Sir Richard Branson said that the UK’s rail franchise bidding system is ‘antiquated’ at a press conference held yesterday at Euston station.
In October, the Government signed an extension to Virgin’s West Coast franchise allowing the company to operate services on the line until December 2012.
The line stretches from London to Glasgow serving Manchester, Birmingham, Liverpool and North Wales
In March, four bidders were shortlisted and invited to tender in May for the replacement InterCity West Coast franchise which will end in 2026.
As well as Virgin Rail Group, the bidders who made the shortlist were FirstGroup, and Government-backed European rail operators Abellio and a joint venture of Keolis & SNCF.
Rail Media’s Nigel Wordsworth attended the event and put a pressing question to Sir Richard:
“You’re bidding on a franchise against two state-owned railway companies who are from markets where you cannot compete with them, yet they can come here and compete with you. How do you feel about the fairness of that and do you think that inside Europe we ought to be working on one system and not several?”
Sir Richard said:
“Yes. I do think and hope that the Government will take into account that the Virgin brand resonates within the UK and because it delivers quality, and its plans for this network.
“We do worry about customers and we do worry about innovation and we’re proud of our name, so we get out there and do everything we can to look after our customers.
“State-run companies, generally speaking, do not do that great a job.”
Sir Brian Souter, Chairman of the Stagecoach Group which owns 49% of Virgin Trains, said:
“We are in an open bidding process and there are some state-owned European companies that we’re bidding against. I would just endorse what Richard has just said, we are not afraid of that, I want to be clear about that.
“We think that innovation, high levels of customer service – these are things that Virgin Stagecoach are renowned for and you can make arguments against state-owned companies but at the end of the day this will be won or lost.
“Our ability to deliver a good railway and value for money… We’re confident we have the right credentials for that.”
Sir Richard then continued:
“As long as they are the rules that are set, if the rules are purely bottom line figure… We’ve lost bids before, like the East Coast Main Line with somebody over-bidding, and therefore it was just given to the highest bidder rather than somebody who was going to transform the East Coast Main Line.
“We could have been operating today, it could have been completely transformed, with millions more people using it but because of the antiquated system of ‘the highest bidder wins’, somebody can put a completely unrealistic bid in and they win so we just pray that doesn’t happen again.”
It is almost certain that SNCF, which incidentally has the controlling shareholding in Keolis, will undoubtedly receive huge financial assistance from the French Government for the West Coast franchise application. Surely, as Messrs Branson and Souter have rightly intimated, this state subsidy has always placed the British private-sector companies at a disadvantage when trying to compete with the European state-owned operators. I have long said that due to the continuing exclusion of foreign companies from running rail services in France, SNCF should be excluded from UK franchises – until such a time that the French Government allows access to British operators.