PERTH-based Stagecoach and Virgin yesterday agreed to pay £3.3 billion to run Scotland-London trains on the east coast main line – twice as much as two previous failed operators who defaulted on the payments.
The consortium, which already operates cross-Border west coast main line services, won the eight-year franchise from next March.
It beat rivals Aberdeen-based FirstGroup, which has already lost its ScotRail franchise, and French group Eurostar/Keolis, which had been tipped to win. It marks the return of the service to the private sector after it was effectively re-nationalised by Labour five years ago.
National Express abandoned the franchise because it could not afford to repay the £1.4bn it had bid. Predecessor GNER had similarly defaulted after bidding £1.3bn.
Rail experts said there was a danger of the same thing happening again.
Rail writer Philip Haigh said: “£3.3bn is at the top end of the scale. It looks like a pretty steep challenge.”
He feared that if passenger growth was lower than expected – as happened before – fares could be pushed up.
Roger Ford, industry and technology editor of Modern Railways magazine, said Stagecoach could struggle because the new trains that were expected to generate growth would not be introduced until 2018 – nearly halfway through the franchise.
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He said: “Pretty heroic assumptions have been made.”
However, a spokeswoman for the UK Department for Transport, said: “The winning bid provides the best deal for passengers, both on quality and value for the taxpayer. The financial robustness of the bid has been thoroughly tested and we are confident it is both deliverable and sustainable.”
The new trains, which have previously been announced by ministers, will cut journey times by using faster acceleration and braking.
Current Edinburgh-London journeys will be reduced from some four hours 20-25 minutes to four hours ten minutes in 2019, and around four hours the following year.
A version of the Hitachi trains, which will be built near Durham, will run on both electric and diesel power to replace 30-year-old trains on the Aberdeen/Inverness-London route. Those journeys could be up to 30 minutes faster.
Until then, Stagecoach will spend £13.4 million on improvements to the current fleet, including a “deep clean”, refurbished toilets, and new carpets and seat covers.
It has also promised faster and more reliable wi-fi, which has been criticised by passengers. Secure luggage areas will be created to prevent theft.
Four extra Edinburgh-London trains a day will run from 2016, increasing to seven in 2019. Stirling will get a second daily service from December next year.
The franchise, which is used by 20 million passengers a year, will be branded Virgin Trains East Coast, despite Stagecoach owning 90 per cent of the consortium.
However, it will be run separately from Virgin Trains on the Glasgow-London West Coast line, whose franchise has been extended to 2017. Stagecoach owns 49 per cent of that firm.
Stagecoach Group chief executive Martin Griffiths said: “Together with Virgin, our innovative plans will give customers new services, faster and more frequent trains, and easier, more personalised journeys.”
Virgin Group senior partner Patrick McCall said: “Our partnership will concentrate on areas for which Virgin is famous, such as looking after our customers and our people. We have a great opportunity to blend the successes of the East Coast and the West Coast lines to create a great experience for all.”
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