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It has been announced that Virgin Rail Group ("VRG"),
has agreed a new West Coast rail franchise with the Department for
Transport ("DfT").
Passengers and taxpayers will benefit from a
multi-million-pound package of significant improvements, including more
seats, new services and free super fast wifi for all customers.
VRG is a joint venture between Stagecoach
and Virgin Group and operates the West Coast franchise through its
Virgin Trains brand.
The new franchise will commence on 22 June
2014 and run until 31 March 2017. The DfT has the option to extend the
contract by an additional year to 31 March 2018.
The new West Coast contract will provide:
• More seats: More
than 20 of trains will have one of their First Class carriages
converted to Standard Class. This will increase Standard Class capacity
by 5500 seats per day, a net increase of 2100 seats.
• Better connectivity:
All 76 of the Virgin Trains Pendolino and Super Voyager trains will be
equipped with superfast WiFi, which Network Rail intends to support by
providing track-side infrastructure. This would be the first major
intercity deployment of 4G technology on the UK rail network and provide
free WiFi to all customers.
• Easier travel: Extra
ticket machines and customer help points will be installed at stations.
An upgraded website and more staff redeployed to concourses and
platforms will help deliver smoother journeys for passengers.
• New services: It
has been agreed with the DfT that there should be new direct services
between Shrewsbury / Blackpool and London. These plans are backed by
Network Rail and will be submitted to the Office of Rail Regulation
("ORR") shortly. If the ORR decides in favour, these services are
expected to start by the end of the year.
• Customer reward programme:
Customers who book via the Virgin Trains website and mobile app will be
able to earn Nectar points on their purchase by the end of the summer.
• Financial value for taxpayers:
The new commercial agreement will generate £433 million in premium
payments to the DfT over the initial period of the contract to 31 March
2017. The financial package will help support the huge investment that
is taking place in the railways.
• Shareholder return:
VRG expects to earn a profit margin similar to the levels expected on
other medium-term UK rail franchises and franchise extensions. A profit
sharing arrangement will apply whereby a proportion of profit in excess
of pre-specified thresholds will be payable to the DfT. A Gross
Domestic Product ("GDP") sharing arrangement will also apply whereby
amounts are receivable by the franchise from the DfT where UK GDP is
below certain pre-defined levels and likewise, amounts are payable by
the franchise to the DfT where UK GDP is above certain pre-defined
levels. The GDP sharing arrangement is similar to that which the DfT is
proposing will apply to the new East Coast rail franchise that it is
currently tendering. There is no significant change expected in the
"risk capital" (i.e. performance bond, season ticket bond and
shareholder loan) relating to the franchise.
• Employee, supply chain and community benefits:
increased emphasis on apprenticeships, training and graduate
placements, a pledge to increase small and medium-sized businesses in
supply chain base by 10%, and plans to make station and training centre
facilities available for community use.
• A greener railway: A commitment to cut carbon emissions across stations, divert 98% of waste from landfill and implement efficient LED lighting.
Martin Griffiths, Stagecoach Group Chief
Executive and Virgin Rail Group Co-Chairman, said: "This new contract is
a great deal for our customers, communities and taxpayers. Millions of
passengers will benefit from thousands of extra seats, plans for new
services and free super fast connectivity. At the same time, the
taxpayer will receive a significant increase in income, helping support
the Government's record investment in Britain's rail network.
"Our country has the leading railway in
Europe and Virgin Trains has been central to driving forward innovations
that are now commonplace across the network. This new commercial
contract shows that a well-run franchising system, with the public and
private sectors working together, can deliver significant benefits to
all stakeholders."
The new contract builds on the progress Virgin Trains has made since taking over the West Coast
franchise in 1997. The number of passengers carried each year has more
than doubled to more than 32 million. Journey times have been cut, the
number of services has increased and more than £2 billion has been
invested in state-of-the-art train fleets. Passengers have responded
by consistently rating Virgin Trains the best long distance rail
operator, with a current satisfaction rating of 91%.
