VTEC revenue from GC

[Paul Duck]

Not sure if in right area, feel free to move if need to sorry.
Read a interesting if long winded document on the ORR regarding how many new passengers and how much revenue they are expecting to generate from there new North Eastern services.
The new Sunderland is expected to generate 6,000 passengers a year and raise around £100,000 a year. Surely this is a paltry amount of passengers and surely will not cover the costs or running the train to Sunderland.
The Middlesbrough service is expected to abstract 1.4m a year directly from Grand Central. (Eaglescliffe passengers)
Now if the boot was on the other foot and a open access operator said they are expecting to take that much off a franchised TOC we all know where there bid would have been told to go.
I do have more figures but don't have them to hand, will post them when I find where I wrote them down and will post a link to the document.

 

[Stats]

Yes, I read that report a few weeks ago when it was first published and a very interesting read it was too. The report is part of ORR's decision making process into all the ECML applications for Alliance, First and VTEC. I see that it has since been republished with an errata.

I disagree with you on the Middlesbrough point. Of all the ECML applications this has by far the best generation to abstraction ratio of 11.99 to all TOCs and 3.88 to non-franchised TOCs.

There are a number of interesting documents on that page, not least the Network Rail capacity reports and they can all be found at www.orr.gov.uk/what-and-how-we-regulate/track-access/current-work/east-coast-main-line. The revenue report is the CH2M Hill report.

 

[HH]

I wouldn't be expecting much of a result if I was Alliance...

 

[Chester1]

I wouldn't be expecting much of a result if I was Alliance...

Looking through the capacity document, it does seem that an hourly fast service between London and Edinburgh is unlikely as it would take all spare capacity north of York and needs timing protection. I suspect First's five trains per day proposal has much more chance because it leaves some spare capacity and is more flexible. It provides competition to the franchise holder on London to Edinburgh services while allowing VTEC or Alliance to have some paths. Its likely that First, Alliance and VTEC will all get more paths. This would mean Alliance and VTEC falling far short of what they want. Personally I really like Alliances Scottish service application. 9 carriages, tilting trains, 3 hour 43 minute journey time and an hourly service would be a huge improvement, but the capacity document felt like the ORR wanted to spread the capacity over as many routes as possible.

 

[HH]

Looking through the capacity document, it does seem that an hourly fast service between London and Edinburgh is unlikely as it would take all spare capacity north of York and needs timing protection. I suspect First's five trains per day proposal has much more chance because it leaves some spare capacity and is more flexible. It provides competition to the franchise holder on London to Edinburgh services while allowing VTEC or Alliance to have some paths. Its likely that First, Alliance and VTEC will all get more paths. This would mean Alliance and VTEC falling far short of what they want. Personally I really like Alliances Scottish service application. 9 carriages, tilting trains, 3 hour 43 minute journey time and an hourly service would be a huge improvement, but the capacity document felt like the ORR wanted to spread the capacity over as many routes as possible.

I'm sure that they would. The problem is the Alliance proposals have considerably less economic benefit per path than the First or VTEC plans.

 

[swt_passenger]

Virgin/Stagecoach (VTEC) bid for the franchise knowing that there would be an hourly long distance OA path; therefore it is not a surprise to them - if their bid ignored the financial impact then tough.

The VTEC 'bid' for additional services is a requirement of their agreed SLC with the DfT, and must already allow room for OA operators as per DfT's spec.

 

[Paul Duck]

Got my notes to hand now!

MBR-KGX:
looking to create £7.9M extra revenue
which breaks down to £1.9M from non-franchised operators, it notes virtually all of this will be from passengers transferring from Grand Central at Eaglescliffe to Middlesbrough services.
Hoping to create an extra 172,00 journeys a year.

SUN-KGX:
Expecting to create a 6,000 passenger journeys a year, producing £180,000 revenue per annum.

Interesting times ahead.

 

[WatcherZero]

If its abstracting £1.9m from £9.8m (7.9 + 1.9) as you say then its a rate of 0.2, well below the 0.3 cutoff rate that ORR considers make a service primarily abstractive.

 

[DarloRich]

A price war anyone?

 

[Stats]

Virgin/Stagecoach (VTEC) bid for the franchise knowing that there would be an hourly long distance OA path; therefore it is not a surprise to them - if their bid ignored the financial impact then tough.

The VTEC 'bid' for additional services is a requirement of their agreed SLC with the DfT, and must already allow room for OA operators as per DfT's spec.

Bidders were instructed to submit a service plan accommodating current levels of open access operation. This is what the SLC is based on.

Bidders were also instructed to submit a contingency plan if they were not successful in obtaining rights for all the paths that they needed to operate the services in their bid. It is the contingency plan that had to include paths for an hourly OAO with non-tilting stock, not the primary franchise bid that forms VTECs track access application.

It appears from the franchise agreement that it is the Middlesbrough service which is conditional on obtaining the necessary paths.
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If its abstracting £1.9m from £9.8m (7.9 + 1.9) as you say then its a rate of 0.2, well below the 0.3 cutoff rate that ORR considers make a service primarily abstractive.

As I said earlier the ratios for the central estimate of the Middlesbrough service are 11.99 for all TOCs and 3.88 for non-franchised TOCs.

The breakdown is
Total Revenue: £7.9m
Newly generated: £7.3m
Abstracted (all TOCs): £0.6m
abstracted (non-franchised TOCs): £1.9m

The explanation given for the abstraction ratio being lower for all TOCs than non-franchise TOCs is because other TOCs would increase revenue, primarily Crosscountry on Newcastle/Edinburgh - York flows where VTEC would lose £1m in revenue.

 

[HH]

As I said earlier the ratios for the central estimate of the Middlesbrough service are 11.99 for all TOCs and 3.88 for non-franchised TOCs.

The breakdown is
Total Revenue: £7.9m
Newly generated: £7.3m
Abstracted (all TOCs): £0.6m
abstracted (non-franchised TOCs): £1.9m

The explanation given for the abstraction ratio being lower for all TOCs than non-franchise TOCs is because other TOCs would increase revenue, primarily Crosscountry on Newcastle/Edinburgh - York flows where VTEC would lose £1m in revenue.

And the above means that the ratio is 0.92, which makes it way over the NPA threshold (It's generative/total, not abstractive/total).