Regulator refuses GW open access
The application was close to approval, however, so the idea is not completely dead yet.
GRAND Union's plan to operate new open access services between Cardiff and London using Class 91 locomotives and Mk.4 trainsets cascaded from the East Coast Main Line has been rejected by the Office for Rail and Road (ORR) on the grounds that it will cause an unacceptable revenue loss to the franchised operators.
The proposal had two distinct phases beginning in May 2021, with seven return trains and the development of a new parkway station at Severn Tunnel Junction. Phase two would see the acquisition of Class
802 bi-modes to extend the service to Swansea and Carmarthen.
The Welsh Government supported the proposal, as many Great Western Railway services run on a semi-fast basis serving Thames Valley stations and offer only an hourly frequency to Swansea. The application was also consistent with a South East
Wales Transport Commissioners
Report that recommended greater use of the South Wales Main Line to improve connectivity.
Network Rail turned down the track access application after finding only six of the seven paths, including platform capacity at terminals. In response, Grand Union agreed to scale back to the six return paths, but a potential decline in performance had also been identified by NR. This was assessed as causing a 0.46% drop in punctuality based on the T-10 measure (arrival within 10 minutes of booked time), but the ORR noted that applying the same methodology to GWR's 2019 timetable was expected to lead to a 2.5% drop in punctuality, and therefore the ORR decided this was not a reason to reject the application.
FINANCIAL TEST
The application met the published financial criteria to approve open access applications. This is that services must demonstrate that at least 30% of the expected revenue will come from new rail customers.
This is known as the NPA (not primarily abstractive) test, aimed at preventing the introduction of services that ‘cherry pick' existing revenue. The Grand Union proposal passed the NPA test with an estimate that 45% of its revenue would be new business.
However, the scale of the proposed timetable and capacity of the trains were judged to lead to an annual abstraction of income from the franchised operators of £34.2 million.
The ORR has previously indicated that an application meeting the NPA test might still be rejected if the impact on funds available to the Government was considered excessive. It also factored in the reduced income likely to be faced as a result of Covid-19 travel restrictions and a lengthy period of recovery.
In consequence, the much-reduced ability of the Great Western Railway to make franchise premium payments was judged to outweigh the acknowledged benefits of the application.
This should not be the end of the project. Successful open access applications have started on a much smaller scale and demonstrated that their presence increases the size of market, so there is much less financial impact on franchised operations as overall network revenue growth takes place.
The ORR should now work with Grand Union to agree an initial level of service that satisfies its wideranging statutory duties that include promoting the customer benefit from competition.