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FirstGroup vies with Virgin in west coast rail bidding war

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ainsworth74

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There would be serious questions if First wins regarding Market dominance.

There is a possibility that First may not get the Greater Western Franchise if they get the ICWC Franchise

Do you have examples that suggest that a company cannot win a franchise due to 'market dominance' issues? I'm not aware of there every being any bid ending competition issues and remember there was a time when NX held a vast number of franchises and they weren't barred from bidding on new ones. Similarly Virgin were allowed to bid on ICEC when they already held ICWC and XC and don't think they lost it due to competition issues.

I hope Justine Greening and Theresa Villiers will make the right decision of awarding Virgin the Franchise and not sub-combing to Gideon's demands and blackmail

That's a pretty serious allegation, due you have any evidence to back it up?
 
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Today I have just received another excellent piece of customer service from Virgin - a refund for a First Class Advance ticket which I couldn't use due to ill health.

It has to be said that Virgin Trains go above and beyond the level of customer service required from a train company. I fear that if First win and squeeze every last penny out of the franchise (which they'll have to do if they're looking at such big premium payments), customer service may take a turn for the worst.
 

Morgsie

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Do you have examples that suggest that a company cannot win a franchise due to 'market dominance' issues? I'm not aware of there every being any bid ending competition issues and remember there was a time when NX held a vast number of franchises and they weren't barred from bidding on new ones. Similarly Virgin were allowed to bid on ICEC when they already held ICWC and XC and don't think they lost it due to competition issues.



That's a pretty serious allegation, due you have any evidence to back it up?

That is the impression I got reading the Telegraph article.

It is not the first time HM Treasury have called the shots, Privatisation
 
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Hi all.

I currently side within VT and thought i'd share my views with you all. My thoughts and views are from a rail employ and not a customer.

Up until the recent articles that have been released we (all VT staff) were very much looking forward to hearing VT were going to get the franchise. However, since this information came out its put massive doubts in our minds.

I was talking with someone who is high up with the exec's and he said he is basically worried. Mr B wouldnt be writting to J.Greening direct if he didt have real concerns - I guess hes correct, its sounds feasable.

With regards to VT 'pulling the rug from the bid team' - They were brought into the company with one goal, and that was to put together a successful bid. Once the bid has been submitted to the DFT then theres nothing anyone can do. They were all aware when they accepted their fixed term contracts they wouldnt stay with the company after the bid was sent, so to say VT sacked them all isnt correct.

I left TPE to be with VT because back then VT were the rail company of choice. High profile, good wages, excellent salary. It had everything. I've been here for a long time now and love it.

It would be a huge shame should VT lose the franchise, but I guess thats what happens in business/franchise.

From what information I can gather First are going to keep the onboard shop but make huge cuts to the catering teams. At present on any breakfast service you have 1 in the shop and upto 7 working in 1st class. 1 Service Manager, CSAs and 1 Chef. There are around 850 catering staff.

Under First they propose to have 1 on the shop and upto 3 max in 1st class dependant on the service they are working, (Pendolinos). Voyagers will remain 2 staff, 1 in the shop 1 in 1st. Everyone will be paid a CSA rate of paid, greatly reduced from what they currently get paid.

I have'nt leaked any pay information, its for all to see on the careers website but Service Managers are paid in excess of £31,000 a year, Assistant Service Managers in excess of £28,000 a year, Chefs about £26,000 and CSAs upto £26,000 a year dependant on location. (higher pay in London). Obviously all pro-rotated pay (but figures above based on 41hr week).

It may take time for these changes to come into effect, anything upto 12 months. Imagine how much money they would save from all that?!

To give you an idea there are currently around 120 staff across all departments which have fixed term contracts that expire on 8th December 2012. I very much think they will instantly be gone under First.

VT are the first rail company in the UK (to my knowledge) which employ weekend casual staff, there isnt many, but they will also go, as would the purpose built recruitment centre.

As you can see theres a lot of people who would be effected by a potential takeover from First. To say we are worried is an understatment.

I just hope the DFT make the right choice.

Just my 10p to add to the conversation. :|:|

Regards,

A very worried TM and ex caterer.
--- old post above --- --- new post below ---
Virgin might only be gone for a year anyway, surely they'd put everything into trying to get East Coast if they lose this?

Think about it from a share holders point of view. You put millions into a bid for the WCML but its refused. Would you then put more money to bid for another franchise? More importantly, would you as the DFT award the ECML to a company which did't hold a franchise? i.e if VT lose the WCML.

