Tuesday, 14 May 2019
Arrriva and the East Midlands
Now Arriva sues government over East Midlands franchise
Rail giant Arriva is suing the government after it lost its bid to run the East Midlands railway franchise. The firm, owned by Germany's state-backed Deutsche Bahn, said it wanted more information on how the Department for Transport assessed the bids.
The move comes after rival Stagecoach, which was banned from rebidding, announced it was taking legal action. Stagecoach refused to accept the potential pension risks that the DfT required operators to bear. The full extent of the risks in relation to the three new franchises is unknown but estimated to be well in excess of £1 billion.
The Department for Transport (DfT) said it had "total confidence" in its franchise competition process.
The East Midlands line operates a network including routes north to south between Yorkshire and London, and east to west as far as Norwich and Liverpool.
The DfT said in April that Dutch government-owned firm Abellio would take over the running of the East Midlands railway franchise for eight years, starting in August. On Sunday, the DfT said it would "robustly defend decisions that were taken fairly following a thorough and impartial evaluation process".
But Arriva said it was "seeking to obtain more information relating to how the bids for the East Midlands franchise were assessed".
Abellio already operates five other rail franchises, including Scotrail and Greater Anglia services between Norwich and London.
Stagecoach, the current owner of the franchise was disqualified from re-bidding after the DfT raised concerns about its pension commitments. It was also barred from bidding for the South Eastern and West Coast Partnership franchises after the DfT said it "knowingly submitted non-compliant bids on all competitions".
Sir Richard, whose Virgin Trains is 49% owned by Stagecoach, said at the time that he was "devastated" by the disqualification.
Martin Griffiths, chief executive of Stagecoach, said on Wednesday that the company had "no option" but to pursue legal action to examine DfT's "opaque decision-making. We remain deeply concerned at [DfT's] procurement of the three most recent rail franchise competitions and the rationale behind its decisions. Despite our continued requests for full transparency around these matters, many fundamental questions remain unanswered."