Branson leads attacks on ‘mad’ bid as First wins West Coast line

Virgin Rail has lost its West Coast main line franchise to rival transport company FirstGroup following a Government bidding process dubbed “insane” by boss Sir Richard Branson.

Virgin has run the London-to-Scotland West Coast route, using high-speed tilting Pendolino trains, since 1997, more than doubling annual passenger numbers.

But the Government has awarded a new 13-year franchise for West Coast to FirstGroup which has other franchises.

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Shares in the company closed six per cent down, or 15.8p lower at 243.2p.

FirstGroup should pay £5.5bn to the Government in premiums during the franchise period, with Rail Minister Theresa Villiers saying the new deal would deliver “big improvements for passengers with more seats and plans for more services”.

FirstGroup chief executive Tim O’Toole said his company would make “significant improvements, including shortening journey times and introducing new direct services”.

But Labour, transport unions and Sir Richard fear FirstGroup will be unable to meet its performance promises and financial commitments and that the new franchise could see service cuts, job losses and big fare rises.

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Sir Richard said Virgin, believed to have bid about £4.8bn, could not have offered more without cutting customer quality and raising fares “considerably”.

In a strongly-worded statement, Sir Richard said yesterday he was “extremely disappointed” with the decision made by the Department for Transport (DfT). He added: “Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise.”

Sir Richard said bankruptcy had hit former operators GNER and National Express who had “overbid” for the East Coast main line franchise and added: “Sadly, the Government has chosen to take that risk with FirstGroup and we only hope they will continue to drive dramatic improvements on this line for years to come without letting everybody down.”

Sir Richard said it was the fourth time Virgin had been outbid in a franchise tender process.

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“On the past three occasions, the winning operator has come nowhere close to delivering their promised plans and revenue, and has let the public and country down dramatically.

“GNER and National Express over-promised in order to win the franchise and spectacularly ran into financial difficulties in trying to deliver their plans. The East Coast is still in Government ownership and its service is outdated and underinvested, costing passengers and the country dearly as a result.

“Insanity is doing the same thing over and over again and expecting different results. When will the Department for Transport learn?”

Virgin Rail chief executive Tony Collins also questioned the process, suggesting their proposal had identified the most that could be achieved.

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He added: “If we thought we could get 10 per cent year-on-year growth, we would have bid that. We don’t believe that is possible.”

The DfT said the franchise, to start on December 9, would see 12,000 extra seats a day when more 11 six-carriage electric trains come into service in December 2016.

Transport Secretary Theresa Villiers said: “This new franchise will deliver big improvements for passengers, with more seats and plans for more services. Targets to meet on passenger satisfaction will be introduced for the first time and passengers will also benefit from smart ticketing and from investment in stations.

“The West Coast is the first of the new longer franchises to be let by the coalition which has helped us secure real benefits for passengers by encouraging First West Coast Ltd (as the company will be named) to invest.”