East Coast - Early Termination of Franchise (29/11/2017)

[whole diary]

[SandTEngineer]

Oh dear:
https://amp.theguardian.com/uk-news/2017/nov/29/east-coast-rail-franchise-terminated-three-years-early-virgin-trains

[Tim]

Opps.  That is three franchises so far on the ECML^▸ (East Coast Main Line) which have failed to last the distance. 

[SandTEngineer]

Having had time to digest the article it seems to me that the new franchise will now be the test case for the franchise running the whole railway and NR^» (Network Rail - home page) just being a maintenance/renewal (but not enhancement) Contractor   Cue split up and sell off of NR....

The rail strategy laid out by Grayling said the East Coast Partnership (ECP) would be “the first of the new generation of long-term regional partnerships bringing together the operation of track and train under a single leader and unified brand”. The partnership models will see private train companies invited to bid for contracts where they can take more control over tracks run by Network Rail.

[caliwag]

Ha...won't be long before Corbyn and crew get their way of course...If indeed you remember the previous incumbent

[LiskeardRich]

Branson is behind today’s idea, he claims he’s been suggesting it for years. I imagine it wouldn’t take much for him to agree early termination for track/toc thing

[JayMac]

How precisely will competition be regulated once the East Coast franchisee is infrastructure owner too?

There's direct passenger competition from Hull Trains and Grand Central, as well as track access agreements for numerous other TOCs^▸ (Train Operating Company) an FOCs^▸ (Freight Operating Company).

A huge amount of new rules, regulations, legal documents and the bureaucracy that goes with them, will be needed to ensure the owning TOC is playing fair and not favouring its own services.

A fundamentally stupid idea from Chris Grayling. Tinkering for tinkering's sake.

[Electric train]

A fundamentally stupid idea from Chris Grayling. Tinkering for tinkering's sake.

Since when has he been known to have a good idea  and tinkering is his middle name 

[LiskeardRich]

A fundamentally stupid idea from Chris Grayling. Tinkering for tinkering's sake.

Since when has he been known to have a good idea  and tinkering is his middle name 

Branson was taking credit in an interview I saw earlier today

[caliwag]

Aye...How many peeps were employed by the railway clearing house in days of yore? or indeed now.

[grahame]

Not to the east but the west ... I can recall a ten year franchise which had premiums loaded towards the end, with a seven year release option.  Although the common perception / view at the time was that the franchise operator would choose to see out the franchise rather than risk its loss, the operator chose to hand the keys back at the end of the seven years, to be handed them again on a series of management agreements / franchises / extensions that carry on to this day - and at least until 2020, with a possibility or probability of 2022.

[ChrisB]

yep, same again here too....Stagecoach's share price rose 1`5% on the news of not paying the last three years worth of franchise payments *and* compensation on the remaining 3 years for enforced early termination!

[Tim]

How precisely will competition be regulated once the East Coast franchisee is infrastructure owner too?

There's direct passenger competition from Hull Trains and Grand Central, as well as track access agreements for numerous other TOCs^▸ (Train Operating Company) an FOCs^▸ (Freight Operating Company).

A huge amount of new rules, regulations, legal documents and the bureaucracy that goes with them, will be needed to ensure the owning TOC is playing fair and not favouring its own services.

A fundamentally stupid idea from Chris Grayling. Tinkering for tinkering's sake.

I am not sure I completely agree with your conclusion (although there is some truth in what you say).  The reason is that I tend to think that from a passenger's perspective it is better to have the track managed in the interests of the dominant operator than in the interests of no operator.  If the change ends up benefiting the 95% of total passengers who travel with "east Coast" then that is good overall even if passengers of other operator's suffer a bit. 

The devil is in the detail of course (who sets the signals for example is an important question) but a system that improves the track availability for "east coast" (for example by incentivising better maintenance practices) also improves the track for Hull Trains.

The main problem of course is that the current ToCs are "thinly capitalised spivs" and not in a position to make infrastructure investment.  Will future bids be by joint ventures of operators and construction companies?  Will an integrated ToC want to invest in infrastructure which when the franchise ends they do not own? 

[eightf48544]

My problem is why do trains have to compete with trains.

Surely there is more than enough competition with the private car, long distance coaches and over longer distances airlines.

[TonyK]

I prefer the views of the analysts, who have no axe to grind, to those of the politicians. You are more likely to find the truth by following the money.

Grayling has given in. Or he thinks he has had a fantastic brand new idea. In about 7 years' time, we'll know which.

[Timmer]

I prefer the views of the analysts, who have no axe to grind, to those of the politicians. You are more likely to find the truth by following the money.

Grayling has given in. Or he thinks he has had a fantastic brand new idea. In about 7 years' time, we'll know which.

He had no choice and by doing so let Stagecoach off the hook. The franchise was in trouble. There was only so much you can cut back on coupled with a decrease in the number of passengers. Another thing to note was their share price went up as soon as the announcement was made.