­ments so far, and in some cases ex­ceed­ing them, Horne praises NR for work it has com­pleted at the south­ern end of the ECML to en­able the in­tro­duc­tion dur­ing 2018 of Thames­link and Azuma ser­vices.

Agree­ment will now need to be reached on the re­main­ing in­fra­struc­ture works, if VTEC is to ful­fil the po­ten­tial these new trains and in­deed the fran­chise have to of­fer.

“We are go­ing to have to go back to the draw­ing board in some de­gree, to look at what timetable we can now run, be­cause we’re go­ing to have the trains but not the in­fra­struc­ture. NR has done the core works to en­able us to launch Azu­mas on all of our ex­ist­ing ser­vices, but we now have a de­lay be­fore we can launch some of the ad­di­tional ser­vices that in the fran­chise plan were to start in May 2019.

“The power sup­ply at the north­ern end of the route is still work in progress, and we need to see the dive-un­der at Wer­ring­ton and an ad­di­tional track be­tween Hunt­ing­don and Wood­wal­ton, which is planned for de­liv­ery at the end of 2020. We need that be­fore we can run the ex­tra ser­vices that we have track ac­cess right for, so clearly we are look­ing for NR to press on with that so we can make full use of the trains we’re get­ting.

“It’s fair to say that PPM is be­low tar­get, and that’s driven by some NR-at­trib­ut­able de­lays be­ing worse than fore­cast, such as the dewire­ments which we are get­ting roughly once ev­ery eight weeks.

“We have track ac­cess rights for ad­di­tional ser­vices, we are get­ting the trains, and now we just need to get on and make it all hap­pen.”


Forty new on-board hosts have been re­cruited by VTEC this sum­mer to ad­dress staff short­ages.

Philip Haigh voiced his con­cerns over VTEC’s cus­tomer ser­vice in RAIL 835.


Vir­gin Trains East Coast Man­ag­ing Di­rec­tor David Horne stands along­side 800101 at York on April 23 fol­low­ing the op­er­a­tor’s ‘Four Trains’ event when four gen­er­a­tions of trac­tion ap­peared side by side dur­ing a pos­ses­sion on the East Coast Main Line. So...


Vir­gin Trains East Coast 91131 stands at Newark North­gate with a King’s Cross-New­cas­tle ser­vice on Oc­to­ber 24. New Class 800 Azu­mas will take over these du­ties once they be­gin en­ter­ing traf­fic from De­cem­ber 2018.

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