Skip to comments.National Express stripped of East Coast franchise (Atlas Shrugged: UK Seizes Railroad)
Posted on 07/01/2009 11:57:51 PM PDT by AKSurprise
The Government has nationalised the East Coast main line after stripping National Express, the troubled bus and rail operator, of the franchise.
Lord Adonis, the Transport Secretary, said he had been forced into the drastic move to "ensure continuity of service to passengers, with no disruption or diminution of service standards".
The struggling transport group reported on Wednesday that Richard Bowker, its chief executive, had quit and it warned on profits in a trading update.
Lord Adonis, speaking on the BBC Today programme said: "I am simply not prepared to bail out companies that are unable to fulfil their commitments. I would like to give our absolute assurances to the travelling public that there will be no disruption.
National Express: share chart, fundamentals
"We will reallocate this franchise in due course. We expect the east coast mainline to be under Government control for about one year."
National Express failed to agree a deal with the Department for Transport over its East Coast rail franchise, which is expected to lose more than £20m during the first half of this year.
Lord Adonis said the government is exploring options on two other National Express rail franchises.
Richard Bowker, 43, who was paid £931,000 last year, is leaving the company to take up a new role as head of Union Railway in the United Arab Emirates.
His surprise departure was announced today as part of a trading statement that was already eagerly awaited by the City in light of the problems facing the beleaguered transport group, which is valued at £470m.
The company said first-half business conditions were challenging and the company faced higher fuel and pension costs.
(Excerpt) Read more at telegraph.co.uk ...
I just returned home from Newcastle, which is on the East Coast Main Line (ECML). I actually traveled with National Express East Coast (NXEC) three different times, going as far south as Doncaster and as far north as Berwick upon Tweed. The trains ran on time and there was no visual indication that NXEC was in financial difficulty. National Express also operates National Express East Anglia, which operates routes like London-Cambridge, London-Ipswich and various commuter routes out of Kings Cross and Liverpool Street stations.
The ECML is probably the premier domestic train route in the UK (leaving out the HST1 route which carries the Eurostar to France and Belgium). At one time, trains ran as high as 140 mph (they are limited to 125 mph at the present time). One can travel from London Kings Cross Station to Edinburgh Waverley Station, about 405 miles, in 4 hours 30 minutes, despite a number of stops.
NXEC operated the ECML (their trains run as far north as Aberdeen in northeast Scotland) and also the London-Leeds trains which leave the ECML at Doncaster. They took over 3 years ago or so for Great North East Railway (GNER), which went broke. When the Thatcher administration privatized rail operations (there are something like 20 rail franchises in the UK today), they issued 10 year franchises. No train operator is guaranteed the rights to a certain route in perpetuity.
Privatization was done in an interesting way. The railway rights of way (and the biggest stations in the country) were put into a private corporation, Railtrack. Railtrack was mismanaged, and a new corporation, called Network Rail, was formed, and it is the current operator of the tracks and something like 15 of the biggest stations (such as Kings Cross, Paddington, Euston, Victoria, Waterloo, Birmingham New Street, Manchester Piccadilly, Leeds, Glasgow Central).
There are three separate private entities that own all of the passenger rail cars. They lease these to the franchisees. There seems to be a constant contest among various transport companies to obtain franchises. For example, Richard Branson’s Virgin group was one of the biggest train operators in the UK, but they lost one of their franchises (the route starting in Edinburgh and heading south to Newcastle and York and then southwest to Leeds, Birmingham, Bristol, Exeter and Penzance) to an outfit called Cross Country. Virgin still has the route from London Euston to Glasgow, and is the major operator on the London-Birmingham, London-Manchester and London-Liverpool routes.
Franchises come and go, as do the names of train companies. Over the past 15 years, I’ve traveled with railways called “Connex South Central”, “Wessex”, “Thames Trains”, “Silverlink”, “Thameslink”, “One Railway”, “Central Trains” and the “GNER”, none of which exist anymore.
There are two companies that dominate ownership of the franchises: First Group and Stagecoach. First operates First Capital Connect (Bedford-City of London-Gatwick Airport-Brighton), First Great Western, First Great Northwestern, First Transpennine Express and First Scotrail. Stagecoach operates SouthWest Trains (which is a major commuter rail player south of the Thames on all routes stretching out from Waterloo station, and operates to places like Southampton, Salisbury and Exeter) and East Midlands trains. I think they are involved in other franchises, but I can’t think of them at the moment.
Under their overall system, the government is the guarantor of rail service, so if a franchisee goes under, the government is obliged to step in.
One other comment; with the advent of internet ticket selling services, the fare structure is as crazy as the structure used by airlines in this country. This means that “buy the day you ride” tickets can be outrageously expensive, but advance purchase tickets can be dirt cheap. Newcastle to London, about 275 miles, ranged in price from around L100 (about $165) one way for a full fare ticket in standard class (first class would be about 50% more), down to L5 (about $8.25) for an advance purchase ticket (I can’t remember whether 14 or 21 days were required). I was able to sidestep these fares but give myself maximum flexibility by buying a “regional rover” ticket—I got 4 days of unlimited train rides in standard class on all routes and on all operators in Yorkshire, Cumbria, Northumberland, Tyne and Wear and Durham for L75 (around $120).
So, it is a very oddball system; I’m guessing that Mrs. Thatcher and her people did the best they could with the cards that were dealt to them.
“Richard Bowker is a modern-day Dagny Taggart, but who is our John Galt?”
Each and every one of us.