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Coronavirus: Rail Franchise Franchise Agreements Suspended for 6 Months

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ComUtoR

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https://www.gov.uk/government/speeches/rail-emergency-measures-during-the-covid-19-pandemic

we are providing train operators on franchises let by my department the opportunity to temporarily transition onto Emergency Measures Agreements.

In the event that an operator does not wish to accept an Emergency Measures Agreement, the Government’s Operator of Last Resort stands ready to step in.

Is there an element of mis-reporting ? That reads as if this is an option for the TOCs to agree emergency agreements and not mandatory or the Government taking over.
 
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hooverboy

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How does this affect the southeastern franchise? We were due either a direct award or government control anyway from 1st April
basically not happening until further notice.

all transport operations,communications etc will be operating as national assets. they may still have in effect private companies running the day to day ops, but the way they operate is now under the control of government for the time being.
 
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hooverboy

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Does this mean that you may use any TOC's service to get from A to B (via permitted route of course)?
if you are permitted to travel it should do,by whatever route you need to take to do your job.

government will at some stage issue a more in depth "list" of essential services companies,and will probably be giving out passes for those who are deemed necessary.

if requested these will provide travellers with the relevant information and authorisation for proof of ID/nature of business
(this is the latest information I have for the company I presently work for.Telecoms infrastructure is deemed as essential service..information is coming from my US colleagues who are under shelter-in-place/state of emergency orders for their respective states,but the same will apply here)
 
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ComUtoR

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The announcement doesn't say that ALL franchises have been suspended. Grant Shapps has stated that they have been given the "opportunity" to take Emergency Measures. Not that franchises have been suspended.

Southeastern is also in a very unique position in that their franchise expires in a week. They may or may not be the franchise holder so would not be in a position to accept 'emergency measures' They could literally walk away next week and hand the whole lot over to the OLR. Especially if there were not going to be given the expected Direct Award.
 

JammyJames08

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The announcement doesn't say that ALL franchises have been suspended. Grant Shapps has stated that they have been given the "opportunity" to take Emergency Measures. Not that franchises have been suspended.

Southeastern is also in a very unique position in that their franchise expires in a week. They may or may not be the franchise holder so would not be in a position to accept 'emergency measures' They could literally walk away next week and hand the whole lot over to the OLR. Especially if there were not going to be given the expected Direct Award.

My thoughts exactly...
 

Murray J

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The announcement doesn't say that ALL franchises have been suspended. Grant Shapps has stated that they have been given the "opportunity" to take Emergency Measures. Not that franchises have been suspended.

Southeastern is also in a very unique position in that their franchise expires in a week. They may or may not be the franchise holder so would not be in a position to accept 'emergency measures' They could literally walk away next week and hand the whole lot over to the OLR. Especially if there were not going to be given the expected Direct Award.
bit off topic I know, but who exactly is meant to take over southeastern? there's been no announcement and know this announcement adds a whole other layer to it.
 

kieron

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The announcement doesn't say that ALL franchises have been suspended. Grant Shapps has stated that they have been given the "opportunity" to take Emergency Measures. Not that franchises have been suspended.
There are two announcements quoted in this thread on the same subject, both with today's date; one in post 1 and one in post 31. One of these does say that all franchises will be suspended.

The distinction may be academic, though. I doubt any of the franchises will carry anywhere near as many passengers as they planned to do this year, so this is a choice between a guaranteed income stream from the government, and franchise targets they have no realistic chance of meeting this year, and perhaps not in the rest of the franchise.
 

ComUtoR

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SE currently has two choices. OLR or Direct Award. That decision is due to be announced any day now. Negotiations have been taking place for some months and the grapevine has been leaning towards a two year direct award.

Chuck in Corona and what happens now ? IF the decision was to go under the OLR then will that still take place or IF the decision was for a direct award then will it be awarded ? If it was a direct award then I would assume that Govia could immediately take the Governments option of Emergency Measures because they would be in a position to accept or decline that offer. Could Govia accept emergency measures for a franchise they don't technically hold ?

SE are in a precarious position tbh.
 

Brissle Girl

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Why wouldn’t Govia carry on? A guaranteed income and be the holder in place when things improve and the govt wants to move to a direct award for a couple of years whilst they put in place whatever the long term system is going to look like. The govt statement won’t have gone into the specific circumstances of the SE and GW franchises, but you can be sure the effect is the same.

Methinks people are overthinking this.
 

ComUtoR

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There are two announcements quoted in this thread on the same subject, both with today's date; one in post 1 and one in post 31. One of these does say that all franchises will be suspended.

Post 1 is a news article with quotes taken from the actual announcement. post 31 is the written statement to parliament direct from Grant Shapps. Both state that an operator might not want to accept the emergency measures.

The distinction may be academic, though. I doubt any of the franchises will carry anywhere near as many passengers as they planned to do this year, so this is a choice between a guaranteed income stream from the government, and franchise targets they have no realistic chance of meeting this year, and perhaps not in the rest of the franchise.

The fee has been set at : "a maximum of 2% of the cost base of the franchise before the COVID-19 pandemic began" I'm sure the Accountants will be working out the sums and I'm sure that Solicitors will be looking over the fine print.

