South Western Franchise extension talks break down.

[whole diary]

[JayMac]

The Department for Transport has notified Stagecoach South West Trains Ltd that it is ending negotiations for a direct award to extend the South Western franchise beyond 2017. The franchise was due to end in February 2017 and the talks were taking place for a direct award to at least April 2019. There will be a small contractual extension to June 2017.

The timetable for the next franchise is now:

OJEU notification: November 2015
Invitation to Tender: April 2016
Award: February 2017
Commencement: June 2017

Statement from Stagecoach Group PLC:

Stagecoach Group plc ("Stagecoach") confirms that it has been notified by the Department for Transport ("DfT^» (Department for Transport - about)") that it is ending the discussions with Stagecoach subsidiary, Stagecoach South Western Trains Limited ("South West Trains"), regarding the direct award of a new rail franchise.

The current franchise is due to end in February 2017 and, as previously reported, South West Trains had submitted proposals to the DfT as part of previously announced government plans for the direct award of a new franchise to at least April 2019.

The DfT has now indicated that it plans to invite applicants to tender for a new long-term franchise to commence sometime in 2017.

In the meantime, the DfT has indicated that it expects to exercise its pre-contracted option to extend the current South West Trains franchise beyond February 2017. The option allows the DfT to extend the franchise to no later than August 2017. Stagecoach does not currently expect South West Trains to earn a significant profit during any extension period.

Our direct award proposals sought to build on the extensive improvements delivered under our operation of the franchise since 1996, providing more benefits for customers, good value for taxpayers and an appropriate return for investors.

However, despite extensive negotiations, a significant difference has remained between both parties regarding the financial evaluation of the proposals. As a result, South West Trains has been unable to reach an agreement on a direct award.

Nevertheless, as the incumbent operator with nearly 20 years' experience in growing and improving one of the most complex and busiest rail franchises in the country, we believe we are in a strong position to submit a powerful and attractive bid for a new South West Trains franchise.

In the meantime, we will continue to deliver on our commitments to government and customers, including the ^50m package of investment agreed with the DfT earlier this year as part of a Deed of Amendment to the existing franchise.

We remain positive about the opportunities in the UK^▸ (United Kingdom) rail market. Constructive discussions are continuing regarding a direct award at East Midlands Trains for a period of at least two years. In addition, we are currently shortlisted for both the Transpennine Express and East Anglia franchises.

Stagecoach will continue to evaluate opportunities to bid for UK rail franchises on a case-by-case basis. We seek new opportunities that offer the right balance of risk and reward, provide scope for us to improve services to customers, and which are compatible with maintaining an acceptable balance of the Group's portfolio between bus and rail businesses.

http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=537813

[ChrisB]

They might have to mend their bridges with Network Rail first....

[JayMac]

Surely, mending bridges is Network Rail's job. 

[Oberon]

Is this going to be another seven year franchise of the plain vanilla variety that ensures zero investment for the foreseeable future? Well hopefully not..

[ChrisB]

Lot of infrastructure work at Waterloo to bring extra plstforms into domestic use....Stagecoach & DfT^» (Department for Transport - about) at odds over cost v revenues. DfT will realise who's right when the bids roll in.

[Electric train]

The risk is DfT^» (Department for Transport - about) my do a Borisisation on the inner London services ie hand them over to TfL^» (Transport for London - about), reshape the West of England and role part SWT^▸ (South West Trains) area into a greater Greater Western franchise. 

[PhilWakely]

The risk is DfT^» (Department for Transport - about) my do a Borisisation on the inner London services ie hand them over to TfL^» (Transport for London - about), reshape the West of England and role part SWT^▸ (South West Trains) area into a greater Greater Western franchise. 

I fear for the Salisbury to Exeter line given both this and the recent decision to scale back rail investment

[ellendune]

The risk is DfT^» (Department for Transport - about) my do a Borisisation on the inner London services ie hand them over to TfL^» (Transport for London - about), reshape the West of England and role part SWT^▸ (South West Trains) area into a greater Greater Western franchise. 

I fear for the Salisbury to Exeter line given both this and the recent decision to scale back rail investment

Could we get this into perspective a bit.  This is not the 1970's or 80's. Look the line has already had some investment and no one is talking about rationalisation of lines any more. All DfT are talking about is slowing investment down to a pace that NR^» (Network Rail - home page) can actually deliver. 

[PhilWakely]

The risk is DfT^» (Department for Transport - about) may.............reshape the West of England and role part SWT^▸ (South West Trains) area into a greater Greater Western franchise. 

I fear for the Salisbury to Exeter line given both this and the recent decision to scale back rail investment

Could we get this into perspective a bit.  This is not the 1970's or 80's. Look the line has already had some investment and no one is talking about rationalisation of lines any more. All DfT are talking about is slowing investment down to a pace that NR^» (Network Rail - home page) can actually deliver. 

I don't wish to get into a spat about this and appreciate what you are saying. I certainly do not anticipate rationalisation on the scale of the 70s and 80's, but I can see through services between Exeter and London Waterloo being reduced. In September, SWT are introducing extra services between Salisbury and Yeovil with the introduction of the new circular services via Yeovil and Frome, but can't see these improvements being included in a new franchise. I agree with Electric train about the Greater Western franchise and fear that all that will be required is local services between Exeter and Salisbury connecting into London services at Salisbury and Exeter respectively - with, maybe, one or two through services.   

[paul7575]

SWT^▸ (South West Trains)'s extra services in the Yeovil area have been included in the current franchise by a deed of variation, I thought?

ISTM they have been formally added now, so why should they not continue?

Paul

[Electric train]

The risk is DfT^» (Department for Transport - about) may.............reshape the West of England and role part SWT^▸ (South West Trains) area into a greater Greater Western franchise. 

I fear for the Salisbury to Exeter line given both this and the recent decision to scale back rail investment

Could we get this into perspective a bit.  This is not the 1970's or 80's. Look the line has already had some investment and no one is talking about rationalisation of lines any more. All DfT are talking about is slowing investment down to a pace that NR^» (Network Rail - home page) can actually deliver. 

I don't wish to get into a spat about this and appreciate what you are saying. I certainly do not anticipate rationalisation on the scale of the 70s and 80's, but I can see through services between Exeter and London Waterloo being reduced. In September, SWT are introducing extra services between Salisbury and Yeovil with the introduction of the new circular services via Yeovil and Frome, but can't see these improvements being included in a new franchise. I agree with Electric train about the Greater Western franchise and fear that all that will be required is local services between Exeter and Salisbury connecting into London services at Salisbury and Exeter respectively - with, maybe, one or two through services.   

It would surprise me if TfL^» (Transport for London - about) do not put in a case to take over the London area services, they are on a bit of land grab at the moment having recently made another case for the SE trains London routes.

If DfT did go for a break up of the SWT franchise area they would not be going for reduction in services more a reshaping of how they are provided.




Edit note: Quote marks fixed, for clarity. CfN.

[ChrisB]

TfL^» (Transport for London - about) are going after SouthEastern next.

The SWT^▸ (South West Trains) Franchise Prospectus has just been published
https://www.gov.uk/government/publications/south-western-franchise-competition-prospectus