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Stagecoach and Virgin wins East Coast main line rail franchise

Article By: ,  Financial Analyst
November 27, 2014 10:26 AM

The East Coast main line rail route has been handed back to the private sector after a consortium of Stagecoach and Virgin was awarded the contract.

Inter City Railways fought off competition from FirstGroup and a joint venture between Eurostar and French firm Keolis to secure the running of the key British rail route. The group has pledged to invest £140 million to upgrade services over its eight-year franchise. Inter City will pay the government £3.3 billion for the contract.

It marks the first time the East Coast main line has been placed under private ownership since the government took over from National Express in 2009. While it is regarded as a major coup for Stagecoach and Virgin, the decision has faced strong criticism from rail unions. The RMT union branded the move back to privatisation "a national disgrace".

Mick Cash, general secretary of the railway union, described the decision as "an act of utter betrayal". He highlighted figures with showed that the current public sector operator in performing well and "handing over a billion pounds back to the British people". Mr Cash added that the current East Coast franchise has also made major improvements in terms of services and passenger satisfaction.

Despite opposition from the unions, transport minister Patrick McLoughlin praised the deal saying: "This is a fantastic deal for passengers and for staff on this vital route. It gives passengers more seats, more services and new trains."

Inter City has already laid its plans for the East Coast main line when it takes control of the route in March 2015. It aims to create 23 new services between London and a number of key destinations with direct links to Huddersfield, Sunderland, Middlesbrough, Dewsbury and Thornaby already highlighted.

It wants to create an extra 3,100 seat for the morning peak time by 2020 and add 12,200 seats to its entire train fleet. These improvements are also aimed at reducing journey times between London and Leeds and London and Edinburgh.

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