Its sad to say, but if VT dont win the WCML then they would be gone for good.
 

krisk

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No one knows anything yet. I'm sure a huge shake up will follow and yes it would nice to be a part of that but I am under no illusions.

I do have several other job apps ongoing with different companies
 

David10

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Love all the media speculation, its simple, no one knows until Tuesday.
Every time the media has started writing up who was the franchise winner at this stage of the cycle they have been correct, Arriva with XC, Abellio with GA etc. The media's source is not messroom gossip but a leaking DfT and all actions since the first article a few weeks ago have pointed to First being the preferred bidder.
 

Trains06

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I am definitely siding with the Virgin camp on this one - there doesn't seem to be any real benefit in First's proposals - less boots on the ground in First, massive staff cuts everywhere... Virgin are certainly on the "good guy" side at the moment in my mind!
 
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At this stage its not over though. The Guardian in fairness have always been anti-VT. What I do know is though, it just takes someone high ranking to ask the right questions. In this case 'Is FirstGroups bid deliverable' - thats why a letter was written to Justine Greening and David Cameron CC'd.

Not that im bias but its interesting to see how other TOCs are viewed from rail people, both workers, customers and enthusiasts. Personally I think we have turned around the WCML but theres still a lot of work to be done. VT are far from perfect, but knowing FirstGroup they are about cost cutting. VT staff cuts aside, it will also have a massive effect on the travelling public.
 

87015

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I am definitely siding with the Virgin camp on this one - there doesn't seem to be any real benefit in First's proposals - less boots on the ground in First, massive staff cuts everywhere... Virgin are certainly on the "good guy" side at the moment in my mind!
So if Vigin don't cut, how are they going to meet their premium payments which are WAY above what they are paying currently and the levels Abellio/SNCF see as viable?
 

Trains06

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So if Vigin don't cut, how are they going to meet their premium payments which are WAY above what they are paying currently and the levels Abellio/SNCF see as viable?

I'm not saying Virgin won't cut staffing but I think First will be more aggressive in staff cuts if they win it. Alot of the catering team are overpaid, perhaps some cuts in pay would be better?
 
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So if Vigin don't cut, how are they going to meet their premium payments which are WAY above what they are paying and the levels Abellio/SNCF see as viable?

Staff being paid too much. Give all caterers a base level salary. Is there any other job which pays £31,000 a year for pouring tea and coffee? Nope. There just isnt a need. Yes, it would effect people massivly, but they wouldnt be out of a job. IMO a caterer should never be paid any higher than £18,000 a year base salary. Given the fact theres 800+ catering crews thats a massive saving in itselfs.
 

David10

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There is a possibility that First may not get the Greater Western Franchise if they get the ICWC Franchise
If First come up with the best deal for GW they will win, plain and simple. Any talk about market domination is just that. Virgin prepared 3 bids for East Coast at the same time as they operated WC and XC.

The only reason I can see First withdrawing from the race is the strain on the balance sheet the performance bond may place, but I think they will manage it.
 

ainsworth74

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More importantly, would you as the DFT award the ECML to a company which did't hold a franchise? i.e if VT lose the WCML.

Why would that matter? If Virgin were a new entrant to the UK Rail market I'd expect the DfT to be hesitent to award a franchise like ICEC to them, bearing in mind there will be other companies bidding with far more experience. But seeing as Virgin are very experienced when it comes to railway operation, I don't see why not holding a franchise would be an issue when it comes bidding?
 

Class377/5

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I am definitely siding with the Virgin camp on this one - there doesn't seem to be any real benefit in First's proposals - less boots on the ground in First, massive staff cuts everywhere... Virgin are certainly on the "good guy" side at the moment in my mind!

See one thing I can't understand is the view point First = 'massive' staff cuts, Virgin = good.

First are offering £7bn over 14 years or £500m per year

Virgin are offering £6bn over 14 years or £428m per year

These figures are based on the leak stuff but if First have to do massive pay cuts to achieve the £500m, I doubt that Virgin wouldn't be looking to do the same just not quite as much. Maybe 'large' staff cuts then?
 

YorkshireBear

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That is the impression I got reading the Telegraph article.

Little bit naive of you there, because papers never exaggerate or lie do they... None of them are biased towards their buddies?

Take anything read in a newspaper with a pinch of salt. (with some newpapers take a suitcase of salt)
 

Stats

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There would be serious questions if First wins regarding Market dominance.
Why? What market dominance? Please tell me of the West Coast flows where First operate an air, rail, coach or bus operation over the same flow.

