Rail Franchising Descends into More Chaos

virgin class220 - Rail Franchising Descends into More Chaos

Legal actions are being brought by Stagecoach Group after the Department for Transport excluded them from the rail franchise bidding process.

Stagecoach, a bidder on three rail franchises, including the West Coast Mainline with Richard Branson’s Virgin Group, has announced that it is to take legal action against the Department for Transport after it was excluded as a result of its stance on Pensions.

The next West Coast Mainline franchise will also include the first years of operations on the controversial HS2 between London and Birmingham.

The legal action will almost certainly delay the franchise award, which as it stands, will bring about the end of the Virgin Trains brand in the UK.

The sticking point for Stagecoach centres around long-term pension deficits. The Department for Transport is insisting that pension obligations are included in franchise bids, however Stagecoach doesn’t believe it should be liable long-term for essentially short-term franchises.

On the basis of Stagecoach’s stance, the Department for Transport disqualified them from not only the West Coast Mainline franchise but also the East Midlands franchise, which it also holds and the South Eastern franchise, of which it had expressed an interest.

The company, as a matter of urgency, is looking for a judicial review on East Midlands franchise, which has been awarded to Abellio, as well as a separate filing at the High Court against the Department for Transport.

This situation, remarkably, has happened before. It is not the first time there has been problems with re-letting the West Coast Mainline franchise.

In 2011 and 2012, the franchise process descended into farce when the Department for Transport initially awarded it to First Group, before acknowledging mistakes, retracting the award, and allowing Virgin Trains to continue operations.