Great Western Coffee Shop

FGW decision to extend (or not) the franchise, assuming they qualify will be known by the end of the year....

FGW decision to extend (or not) the franchise, assuming they qualify will be known by the end of the year....

Apart from the scotrail franchise do first group have any other rail operations?

First Capital Connect, and First TransPennine are the two other large ones, with First Hull Trains as a little added extra.

Article about that here: http://www.guardian.co.uk/business/2011/mar/13/firstgroup-may-abandon-first-great-western-franchise (http://www.guardian.co.uk/business/2011/mar/13/firstgroup-may-abandon-first-great-western-franchise)

FirstGroup is considering handing back the ^1.1bn First Great Western rail contract three years ahead of schedule as the economic downturn and delays in the introduction of the new generation of intercity trains threaten the viability of the franchise.

A unique break clause in the transport giant's contract allows it to terminate the franchise in 2013, and save ^826.6m in payments to the government over the following three years. FirstGroup is giving this serious consideration because it is already missing revenue targets as the recession hits demand for services that include the London-to-Swansea and London-to-Oxford lines and routes throughout south-west England.

In a further hindrance to FirstGroup, the business case envisaged a modern fleet of trains generating enough revenue to cover the rapid escalation in fees from 2013 to 2016. But the government confirmed this month that the new intercity trains would arrive from 2016, not 2013 as first thought.

FirstGroup must decide by the year end whether it will continue beyond 2013, but a verdict is expected sooner. "We have to make a decision before the end of the year as to whether we are going to exercise our contractual right to extend the FGW franchise to March 2016," the company said.

It is understood that FirstGroup is not seeking to renegotiate the contract after National Express's attempts to haggle over the ^1.4bn East Coast franchise in 2009 ended in failure. National Express relinquished the loss-making deal, lost its chief executive and narrowly avoided exile from the passenger rail market.

Douglas McNeill, analyst at Charles Stanley Securities, said FirstGroup had a strong case for requesting revised terms because of the intercity delays and likely disruption from the building of the ^16bn Crossrail line, which includes major work at First Great Western's London Paddington terminus. But he added that the Department for Transport would be confident of recouping almost all of the ^800m it would lose from the early termination. "FirstGroup has the moral high ground in seeking revised terms, but since there would be no shortage of interest if the franchise were retendered, the DfT may feel it holds the whip hand."

The First Great Western contract demands hefty payments ^ more than ^140m this year alone ^ but it is heavily reliant on government support to meet its targets: it received an extra subsidy of ^133m last year.

This will be one of the first major decisions for Tim O'Toole, the former head of London Underground who is FirstGroup's new chief executive.

...possibly big changes to the timetables. Then the electrification and new IEP trains in 2016...

6.) Govia I know they run the southern & southeastern franchises - anyone know if they are any good

It will be a very interesting period in the next few years or so then, especially if a new operator takes over in 2013.  New operator, new liveries, possibly big changes to the timetables. Then the electrification and new IEP trains in 2016.  Very interesting.

I wonder who will take over then, should First Great Western call it a day.  National Express, to become National Express Great Western?

With the Government talking up 20+ year franchises, I can well imagine FG considering a fresh contract.

Having said that, with things as they stand with the recession and the "cap/collar" benefit FG has benefited from, how would FG stand if they continue to miss their income projections past 2013?  As a new franchise, the cap/collar protection wouldn't kick in straight away

Also, i'm surprised the usual line of "Don't FG own a few HSTs?" hasn't been mentioned yet...  :D

Whoever else would bid for a new franchise would have to come up with an intrim solution to cover the start of the new franchise and IEP units coming on stream unless First would be prepared to lease them to the new franchise holder. All the best with that one.

I also don't think it would be that clever of First to try and hold the DfT to ransom.

With the Government talking up 20+ year franchises, I can well imagine FG considering a fresh contract.

Having said that, with things as they stand with the recession and the "cap/collar" benefit FG has benefited from, how would FG stand if they continue to miss their income projections past 2013? 

