Virgin Trains to lose contract after Stagecoach banned from rail bidding

DfT said there would be ‘replacement of the entire regional train fleet’ with ‘faster more modern and comfortable’ refurbished trains

Transport secretary Chris Grayling hailed Abellio's ability to improve the experience for passengers over the next eight years and said the firm would deliver state-of-the-art new trains, upgraded ticketing systems and improvements to stations.

The DfT banned Stagecoach from the East Midlands, South Eastern and West Coast Partnership franchise competitions "principally in respect of pensions risk", the company said.

Abellio also operates the London North Western franchise with trains from London to Birmingham, Coventry, Stoke and Liverpool, the West Midlands Railway franchise, Merseyrail around Liverpool, and the Scotrail franchise.

As part of the takeover, we're being promised new trains, smart ticketing, faster journeys and more frequent services for passengers.

Martin Griffiths, Stagecoach Group chief executive, said he was shocked at the DfT rejection of its bid, adding he was requesting a meeting with the DfT.

'We look forward to working closely with Abellio East Midlands to ensure they deliver the high-quality services that passengers expect and deserve from the railway and the East Midlands Railway franchise.

The successful bidder for the new East Midlands Railway franchise has been named, with a £600m investment set to be made in new trains and infrastructure.

In a blog on Virgin's corporate website, Sir Richard said Virgin Trains "could be gone from the United Kingdom in November".

However, RBC said that accepting the pension liability meant the firm would have risked "not fully known" payments that could have eliminated any positive cash inflows from the franchises, and that through disqualification it was now "away from unknown contingent liabilities".

The winning bidder will be responsible for services on both the West Coast Main Line from March 2020, and designing and running the initial HS2 high-speed services from 2026.

It added that the Pensions Regulator was seeking additional funding because of "serious doubts" over the government's ongoing support for the industry-wide scheme.

The Virgin Trains owner added how the company had "significant concerns over the latest developments and their implications for the future of the United Kingdom rail market" and that options would need to be considered before any further decisions were made.

'The franchise is due to start on 18 August 2019 and will run for 8 years, until 21 August 2027, with an extension of 2 years callable at my discretion.

Virgin has operated West Coast services since 1997 and has a 90 per cent customer satisfaction rating, the highest for all long-distance franchises.

"This is more evidence that the current franchising model is not fit for goal, a view which has already been expressed by Keith Williams, who is leading the independent review of the rail system".

The rail and bus company has been verbally informed by the DfT that irregularity in filling a gap in the pension plans for United Kingdom railway employees has been behind the move to ban them from 3 now ongoing franchise bids, including Virgin's InterCity West Coast franchise. Virgin Trains has led in the industry for more than 20 years and we wanted this to continue for many more years.

In a trading update on 3 April, the company reported a 3.4% increase in like-for-like revenue for the United Kingdom regional bus operation while the London bus business grew 1.3%.

"The new East Midlands Railway franchise will also introduce enhanced delay repay compensation, with passengers able to claim compensation if their train is more than 15 minutes late".

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