Virgin 'interested' in east coast line

Published on Tuesday 19 May 2009 21:55

SIR Richard Branson yesterday confirmed his Virgin Rail group would be prepared to look again at the troubled east coast main line franchise if current owner National Express walked away.

Earlier this month, the government was urged by some MPs to renationalise the line after National Express said stalling revenues on the Scotland-to-London franchise had piled pressure on the group.

At a London press conference at which he called for longer rail franchises of 20 to 30 years to encourage investment, Branson – whose group already operates the west coast main line – said he would be interested in the east coast route.

"For years, we have expressed an interest in the east coast main line. We could bring a lot to the east coast. We would certainly look at it," he said. "We have had dramatically exciting plans for the east coast in the past, such as building a whole new track alongside the existing track and improving the rolling stock."

National Express, which took over the east coast route from GNER in 2007 before recession struck, must pay the government 1.4 billion over the life of the franchise to 2015.

But in a bleak trading update earlier this month, it said the terms of the franchise were "agreed in a very different economic climate", and that it would not receive revenue support from the Department for Transport (DfT) – agreed as part of the deal for the franchise – until the end of 2011.

National Express said it saw underlying revenue growth on the east coast line of only 0.3 per cent in the first three months of 2009. That compared with 9 per cent growth last year.

The group said at that stage it was "in regular discussions with the DfT, which include the impact of the recession on the east coast franchise".

That has fuelled speculation about a possible exit strategy, leaving the line potentially in state hands or opening the way for another private operator.

However, it is believed Virgin Rail might face strong political and consumer opposition to any attempt to run both main north/south rail routes in Britain.

Branson, whose group unsuccessfully bid for the east coast franchise in 1997 and 2007, also called on the government yesterday to allow the private sector to plug the funding gap which is threatening the growth of the railways in return for much longer franchises.

A Glasgow-to-London time of less than four hours and a London-to-Birmingham of less than 60 minutes would be just two benefits from letting train companies play a bigger role in financing and running the railways, he said. It could also lead to linking the west coast line at its southern end with both Heathrow airport and the high-speed Channel Tunnel rail link to Europe.

"We need private vision and investment to take on the challenge that taxpayers are unable and unwilling to fund," he said.