Also, i'm surprised the usual line of "Don't FG own a few HSTs?" hasn't been mentioned yet...  :D

I've said elsewhere, I don't believe the fact that First Group own a few HST power cars is that much of a bargaining chip in franchise negotiations. These power cars have a value to First Group outside of the FGW franchise and I can't see First Rail Holdings Ltd sitting on them and not offering them for lease to a new Greater Western franchise holder. It's also very likely that 5 Class 180s will be available to cover any shortfall should First Group play silly buggers and not offer the power cars for lease. I also don't think it would be that clever of First to try and hold the DfT to ransom.

I agree they aren't much of a bargaining tool.  There's little or no use for them in the other First franchises AFAICS

You may think that but First have every right to say to the dft "We will scrap the HSTs if you don't give us the franchise" and the dft would have little choice but to give the franchise to First.

'DfT gives in to blackmail' just ain't going to happen

Silly question alert ...

The franchise was let on very low growth forecasts that have been exceeded with trains filled to the rafters all over the place.  On lines they're already 3 carriages when they were bid as 2 carriage services form the life of the franchise, and there's talk of those services needing 4 or 5.   Seven of the 10 most overcrowded trains in the UK are in FGW land, and even on a Saturday morning and Sunday afternoon I can find you places where your journey will be uncomfortable or impossible due to overcrowding.

So to my simplistic mind, the train operator's getting rather more farebox income than they would have expected and that's not going to be offset by extra rolling stock costs - you only need one driver if a train is 2, 3, 4 or 5 carriages. Due to overcrowding I suspect they're getting more income per vehicle anyway, and fare haven't exactly lagged behind inflation.

So why has the franchise fallen into "Cap and Collar"?   Surely it can't be because fewer people are buying cups of railway tea as they travel, can it?

I believe the franchise could work it First Group won't let others play with their trainsets. 5 Class 180s remember? Drop the use of an off-peak HST on the Cotswolds line. Plus possible use of a XC set.

Silly question alert ...

I did hear that National Express put in a higher bid for the franchise last time round but the fact that First owned the HSTs resulted in the dft having little choice but to give the franchise to First.  I don't know how true this is.

It seems the DfT would want First to not to take the franchise extension as then they could re-tender it with a lower (cheaper) service franchise commitment.

Didn't FG buy these 125s after they won this franchise? I think so.

With the 180s in play now, those HSTs aren't as necessary as they were.

at the time didnt fgw have the 180's

Duh, I think we knew that!

I was just answering the question. No need to get funny about it.

Always remember that not everyone who visits this or any other forum may have the same knowledge on a particular topic as yourself.

Duh, I think we knew that!

With the country in dire straits, why would the DfT want less in way of a franchise payment? I'm sure they're hoping exactly the opposite - that FGW continue to 2016 and get the near-^1billion in franchise payments due in those three years.

Eh? Like what for example?

The franchise is a public domument on the web. Can you point to which pages you refer to?

Oh, there's no way the DfT wouldn't specify those - or be allowed not to!

Revised Government policy
5.4 We propose to significantly simplify train service specifications, so that bidders are given greater flexibility in how they develop the service offered to passengers. However, we also recognise that on some routes (and at marginal times of day), train services would not operate unless they were specified, and subsidised. The Government therefore needs to balance operator flexibility with the requirement to protect a core level of service for passengers. Given this, the level and method of train service specification will differ by route and by franchise.

5.5 In general, we would expect to specify first and last trains, by day of week and specify an off-peak level of service, although the level will vary by route. On a commuter franchise, this level of service specification will be supplemented by a requirement for the operator to satisfy a crowding metric. This metric will ensure that peak services above and beyond the off-peak requirement are operated, and are designed to use the resources sensibly. It will also encourage operators to develop initiatives that encourage passengers to travel in periods of lower demand.

5.6 For non-commuter services, a peak requirement, framed at a high level, may be necessary. This will be applied on a case by case basis.

etc, etc...

FirstGroup could quit ^1.2 billion Great Western rail franchise

FirstGroup may be about to pull the plug on its ^1.2 billion Great Western rail franchise three years ahead of schedule after delays to a new fleet of trains and weaker-than-expected revenue.