Looking at the position SE is in. What will the 2% be based on ? The last direct award ?, A new one ? or some kind of agreed cost to manage the franchise for the next 6 months and then back to square one for the OLR/Direct award again ?
 

kieron

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Post 1 is a news article with quotes taken from the actual announcement. post 31 is the written statement to parliament direct from Grant Shapps. Both state that an operator might not want to accept the emergency measures.
I'm not sure what you're trying to say with your first sentence. We have two pages on the government web site, each of which carries Grant Shapps' name. That seems to me to be the important thing about them. Do you see it differently?

On train operators, the post 1 article appears to give franchisees' choice as being between accepting the agreement and losing the franchise. It says:
In the event that an operator does not wish to accept an Emergency Measures Agreement, the Government’s Operator of Last Resort stands ready to step in.
 

kensal rise

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Looking at the position SE is in. What will the 2% be based on ? The last direct award ?, A new one ? or some kind of agreed cost to manage the franchise for the next 6 months and then back to square one for the OLR/Direct award again ?

Southeastern's accounts to June 2019 showed operating costs of £958m - 2% would be about £19.2m / six months would be £9.6m - surely Govia would rather have that with no financial risk than giving it over to OLR
 

hwl

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Southeastern's accounts to June 2019 showed operating costs of £958m - 2% would be about £19.2m / six months would be £9.6m - surely Govia would rather have that with no financial risk than giving it over to OLR
Indeed, bonkers not to accept.

The only time you wouldn't is if you were going to "hand back the keys" anyway.

a potential complication is if the cost base was pllaned to increase in the short term e.g. SWR with new stock.
 
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PG

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Indeed, bonkers not to accept.

The only time you wouldn't is if you were going to "hand back the keys" anyway.

a potential complication is if the cost base was pllaned to increase in the short term e.g. SWR with new stock.
Agreed, IMO bonkers not to accept.

I've already mentioned it in the Caledonian Sleeper thread, as being the most likely TOC which might be wanting to 'hand back the keys'?

EDIT:
Should have checked the Caledonian Sleeper thread as my points have been answered there, thanks :oops:
 

hwl

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Agreed, IMO bonkers not to accept.

I've already mentioned it in the Caledonian Sleeper thread, as being the most likely TOC which might be wanting to 'hand back the keys'?

EDIT:
Should have checked the Caledonian Sleeper thread as my points have been answered there, thanks :oops:
Actually I'd put C2C (TrenItalia) as fairly near the top of the queue as they have been making certain noises before the crisis.

The sleeper is TS's problem not DfT's.
 

jopsuk

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been mentioned elsewhere, but the big threat here is to the Open Access operators. they're not covered by this
 

PG

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They have the option to cease operations and furlough staff with the 80% grant, which is what I suspect they will do. They aren't exactly essential.
How much use is their rolling stock to other operators?
If not much then I guess the ROSCOs will accept alterations to the leasing payments.​
If they do however have a ready use with other operators then wouldn't the ROSCOs say no pay no stock and lease it to another operator?

Which then leaves them in a difficult position if they wish to resume their operations...
 

Killingworth

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How much use is their rolling stock to other operators?
If not much then I guess the ROSCOs will accept alterations to the leasing payments.​
If they do however have a ready use with other operators then wouldn't the ROSCOs say no pay no stock and lease it to another operator?

Which then leaves them in a difficult position if they wish to resume their operations...

The government hasn't had time to set a longer term strategy but must already be looking beyond the first 6 months to an effectively nationalised railway. The cost base is going to be severely impacted and revenues even more so. As passenger numbers on most routes have fallen off a cliff, and won't come back to previous levels for many months, if at all, it's anyone's guess what will happen. TOCS of all kinds, including Open Access, need to be kept running until we're able to see more clearly ahead.

I'd suspect quite a few older units will be scrapped earlier than expected a month ago, with a general shuffling of the pack over the next two or three years as things settle down again.
 
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Bletchleyite

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How much use is their rolling stock to other operators?
If not much then I guess the ROSCOs will accept alterations to the leasing payments.​
If they do however have a ready use with other operators then wouldn't the ROSCOs say no pay no stock and lease it to another operator?

Which then leaves them in a difficult position if they wish to resume their operations...

The Electrostars which will be used going forwards are leased by GWR. The Siemens stock is no real use to anybody and is likely to be scrapped once finished.
 

CeeJ

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How much use is their rolling stock to other operators?
If not much then I guess the ROSCOs will accept alterations to the leasing payments.​
If they do however have a ready use with other operators then wouldn't the ROSCOs say no pay no stock and lease it to another operator?

Which then leaves them in a difficult position if they wish to resume their operations...

Will other operators be in a place to pick up new stock with these emergency contracts? Even if they did post-pandemic, wouldn't it be the same as creating a new payment plan with Open Access operators?
 

PG

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Will other operators be in a place to pick up new stock with these emergency contracts? Even if they did post-pandemic, wouldn't it be the same as creating a new payment plan with Open Access operators?
I think all bets are off right now, and afterwards we may well be left with DfT effectively running the show even more than previously so it'll likely depend upon them.
 
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