If we step back to the early 1990s it should be remembered that due to the recession at that time BR cut various bits of capacity out of the network (in a way it could because there was no minimum service requirements that franchises now have) - both services and train formations.
We then moved after the 1992 election towards privatisation, the arrival of shadow Train Operating Units and then privatisation itself. Nobody was predicting massive growth. It was thought that managed decline, stabilisation or possibly modest growth was the order of the day. Companies looked at what they could do with existing assets - faster turnarounds, some frequency increases, etc. A lot of new stock assumptions were made on that basis, so orders for new stock would have reflected what was budgeted for in the bids. And whilst some services were busy others were pretty empty. I can recall travelling on some West Coast and CrossCountry services and having my pick of tables for four, it being very unusual to find someone needing to sit opposite me. Advance Purchase fares were still in their infancy (I remember having to go to the station to book them, my ticket being printed on different stock and given a separate compulsory reservation coupon).
Under the original franchise models there might well have been incentives for TOCs to go out and agree to lease more new stock, or extend existing fleets. But gradually in the 2000s as the first franchises ended first the Strategic Rail Authority (SRA) and then an ever more prescriptive DfT (with an ever hungry Treasury in the background looking for huge premiums or minimum subsidies) throttled innovation and risk taking. We've seen some of the worst effects of that with Direct Awards in the 2010s, where extending an existing franchise for a few years delivers minimal changes because it is hard for the incumbent to get a return on major investment (whether a refurbishment or new stock) and DfT won't sign off on it either because it could affect plans for the franchise.
Chris Green admitted that when he was brought in by Virgin Trains it was too late to alter the designs of the Voyagers (wouldn't have had universal toilets in non-driving coaches; a buffet in place of a shop) and Pendolinos (buffet in place of a shop). For those who complain about trains being first class heavy, again in the late 1990s it was thought the big growth area would be getting business people out of cars or planes and into First Class with fast, frequent services. It was hoped to using yield management to spread the leisure travel load. But nobody foresaw companies cutting back on First Class travel, changing travel habits, etc.
When National Express took on the Midland Mainline it had a fleet of 14 HSTs and was effectively offering an hourly service to Sheffield and Nottingham. It brought in the 170s to try and speed up the longer distance services, but ended up stimulating new demand at the same time. It was able to extend 10 of the 17 units to three-cars but it still wasn't enough - hence their replacement by 4-car 222s in their second franchise (the 9-car 222s were for a Leeds service that the SRA quashed).
Stagecoach nearly got a twenty year franchise for SWT in the early 2000s but it was never let after DfT got cold feet. Even then, they hoped to introduce more Desiros than they did - 100 4-car 450s for outer suburban services and 32 5-car 450s for Windsor side routes. The SRA (them again) quashed that and all SWT got was 110 4-car 450s. The remaining 120 vehicles were delivered as the Class 350/1s for joint use by Silverlink and Central Trains. We had a TOC trying to delivering a 10-car railway on the Windsor side ten years earlier than actually happened!
Everyone moans about the 185s on TPE but it was the SRA (yep!) who cut back the original order. There were also several attempts to extend a number of the units to four coaches before delivery but it never happened because the SRA and DfT wouldn't agree terms. First they missed the opportunity to order more engines (which would have had all four coaches powered) and even when it was realised a trailer could probably be added it never happened.
Remember Virgin wanting to extend all Pendolinos to 11-cars but DfT refusing terms? Remember Virgin wanting to keep a small fleet of 2+5 HSTs (Class 255 Challengers) for Swindon-Birmingham services?
The privatised railway comes in for a lot of grief. Some of it is justified and there are own goals. But British Rail was never controlled or micro-managed to the extent that the current franchises operators are by DfT. It is the private companies that take the flack and it was ultimately why National Express walked away from UK rail (who recalls they once had the most TOCs?). Stagecoach were forced to exit after non-compliant bids, but in some of the things they were non-compliant on they have been proved right (hello SWR!).
But back to topic. Operation Princess was ambitious. In some ways it was naive. It was scoped too tightly in terms of performance. It was also probably a bit too complex for something being shoehorned through Birmingham New Street that way. By the time the franchise was won by Arriva the timetable had been recast and the DfT wanted a very different type of bid. So no opportunity to extend all Voyagers to 6-cars for example
