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Virgin Rail Loses Only UK RouteAugust 15, 2012 By: Jena Tesse Fox
Sad news this morning for fans of train travel in the UK: The government has taken the country's West Coast rail line—the main link between London and Scotland—out of Virgin Rail Group's control and awarded the $1.41 billion-a-year franchise to rival transport company FirstGroup PLC. It was the line's only route.
According to the Wall Street Journal, Virgin Rail, which is 51 percent owned by Richard Branson's Virgin Group and 49 percent by Stagecoach Group SGC.LN +1.76 percent PLC, has run the West Coast rail line for the past 15 years and put in a bid worth billions of pounds to continue running the franchise, according to analysts.
But the U.K. Department for Transport, or DfT, awarded the contract to FirstGroup, the country's largest rail operator, which bid even more to operate the route until 2026.
In a statement, Branson praised his company's performance over the last 15 years. "We said we would revolutionise train journeys and we have," he said. "For instance, when we took over in 1997 we ran just one train an hour from Manchester to London — we now run three every hour at far higher speeds, leaving a strong legacy for the future. Many other towns and cities have also seen improvements to leisure and business travel as we have more than doubled the number of customers to some 31 million a year."
He also hinted at what might have been had Virgin won the contract: Among the proposed plans were adding new trains and services to new destinations, providing more onboard catering and improving stations. "We also planned to change radically the way you buy tickets to make it simpler, and to create a fantastic customer loyalty scheme involving the whole Virgin group, bringing many perks in the UK and overseas. But sadly our customers will not see the many benefits we would have provided from December."
The decision follows an announcement Tuesday that U.K. train fares would rise by as much as 10 percent in the new year, causing protests by commuters at some rail stations and thrusting into the spotlight issues of service and punctuality.
The West Coast line is the U.K.'s busiest intercity rail route, carrying 31 million customers a year between London, Manchester and Edinburgh, and is the only remaining route run by Virgin. FirstGroup will take over the line as of December 9. The Virgin Trains, which were leased, will reportedly be transferred to FirstGroup and rebranded.