There is a possibility that First may not get the Greater Western Franchise if they get the ICWC Franchise
What has the West Coast franchise got to do with the Great Western franchise? Please tell me where there is a single flow that overlaps on the two franchises.

Virgin might only be gone for a year anyway, surely they'd put everything into trying to get East Coast if they lose this?
I don't see it if East Coast becomes a multi-purpose franchise, as all the signs are pointing it to go.
 

tbtc

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One point not raised yet - with First potentially selling off millions of pounds of bus operations (or just shutting them down), they are going to be very heavily dependant upon a couple of rail franchises in future if they win this bid.

That will mean years of stability, but it will also mean that in fifteen years time a lot will hinge on their ability to re-win the WCML franchise.

Krisk, what makes you think Virgin will be so much better than First? The VT bid is also massive and there will have to be cuts and revenue increases left, right and centre regardless of the colour of the train

This is important - Virgin are offering a significantly larger premium to the Government over the course of the next franchise (compared to what they currently pay), so they will have to raise fares significantly (though Virgin fares have gone up a few times over the years already...)/ cut staff etc.

Anyone pretending that First are the bad guys and Virgin are going to save all these jobs/ not put tickets up etc is being naive.

I am definitely siding with the Virgin camp on this one - there doesn't seem to be any real benefit in First's proposals - less boots on the ground in First, massive staff cuts everywhere... Virgin are certainly on the "good guy" side at the moment in my mind!

We don't know what their proposals are. We've seen suggestion that First are offering the Government more money, which we can't be certain about, but everything else is just guesswork. Maybe one bidder is offering to run more services than the other? Who knows.
 

Skimble19

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The RIGHT bid must be chosen. There are laws in place that would (should) stop someone ignoring the content of the bids and just picking the one they fancy, or has done the most lobbying. In fact, that would be corruption and would land everyone in deep water.

Just like Bombardier not winning contracts, if it's a case of Virgin not putting in a good enough bid, it will be its own fault. And while First may have overbid just to buy the franchise, we can't all sit here and automatically assume it will fail.

I have more faith in First than National Express, but even National Express may come back now that it has Elaine Holt working on future bids. I am sure she will have gone there to give advice on where they've gone wrong before.

I do agree that it would be a shame to lose Virgin on the railway but that's sadly the way franchising works.
Of course, Elaine was at DOR and East Coast during the initial clean up after NX walked away from NXEC, so she will know a fair bit about what they done wrong.

With Elaine on board I would expect NX to have a resurgence - she's not the kind of woman who'll be very keen on them sitting around doing nothing for very long.. As a minimum I would hope they'd keep c2c (as in all fairness, they've done nothing wrong there!), not really too sure about what else they'd be likely to go for though.
 
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sprinterguy

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Think about it from a share holders point of view. You put millions into a bid for the WCML but its refused. Would you then put more money to bid for another franchise?
How else would rail franchising work if prospective franchisees didn't keep bidding for franchises as they come up? The number of different franchises that the likes of First, National Express and Abellio have expressed interest in, been shortlisted for or are currently preparing bids for at the present time defies your rationale somewhat.
More importantly, would you as the DFT award the ECML to a company which did't hold a franchise? i.e if VT lose the WCML.
As much as it often seems that way, there is no evidence as you seem to suggest that the rail franchising process is a private party where only those who are already inside need apply. Both Abellio and MTR Corporation are relative newcomers to the UK rail industry, yet they have both been awarded franchises (Or a concession, in the case of MTR/DB running London Overground). I don’t recall that the Go Ahead Group were awarded/bid for anything in the original round of franchising either, yet they now operate a number of franchises.
 

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As much as it often seems that way, there is no evidence as you seem to suggest that the rail franchising process is a private party where only those who are already inside need apply. Both Abellio and MTR Corporation are relative newcomers to the UK rail industry, yet they have both been awarded franchises (Or a concession, in the case of MTR/DB running London Overground). I don’t recall that the Go Ahead Group were awarded/bid for anything in the original round of franchising either, yet they now operate a number of franchises.

IIRC Arriva didn't win any of the first round of franchises and First only won one (Great Eastern)?

(Arriva later took over MTL's buses and their two rail franchises in northern England, First took over Great Western Holdings and their two franchises)
 

fgwrich

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Of course, Elaine was at DOR and East Coast during the initial clean up after NX walked away from NXEC, so she will know a fair bit about what they done wrong.

With Elaine on board I would expect NX to have a resurgence - she's not the kind of woman who'll be very keen on them sitting around doing nothing for very long.. As a minimum I would hope they'd keep c2c (as in all fairness, they've done nothing wrong there!), not really too sure about what else they'd be likely to go for though.

