First Group PLC has announced that they have reached an agreement with the Department for Transport over the termination sums for the rail franchises of South Western Railway and Avanti West Coast.
The two companies are currently operating under Emergency Recovery Measurements Agreements (ERMAs), which were put in place by the Department for Transport to make sure rail services continued to operate for key workers in the coronavirus pandemic.
The ERMA is in place for Avanti West Coast until the end of March 2022, and is in place for South Western Railway until the end of March 2021.
Train operators and the Department for Transport must agree whether any payment is required to terminate the existing franchise agreements, and if so, how much.
The DfT and First Group have announced that no sum is needed for Avanti West Coast, which started in December 2019 and had been performing well before the pandemic.
An agreement has been reached for South Western Railway, which requires a further contribution from FirstGroup of £33.2m.
The pre-existing franchise agreements will terminate at the end of the ERMA term for SWR and Avanti.
Following these agreements, FirstGroup is now negotiating new management contracts with the Department for Transport.
The Department for Transport has indicated that these new National Rail Contracts would last until 1st April 2023 for SWR, and 1st April 2026 for Avanti West Coast, with extensions available up to two further years.
The TransPennine Express franchise is also under an ERMA. It is currently working to agree a termination sum, but this has been extended until the end of January 2021 alongside the ERMA for Great Western Railway, which has already been extended until June 2021.
Commenting on today’s announcement, FirstGroup Chief Executive Matthew Gregory said: “We welcome this agreement, which marks a further evolution of the contractual framework for our SWR and Avanti train operating companies, both in the context of providing resilient services throughout the coronavirus pandemic and also a more sustainable long-term approach. These new directly awarded management contracts will focus on passengers and operational performance, with a more appropriate balance of risk and reward. We look forward to working constructively with the DfT to make this a reality, and to use our expertise and understanding of the needs of our customers to deliver improvements that we know passengers want.”
“We have acted flexibly to ensure continuity of service while implementing social distancing, as well as enhanced cleaning protocols and innovative technology to improve the customer experience. Passengers and employees alike can be confident that our trains are safe. We are now operating around 90% of the rail services we were before the pandemic. We will continue to bring all our experience to bear alongside Government and industry partners to deliver the next phase of recovery of the rail network.”
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Responses
Is it true that railway franchising is dying?
See my reply to Andrew Gwilt’s earlier post.
On come off it 🙄
Eurostar is also in a precarious position, but no one government to bail them out; interesting times indeed!
More pigs at the trough called privatasion and yet more ‘jam tomorrow ‘speak meanwhile us mugs continue to pay the price
Trenitalia, Govia or Abellio to franchise the West Coast franchise that Avanti West Coast took over from Virgin Trains. And MTR, Arriva or Abellio to take over the South Western Railway franchise that they took over from Stagecoach South West Trains.
Your point is…?
My point is that franchises are struggling no matter what goes on. Including during the coronavirus pandemic.
I actually work in the railway industry as an engineer at a depot in North West London and the latest gossip on the railway grapevine is that train operating franchises are dead.
Avanti, whose trains I work on and which took over from Virgin last December, no longer have a franchise in the real sense of the word – I think the term that’s used now is an operating contract (or something like that).
So any talk of franchises, who took over what from who, is now a moot point and largely irrelevant.
From my perspective within the industry, it seems like a slow creeping return to a modern form of nationalisation. Whether that’s a good thing, remembering the experiences of the past, remains to be seen. Perhaps someone in the government/DTi has come up with something that gives the best of both worlds… But somehow I doubt it 🙁
Ok thanks for the interesting comment Trev.