DoT announces rail franchise bidders

The Department of Transport has announced the runners and riders for the three rail franchises it has up for renewal.

In total, 13 companies are waiting on the platform to learn whether they have won the right to operate one or more of the three franchises: the Great Western, Thameslink and Essex Thameside.

For the Great Western network, successor to the railway built by legendary engineer Isambard Kingdom Brunel, the Department of Transport (DoT) said First Great Western Trains, GW Trains Limited (Arriva UK Trains - DB), NXGW Trains Limited (National Express Group) and Stagecoach Great Western Trains Limited will all be invited to tender bids for the franchise in May of this year.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The DoT will make its decision on who gets the gig by December, if all goes well. The franchise agreement will kick in during April 2013 and will last for 15 years.

The Great Western network provides long distance, commuter, regional and branch line train services from London Paddington to the Midlands, Cotswolds, South Wales and West of England, the South Coast, Devon and Cornwall and Gatwick airport. Great Western's Heathrow Connect services are expected to transfer to the separate Crossrail franchise in May 2018. The full Crossrail service is expected to operate to Heathrow and Maidenhead by December 2019, replacing most of the current suburban services provided to and from Paddington.

Bidders for the Essex Thameside franchise are Abellio Essex Thameside Limited (NV Nederlandse Spoorwegen), First Essex Thameside Limited (FirstGroup), MTR Corporation (Essex Thameside) Limited and NXET Trains Limited (National Express Group).

The invitation for tender for Essex Thameside is due to be sent out in June, with the successful bidder scheduled to be announced in January 2013. As with the Great Western franchise, the term will be for 15 years, but the new term starts a month later, in May.

Essex Thameside connects London, Tilbury and Southend and is a major commuter artery, known to its long-suffering passengers as "the misery line" because of its erratic service.

The bidders for the Thameslink franchise are Abellio Thameslink Limited, First Thameslink Limited, Govia Thameslink Railway Limited (Go-Ahead Group and Keolis SA), MTR Corporation (Thameslink) Limited and Stagecoach Thameslink Trains Limited.

Invitations to tender are set to be sent out in October 2012. The successful bidders should be announced in May 2013, with the contract starting in September 2013.

The length of the franchise will be a minimum of seven years, with pricing also required for a potential extension of up to two years, which will be at the discretion of the Secretary of State.

Thameslink is a multi-billion pound project providing new and longer trains between north and south London. The franchise will initially include train services between London, Brighton, Bedford, Peterborough, Cambridge and King's Lynn. Between April and December 2014, it will take on Southeastern's existing services on the Thameslink route. At some point between July 2014 and July 2017, the franchise will be expanded to include all of the current Southern services in south London, between central London and the South coast, through East and West Sussex, Surrey and parts of Kent and Hampshire.

A number of the quoted rail companies have commented on the DoT announcement.

Go-Ahead says it will be seeking feedback from the Department for Transport on the failure to make the cut on Essex Thameside.

Dean Finch, Chief Executive of National Express, expressed his delight at having pre-qualified for the Great Western and c2c (Essex Thameside) franchises.

"Our focus now is on submitting strong, innovative and robust bids that meet passenger needs while providing good value for fare-payers, tax-payers and shareholders alike," Finch said.

A spokesman for Stagecoach Group, which has been short-listed for the Great Western and Thameslink franchises, sounded like he had attended the same public-relations-by-numbers course as National Express's Dean Finch, as he commented: "Our bids will be firmly focused on delivering better services for passengers, value for money for tax payers and the right risk-reward profile for our shareholders."

Rail Minister Theresa Villiers was banging the same drum. "Our reformed approach to franchising will give more flexibility to train operators on how they configure services and run their business, within a framework set by the franchise agreement which will protect key outcomes for the passenger, the taxpayer and the economy," she said, though the smart money is on customers continuing to grumble about lousy services and high fares no matter which rail system the government introduces, and which companies operate the networks.