Franchise extension to preface West Coast Partnership
VIRGIN Trains has received an extension to its existing franchise on the West Coast.
The franchise is now set to end on March 31 2019, but could last as long as two years. The existing deal had been due to end on March 31 this year.
Secretary of State for Transport Chris Grayling made the announcement in the Commons on February 5, during the speech where he confirmed Virgin Trains East Coast had only a few months left to run (see pages 6-7).
Grayling said the new deal was needed to assist in the design of the West Coast Partnership, which includes operating HS2 for its first four years. That is due to start on April 1 next year.
He said: “Let me be clear, the East Coast and West Coast franchises should not be confused. As with the East Coast, the operator is meeting all its financial obligations, but the West Coast franchise has a completely different corporate structure, where Virgin Trains is the majority shareholder.” The deal is split 51% owned by Virgin Group and 49% Stagecoach.
Grayling said that when the West Coast Partnership is ready, the Direct Award will end.
He defended the decision, saying: “My decision is also in keeping with the three key principles I set out earlier in protecting passengers, ensuring value for money, and supporting investment. I look forward to the release of the Invitation to Tender for the West Coast Partnership in due course, and I am confident we will see strong competition for this exciting new franchise, which will help transform rail travel in this country through the delivery of the first HS2 services.”
He added: “My expectation is that it will last no more than two years - possibly only one year. It is important to get the West Coast Partnership structure in place to go through the bidding process, and we will shortly be issuing the Invitation to Tender.”
VT announced improved WiFi for its 56 Class 390 Pendolinos in its Direct Award, as part of a £7.5 million investment. This work starts in May and will be completed by January next year.
VT Managing Director Phil Whittingham said: “Virgin Trains has led the industry for more than two decades, and I’m delighted that we have secured a new contract to continue operating on the West Coast.”
The company will also look to address the areas where there is little or no mobile phone coverage. It will also look to upgrade ticket machines for contactless payment, introduce more station seating, provide additional staff at stations during busy times to improve accessibility, improve customer information during disruption, and recruit more apprentices.
VT said that it has paid £476m in premium payments in the past three financial years to Government.
Shadow Transport Secretary Andy McDonald said: “Members on both sides of the House can be in no doubt: the bail-out culture at the Department for Transport is alive and well - it has never been better.
“Virgin-Stagecoach failed to deliver on its contract on the East Coast route. No problem - the Government will step in and bail it out, kissing goodbye to the £2 billion that Virgin had previously agreed to pay. But, guess what? Let us just give both companies a new contract to run the West Coast line as well.
“Listening to the Secretary of State’s statement, I did not know whether to laugh or cry. His argument that a Direct Award to Virgin-Stagecoach for the West Coast and East Coast represents a good deal is truly laughable.”
Government will issue the Invitation to Tender (ITT) for the West Coast Partnership deal “very shortly”, Grayling told the House of Commons on February 5.
Discussing the Direct Award for Virgin West Coast, he said: “It will run for between one and two years. It will finish as soon as possible. I want this up and running. We are going to issue the ITT for the West Coast Partnership very shortly.”