FEATURE: EAST COAST MAINLINE FRANCHISE
Inverness Aberdeen
East Coast Mainline Route Please be aware that the map has been simplified and geographical locations of stations are not accurate. Glasgow Central Edinburgh
Newcastle
Sunderland Middlesborough
Skipton
Harrogate
Bradford Foster Square In fact, it seems that quality was not the only factor in favour of the bid since the Virgin Stagecoach joint venture would probably have won the franchise anyway. The contract envisages more than doubling revenue from around £700m today to to over £1.4bn by the end of the eight year contract at today’s prices. The new company Inter City Railways is really Stagecoach in disguise. This is a very different type of arrangement than the almost 50 per cent share Virgin and Stagecoach each have on the West Coast. Indeed, it is the traditional Virgin model which effectively lends its brand – as with say Virgin Media or Virgin Atlantic – to another company which runs the operation as Stagecoach has a 90 per cent share in the operation. It will be Brian Souter rather than Richard Branson calling the shots. The franchise divides into three phases, with the new InterCity Express fleet will be introduced halfway through. Therefore the first three years will be about maintaining existing services, though there will also, according to the company, be some £140m investment, principally on stations and new technology. The sort of ‘deep clean’ that is generally associated with a new franchisee will also be carried out, though in my experience the trains are currently in quite good condition. The introduction of the new trains which will start some time, as yet unspecified, in 2018 will begin to transform services on the line. There will be several services that are much
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York
Leeds
Doncaster Huddersfield
Lincoln
Major Interchange Other Stations London King’s Cross
faster than today with the headline time of four hours between the two capitals being provided by at least six return services every day. Leeds – London will also see faster services with the rather vague promise that there will be ‘many with a journey time under or close to two hours’. Historically, of course, the introduction of a new fleet has been problematic but there are high hopes in Stagecoach that the Japanese practice of working to very high standards will ensure there is no problem with the Hitachi trains. In the third phase with the IEP trains bedded in, the vast increase in available seats together with, it is hoped, the effect of the new trains, will see a rapid increase in passengers. The publicity in fact claims that by 2020 when all the new trains are operating, there will be a staggering 50 per cent increase in capacity on the line. This is actually dependent on some of the existing trains remaining in service and being used to serve some of the minor destinations that have been added to the franchise contract, such as Bradford, Harrogate
and Lincoln, all of which will see a two hourly direct London trains. This is, too, where the premium profile for the contract gets very ambitious – or optimistic in the words of some City commentators. Premium payments which are by and large around the same level as today for the first three years, then leap rapidly from £353m in 2020 to £654m in 2023. The East Coast has seen two franchisees fail – Sea Containers and National Express – followed by a five year period of stability under government control. Stagecoach’s bid was undoubtedly ambitious and at £3.3bn of premium payments was £900m more than any of the rival bidders. Stagecoach is relying on a rapid increase in passengers attracted by new services, faster trains and modern rolling stock. There is no doubt that a lot of thought at Stagecoach’s Perth headquarters will have gone into the bid in order to ensure that there is not a third failure on the line, but the difficulties of estimating future numbers, especially given the recent dip in oil prices, cannot be ruled out.
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