First Great Western to Give up Franchise?

[whole diary]

[Super Guard]

With the Government talking up 20+ year franchises, I can well imagine FG considering a fresh contract.

Having said that, with things as they stand with the recession and the "cap/collar" benefit FG has benefited from, how would FG stand if they continue to miss their income projections past 2013?  As a new franchise, the cap/collar protection wouldn't kick in straight away - hence why other franchises like Crosscountry struggled, whereas GW^» (Great Western - used as an abbreviation for the area / lines under the Great Western franchise, as opposed to FGW which includes "First", the company operating them too. For tickets - about) were 'lucky' in the timing of the recession.

Also, i'm surprised the usual line of "Don't FG own a few HSTs^▸ (High Speed Train (Inter City class 43 125 units))?" hasn't been mentioned yet... 

[Super Guard]

It will be a very interesting period in the next few years or so then, especially if a new operator takes over in 2013.  New operator, new liveries, possibly big changes to the timetables. Then the electrification and new IEP^▸ (Intercity Express Program / Project. This will offer more capacity on routes, save money, give a consistent and safe service and meet customer requirements. Intended to replace HSTs.) trains in 2016.  Very interesting.

I wonder who will take over then, should First Great Western call it a day.  National Express, to become National Express Great Western?

I would hope if FG don't continue past 2013, that we return to "Great Western".

[paul7575]

With the Government talking up 20+ year franchises, I can well imagine FG considering a fresh contract.

Having said that, with things as they stand with the recession and the "cap/collar" benefit FG has benefited from, how would FG stand if they continue to miss their income projections past 2013?  As a new franchise, the cap/collar protection wouldn't kick in straight away

New franchise aren't supposed to be having protection similar to cap and collar though...

Paul

[Zoe]

If the franchise is retendered in 2013 First will be in pole position to win as since First own the HST^▸ (High Speed Train (Inter City class 43 125 units)) power cars there's no way another company would win.  Since the new franchise is going to be for at least 15 years this will be much better for First than any cap and collar arrangement through to 2016 would be.

[grahame]

Silly question alert ...

The franchise was let on very low growth forecasts that have been exceeded with trains filled to the rafters all over the place.  On lines they're already 3 carriages when they were bid as 2 carriage services form the life of the franchise, and there's talk of those services needing 4 or 5.   Seven of the 10 most overcrowded trains in the UK^▸ (United Kingdom) are in FGW^▸ (First Great Western) land, and even on a Saturday morning and Sunday afternoon I can find you places where your journey will be uncomfortable or impossible due to overcrowding.

So to my simplistic mind, the train operator's getting rather more farebox income than they would have expected and that's not going to be offset by extra rolling stock costs - you only need one driver if a train is 2, 3, 4 or 5 carriages. Due to overcrowding I suspect they're getting more income per vehicle anyway, and fare haven't exactly lagged behind inflation.

So why has the franchise fallen into "Cap and Collar"?   Surely it can't be because fewer people are buying cups of railway tea as they travel, can it?

[Timmer]

Also, i'm surprised the usual line of "Don't FG own a few HSTs^▸ (High Speed Train (Inter City class 43 125 units))?" hasn't been mentioned yet... 

Whoever else would bid for a new franchise would have to come up with an intrim solution to cover the start of the new franchise and IEP^▸ (Intercity Express Program / Project. This will offer more capacity on routes, save money, give a consistent and safe service and meet customer requirements. Intended to replace HSTs.) units coming on stream unless First would be prepared to lease them to the new franchise holder. All the best with that one.

[Zoe]

Whoever else would bid for a new franchise would have to come up with an intrim solution to cover the start of the new franchise and IEP^▸ (Intercity Express Program / Project. This will offer more capacity on routes, save money, give a consistent and safe service and meet customer requirements. Intended to replace HSTs.) units coming on stream unless First would be prepared to lease them to the new franchise holder. All the best with that one.

That's exactly why it's in the best interests of First to have the franchise retendered in 2013 as they are almost certain to win the new franchise that will run at least until 2028.  If they wait until 2016 they won't have their HST^▸ (High Speed Train (Inter City class 43 125 units)) card to play.

