Virgin Rail issues franchise price plea

VIRGIN Rail, the west coast mainline operator run jointly by Sir Richard Branson and Sir Brian Souter’s Stagecoach group, yesterday urged the government not to award the franchise’s renewal next December on price alone.

Branson said “innovation” and passenger service quality should also play a key part in the decision, as Souter separately revealed with Perth‑based Stagecoach’s results that its share of Virgin Rail’s profits fell to £12.2 million from £13.7m in the six months to end‑October.

Branson warned the government against “just going for the bottom line” and accepting “unrealistic bids” to win the franchise. He said that would lead to “the cheapest of everything” in the Glasgow to London Euston service. “That’s not what people want. It should be a beauty parade of innovation and quality, not just the bottom line,” Branson added.

Other shortlisted bidders for the west coast mainline are FirstGroup, Abellio, a subsidiary of the Dutch state rail operator, and a consortium of French state rail giant SNCF and Keolis.

It came as Stagecoach revealed that its entire rail business, including South West Trains out of London Waterloo, made a half-time loss of £6.9m against a £22.9m profit last time.

This was because of a loss of more than £25m at the East Midlands franchise, as the group’s net contribution to the taxpayer rose £100m to £240m.

It was a much stronger performance at Stagecoach’s core UK and American bus operations, including continued robust progress at its budget bus business in North America, megabus.com.

UK bus profits rose 6.7 per cent to £80m, the acquired London operation came back into the black, while North American profits including megabus.com were steady at £15.3m.

Megabus revenues across the Atlantic jumped 49 per cent to $54m. Stagecoach, whose interim dividend rises 9 per cent to 2.4p, also announced that it is investing £44m to acquire more than 100 vehicles for its budget bus operations, including 95 double‑deckers for megabus.com in North America.

Souter said he believed the US budget bus business, which sees its main competition as regional airlines rather than other coach operators, was benefiting both from “Americans seeming to be able to travel much longer in a bus than we are” and their increasing environmental concern.

Stagecoach’s shares, which have more than doubled in the past year, closed up another 6 per cent, or 16.8p, at 265.4p.