Posted 2nd August 2012 | 31 Comments
Government 'warned' about high West Coast bid
THE COMPETITION to win the next West Coast franchise has taken a new turn, following rumours that FirstGroup is the favourite to win the four-way contest.
It's reported that Richard Branson has tried to intervene in the process by writing to transport secretary Justine Greening as well as the Prime Minister. He is urging them to reconsider a bid from First which would allegedly mean cuts in on-board services and other economies in order to pay an extra £1 billion in premiums during the 14-year contract.
He has pointed out that other high-end bids have come to nothing in recent years, citing the failures of both GNER and National Express to stay the course on East Coast.
The Department for Transport has said that all bids are subject to a 'deliverability test', and that the highest is not necessarily the winner. As an example of this, it is widely believed that Arriva bid more than National Express for the last East Coast franchise, but failed to win the contract because the DfT did not believe its business plan was good enough.
After National Express surrendered its contract, East Coast was handed to a state-owned operator. Although it had originally been said that East Coast would return to the private sector in 2011, the government operator is now expected to stay in charge until at least the end of next year.
An unusual step like Sir Richard's would break the rules of franchise competitions, in which bidders are not supposed to make public comments until the franchise is awarded, but his subsidiary Virgin Trains, 49 per cent of which is owned by Stagecoach Group, is staying silent.
The Department for Transport is presently considering four bids for the Intercity West Coast contract. Apart from First and Virgin, the other shortlisted contenders are the Dutch operator Abellio and a French partnership of SNCF and Keolis.
An announcement about the winner is due this month, and the new franchise is scheduled to start in December.
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