[JayMac]

I've said elsewhere, I don't believe the fact that First Group own a few HST^▸ (High Speed Train (Inter City class 43 125 units)) power cars is that much of a bargaining chip in franchise negotiations. These power cars have a value to First Group outside of the FGW^▸ (First Great Western) franchise and I can't see First Rail Holdings Ltd sitting on them and not offering them for lease to a new Greater Western franchise holder. It's also very likely that 5 Class 180s will be available to cover any shortfall should First Group play silly buggers and not offer the power cars for lease. I also don't think it would be that clever of First to try and hold the DfT^» (Department for Transport - about) to ransom.

[Zoe]

I also don't think it would be that clever of First to try and hold the DfT^» (Department for Transport - about) to ransom.

Maybe not but would it matter if by doing so you could win a very lucrative 15 year franchise?  By the time it comes up for renewal again people will have likely forgotten.

[ChrisB]

With the Government talking up 20+ year franchises, I can well imagine FG considering a fresh contract.

They'll only be for a max of 15 years - there's some EU^» (European Union - about) legislation making anything longer difficult. I didn't quite understand the man at the DfT^» (Department for Transport - about), but I think they outline the problem in that Franchise paper they put out....

Having said that, with things as they stand with the recession and the "cap/collar" benefit FG has benefited from, how would FG stand if they continue to miss their income projections past 2013? 

THe projections would be uypdated to fit the new franchise. Cap & Collar isn't part of new franchises so presumably another method will compensate....

Also, i'm surprised the usual line of "Don't FG own a few HSTs^▸ (High Speed Train (Inter City class 43 125 units))?" hasn't been mentioned yet... 

First own 5 full HSTs.....not just the power cars.

[paul7575]

I've said elsewhere, I don't believe the fact that First Group own a few HST^▸ (High Speed Train (Inter City class 43 125 units)) power cars is that much of a bargaining chip in franchise negotiations. These power cars have a value to First Group outside of the FGW^▸ (First Great Western) franchise and I can't see First Rail Holdings Ltd sitting on them and not offering them for lease to a new Greater Western franchise holder. It's also very likely that 5 Class 180s will be available to cover any shortfall should First Group play silly buggers and not offer the power cars for lease. I also don't think it would be that clever of First to try and hold the DfT^» (Department for Transport - about) to ransom.

I agree they aren't much of a bargaining tool.  There's little or no use for them in the other First franchises AFAICS^▸ ('as far as I can see'):

FCC^▸ (First Capital Connect)?   London commuter TOC^▸ (Train Operating Company) in a fully electrified area
TPE^▸ (Trans Pennine Express)?   DfT subsidised on the basis of current fleet
Scotrail?  Transport Scotland ditto
Hull Trains - maybe being OA they can do what they like - but basic economics still apply...

Paul

[Zoe]

I agree they aren't much of a bargaining tool.  There's little or no use for them in the other First franchises AFAICS^▸ ('as far as I can see')

You may think that but First have every right to say to the dft "We will scrap the HSTs^▸ (High Speed Train (Inter City class 43 125 units)) if you don't give us the franchise" and the dft would have little choice but to give the franchise to First.

[paul7575]

I agree they aren't much of a bargaining tool.  There's little or no use for them in the other First franchises AFAICS^▸ ('as far as I can see')

You may think that but First have every right to say to the dft "We will scrap the HSTs^▸ (High Speed Train (Inter City class 43 125 units)) if you don't give us the franchise" and the dft would have little choice but to give the franchise to First.

Dream on. 

'DfT^» (Department for Transport - about) gives in to blackmail' just ain't going to happen - especially once all the other bidders instruct their learn'd friends...

Paul

[Zoe]

'DfT^» (Department for Transport - about) gives in to blackmail' just ain't going to happen

That would usually be the case but this time I don't think the dft will have much choice as you won't be able to run all the trains without the HSTs^▸ (High Speed Train (Inter City class 43 125 units)) that first own.

[JayMac]

I believe the franchise could work it First Group won't let others play with their trainsets. 5 Class 180s remember? Drop the use of an off-peak HST^▸ (High Speed Train (Inter City class 43 125 units)) on the Cotswolds line. Plus possible use of a XC^▸ (Cross Country Trains (franchise)) set. And it's only likely to be an issue for 4 years.

Not that I believe for a moment First Rail Holdings Ltd will sit on the stock. They'll either sell or lease.

I want to see competitive tendering, not one bidder having preferential treatment just because they own a few trains.