The Office of Rail and Road (ORR) has approved bids from two rail operators, including current franchisee Virgin Trains, to run new services on the East Coast Main Line (ECML) between London and Edinburgh.
The move brings more on-rail competition to the line. The ECML already has competing operators, with open access operators providing services to London from the North. Recent reports suggest the existing francisee could be considering cuts to services due to difficult financial circumstances.
ORR supported the idea of more on-rail competition but set a number of tests, including financial safeguards to protect existing operators on the line.
'We have a long-standing policy of not approving new open access services that we consider are “primarily abstractive” of an incumbent’s revenue (the NPA test). In practice this means we will not normally approve new services that do not generate at least 30p of new revenue for every £1 abstracted from incumbents,' ORR said.
The regulator said services from Virgin Trains East Coast (VTEC) and FirstGroup will be introduced in stages over the coming years, in some cases once Network Rail completes a programme of work to increase track capacity.
ORR said the changes would benefit passengers travelling to Middlesbrough, York, Newcastle, Morpeth, Lincoln, Leeds, Bradford, Harrogate and Stevenage.
Overall the regulator received bids from three train operators to introduce new train services on the ECML. An application from the Great North Eastern Railway Company Limited (GNER) was rejected.
John Larkinson, ORR’s director of railway markets and economics said: ‘These new train services will give passengers more choice on services to Edinburgh and London and provide more frequent trains to towns and cities which are not so well served by rail today.
‘Our decision has been informed by extensive analysis, formal industry hearings and detailed engagement with all parties. We have carefully weighed up the potential passenger benefits and the financial impacts on existing operators and the Government, as we are required to do by law.’
In a letter to the applicants, Mr Larkinson explained that ORR had focussed on three issues:
- the available capacity and performance implications of new services
- the costs and benefits of the alternative uses of capacity, given there will be insufficient capacity to accommodate all the applications
- the financial impacts of the applications (including on existing open access operators, the franchisee VTEC and the Secretary of State)