Not just Elaine, but also a seemingly host of other ex First Group / Virgin and quite possibly even Stagecoach managers. One worry, and rival to the First Groups FGW bid is NXs - As a certain Mr Dean Finch was previously on First's Side for the GW, now he's on NX's. And as it's been said elsewhere, Great Western was always Dean Finches’ franchise, and now he'll be going for gold on it again.

To be fair to C2C though, NX haven't really had anything to do to it - Most of the Upgrades were carried out by the once upon a time Prisam Rail, and one of the managers responsible for that, a certain Mr Hopwood.
 
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fgwrich

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Ok, West Coast, Great Western, Capital Connect, TPE and Scotrail. However, Great Western is under tender - so they may or may not win that, CC is under tender - so they may or may not win that, TPE and Scotrail will both also be going out to tender in the near futures, so they may or may not win those either.

Which none of this comes close to the one upon a time empire of NX - who once operated:
Wales and Borders - until 2003
Scotrail - until 2004
WAGN - until 2006
Wessex Trains - until 2006
Central Trains - until 2007
Midland Mainline - until 2007
Sliverlink- untill 2007
Gatwick Express -untill 2008.

So, at any one time, NX operated 8 Franchises, all without complaint - So what makes First taking over the IWC so dominant, given that First way well lose some of its current franchises?
 

All Line Rover

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This is important - Virgin are offering a significantly larger premium to the Government over the course of the next franchise (compared to what they currently pay), so they will have to raise fares significantly (though Virgin fares have gone up a few times over the years already...)/ cut staff etc.

That is debatable. Anytime fares on the WCML are already buckling under the pressure of continual rises. Standard Class Seasons are regulated, and the SOR:7DS ratio is reaching equilibrium on many flows (whereas under BR and at the start of the franchise it was more like 4:1).

For example, Crewe to Milton Keynes. SOR £152. 7DS £152.40. Also Stoke to London Euston. SOR £246. 7DS £305.10.

Whilst there is nothing to stop VT or First increasing Anytime fares above the level of a 7DS (for which fare increases are limited by those set by the government, and for which any huge rises would provoke outrage among commuters), people would simply switch to using season tickets, which is perfectly legitimate. (Also, whilst I can't confirm this, I don't believe TOCs are allowed to withdraw 7DS fares which have always been available).

With regard to the FORs, when you consider the plummeting numbers of First Class passengers in recent years, to increase these fares by 50% or 100% would make no business sense whatsoever, especially if there was a reduced level of service.
 
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calc7

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See one thing I can't understand is the view point First = 'massive' staff cuts, Virgin = good.

First are offering £7bn over 14 years or £500m per year

Virgin are offering £6bn over 14 years or £428m per year

These figures are based on the leak stuff but if First have to do massive pay cuts to achieve the £500m, I doubt that Virgin wouldn't be looking to do the same just not quite as much. Maybe 'large' staff cuts then?

I don't think it is wise to consider the figures in absolute terms.

The "margin" may be say £350m, in which case First are offering "twice" as much relatively than Virgin.
 

sprinterguy

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To be fair to C2C though, NX haven't really had anything to do to it - Most of the Upgrades were carried out by the once upon a time Prisam Rail, and one of the managers responsible for that, a certain Mr Hopwood.
National Express have had an awful lot to do with ensuring that the C2C operation is the most punctual in the UK, that the class 357 fleet is one of the most reliable train fleets in the UK (In combination with their Bombardier engineering staff at East Ham) and in consistently keeping the trains in exceptionally good nick internally and externally (C2C cleaning is outsourced, but they must have good communication with their contractor if the trains are kept as tidy as they are). They also have an impressive CCTV network.

C2C provides a superb commuter rail operation, and this would not be the case if National Express had done nothing but rest on their laurels since they took over from Prism.
 
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fgwrich

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National Express have had an awful lot to do with ensuring that the C2C operation is the most punctual in the UK, that the class 357 fleet is one of the most reliable train fleets in the UK (In combination with their Bombardier engineering staff at East Ham) and in consistently keeping the trains in exceptionally good nick internally and externally (C2C cleaning is outsourced, but they must have good communication with their contractor if the trains are kept as tidy as they are). They also have an impressive CCTV network.

C2C provides a superb commuter rail operation, and this would not be the case if National Express had done nothing but rest on their laurels since they took over from Prism.

Ah ok, crikey - i didn't realise they'd done that much then! You can see why First were so keen to catch Mark Hopwood then.
 
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