East Coast set for cuts as ORR considers on-rail competition

 

The operators of the East Coast rail franchise, which has been reported to be struggling financially, are planning cuts as they face ‘on-rail’ competition from other companies.

The Transport Salaried Staff Association (TSSA), which represents ticket office staff, has warned that up to 100 jobs could be lost at travel centres between London and Edinburgh. The Rail, Maritime and Transport (RMT) union has also warned of the impact of proposed cuts.

”Local
Virgin's new Azuma train will operate from 2018

Inter City Railways, a consortium between Virgin Trains and Stagecoach controversially took over the franchise last year after it was successfully run within the public sector. The consortium promised to pay the Government more than £3bn over eight years and to invest heavily in the business.

Last month RMT general secretary Mick Cash said the union was deeply concerned that rumours of serious losses appear to be confirmed in the company’s financial returns.

A spokesman for Virgin Trains on the East Coast route did not deny that the company was struggling financially. He said: ‘Virgin Trains is continuing to deliver on the contract signed with the Department for Transport, growing the business and improving the experience for passengers. We are meeting both our promises around significant investment and our commitments on premium payments to the taxpayer.’

It has also been reported that the Office of Rail and Road (ORR) will decide shortly whether to allow ‘on rail’ competition on the line, following a study published in January that said that competition would lead to lower fares, significant additional revenue, and a substantial benefit to passengers.

However, the study by CH2M also advised ORR to consider ‘whether applicants would be likely or able to adopt a strategy to charge higher fares, having first secured track access rights’.

A spokesman for ORR told Transport Network: ‘We are currently assessing four competing applications to use the limited capacity of the East Coast Main Line (ECML). These are from Virgin Trains East Coast (the DfT franchisee), FirstGroup, and two applications from Alliance Rail Holdings.

‘Three of these applications include proposals for long distance high speed trains between London and Edinburgh and all four would require capacity at the very busy southern end of the route.’

In March a report from the Competition and Markets Authority (CMA) said that allowing operators to run competing services on the same line could bring a range of benefits, including lower fares and growth in passenger numbers.

At that time, ORR chief executive Joanna Whittington said it had been working closely with the CMA on the project, ‘and our analysis fully supports their view that more competition could realise even greater benefits for rail passengers’.

 
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