The company is considering whether to trigger a unique get-out clause which could save it more than ^826 million in repayments.

Termination of the 10-year deal in 2013 by way of 12 months' notice next April would leave the Government just 12 months to find a new operator at a time of massive upheaval in the rail industry.

A spokesman for FirstGroup yesterday told the Western Morning News it would make a decision "before the end of the year" whether to "exercise our contractual right to extend the franchise to March 2016".

Passenger groups in the region say the timetable for a comprehensive re-tender is tight and are calling on the Department for Transport (DfT) to act quickly.

Experts say delays to the process or an ill-thought-out contract could see a return to the service reductions and subsequent protests which blighted the start of the current deal five years ago.

Gordon Edwards, director of Travel Watch South West, said there was "nervousness" within the DfT that FirstGroup might take the decision "right down to the wire" on March 31 next year.

"Some people doubt the DfT's ability to let the franchise in 12 months," he added. "They might have to go cap in hand to First to extend the contract for six months but they won't get a good deal in such a bad bargaining position. If we go back to 2006, the franchise got off to an appalling start with the December timetable prompting fare strikes and castigation for the company in the House of Commons."

First Group took on the 10-year franchise in April 2006 but concerns about the Government's ability to deliver a new fleet of replacements for the ageing intercity125 trains by 2013 led to the insertion of a get-out clause.

This allows the company to walk away three years early and lets the Government call time if performance indicators are not met.

The contract includes a "cap and collar" agreement whereby revenue of more than 6 per cent below projections is subsidised with 6 per cent rises above targets triggering payments to Government.

FirstGroup is currently receiving a rebate because its income is lower than expected, as the recession hits demand for services, and it also faces an escalation in fees payable to the Government from 2013 to 2016.

The Government's announcement earlier this month that the trains would be unable to deliver the new fleet until 2016 has further threatened the viability of the franchise.

Added to this, planned upheaval across the network, including disruption at London Paddington from the building of the ^16 billion Crossrail line, the reconfiguration of Reading station and electrification, has also made the near future uncertain.

Passenger groups are concerned that hard-won improvements in the Westcountry, such as the extra trains laid on by First Group over and above the franchise and the booming branch line sector be maintained.

Richard Burningham, manager of the Devon and Cornwall Rail Partnership, is urging the DfT not to risk a row with passengers and user groups. He said the retention of existing services should be "an absolute baseline", adding: "Last time around we had a bad experience and nobody wants a repeat of what happened in 2006."

Mr Burningham said there would be no shortage of suitors when the franchise is finally offered. He said: "It is a very competitive market."

A DfT spokesman refused to say if discussions had taken place or if plans were in place should the franchise end, describing it as "speculation".

Throw in the uncertainty of what's going to happen to Network Rail, the cost of IC125 life extension and so on, and it's very difficult to make a sane case for retaining GW for the final three years. IF FirstGroup does intend to hand back the keys after seven years, one could hardly blame them.

Andy

Returning to the argument that First may not want anyone to play with their HST's, I don't think they would like to be left as a ROSCO with half a dozen trains they have to update just so they can rent them out. Sell them asap.

mystic vacman predicts that the final 3 years will be "re-negotiaed" in FG's favour on a management type contract......... watch this space........

First Great Western bids for longer rail franchise deal

The rail operator First Great Western (FGW) says it does not want to take up the option to extend its franchise beyond March 2013.

The firm said it wanted instead to try to negotiate a longer-term deal.

CEO Tim O'Toole said: "We believe we are best placed to manage these projects and capture the benefits through a longer-term franchise."

First Great Western runs train services between London, the west of England and south Wales.

In December 2005, First Group was awarded the franchise to run services in the Great Western area.

It was already running the Intercity and Thameslink services while National Express was running Wessex Trains, which was combined into the enlarged franchise awarded by the government.

At the time, the firm said the deal would be worth more than ^1bn in revenues per year.

But First ran into problems in 2007 when angry commuters threatened to refuse to buy tickets or show passes in a row over overcrowding.

It was already running the Intercity and Thameslink services

Surely, the Franchise now comes to an end in March 2013, and is competively retendered, a la other franchise bidding wars?

use said hsts on other franchises (East Coast/West Coast maybe ?)

As First own the HSTs though they will be in pole position to retain the franchise and so to them it will just be like a new deal.  I can't see the dft risking another company not having use of the HSTs.  Had First waited until 2016 and the IEP they wouldn't have had this trump card to play.

Would the dft want to risk a shortage of stock on Greater Western due to this?  Much easier just to give the new franchise to First.

Besides, the actual decision has to be made blind - so they'll have to find a way of removing the HSTs from the bid process, else FGW's bid would be identifiable to those making the decision, surely?

Totally illegal under EU procurement rules I reckon...

And lets not forget the bigger franchise picture.First have prefered bidder status on the new West Coast franchise as well

Totally illegal under EU procurement rules I reckon...

Paul

As First own the HSTs though they will be in pole position to retain the franchise and so to them it will just be like a new deal.  I can't see the dft risking another company not having use of the HSTs.  Had First waited until 2016 and the IEP they wouldn't have had this trump card to play.

And I don't see the Fist Group owned HSTs as such a trump card. Certainly not one First should play against the DfT. That sort of thing is unlikely to go down well with the manadarins of Marsham St.

5 x Class 180s will fill the gap in the rolling stock provision quite nicely for a new franchise to run to the same SLC as the current one.

If First do decide to over-egg their bid based on the HSTs they own, they could be left high and dry with rolling stock that nobody needs.

A commuter group is seeking assurances that First Great Western services will not suffer as the firm bids for a new franchise from the government.

The rail group has decided not to take up an option to extend its franchise by three years beyond March 2013 in the hope of securing a longer deal.

Anthony Smith, Passenger Watch's [chief executive, said he wanted the company to ensure "standards will not slip".

First said it would continue to provide a "high quality" service.

"We at First Great Western look forward to drawing on our unrivalled expertise and experience to bid for the new Greater Western franchise and continue to develop key projects across our network," the firm said.

But Mr Smith said he wanted whoever eventually runs the franchise to focus on "better value for money, punctual trains and more frequent services".

"Also important are the inclusion of passenger satisfaction targets and repercussions if the train company lets passengers down," he said.

First Great Western runs train services between London, the west of England, south Wales and parts of the Midlands.

First Group was awarded the franchise to run services in the Great Western area in December 2005.

The firm said it wanted instead to try to negotiate a longer-term deal
But the company has not always been popular among commuters.

In 2008, the company faced a fare strike by some passengers over claims of high prices, overcrowding and unreliable trains.

A First Group spokesperson admitted then that the firm had failed to deliver an "appropriate level of service".

The Office of Rail Regulation added that punctuality on the line had been "poor for far too long".

At the time, 83% of First Great Western's services were arriving on time compared to a national average of 91%.

The firm's high-speed service is currently on time 88.1% of the time although some of its local services, such as in Devon and Cornwall, are on time in more than 95% of journeys.

And I don't see the Fist Group owned HSTs as such a trump card. Certainly not one First should play against the DfT. That sort of thing is unlikely to go down well with the manadarins of Marsham St.

5 x Class 180s will fill the gap in the rolling stock provision quite nicely for a new franchise to run to the same SLC as the current one.

If First do decide to over-egg their bid based on the HSTs they own, they could be left high and dry with rolling stock that nobody needs.

Suitably timetabled on the Cotswold Line and in the stead of current Oxford fasts could potentially increase capacity, freeing up HST sets and maybe even release one or two turbos for use elsewhere.

I could just imagine... Arriva Great Western... :o ::) :-X

Yup, that's a 'me too' from me - they talk to customers ata high level. And Arriva don't....

I also hope that First retain the franchise- for the simple reason that any new franchise holder will squander our money repainting the trains again.

I think it's interesting to note that any news reports trying to find a 'negative' message seem to have to go back to the 'fare strikes' of 2008 - since then, generally, FGW have gradually but steadily improved, and they haven't lost any significant ground.

I could just imagine... Arriva Great Western... :o ::) :-X

Whether a win for them on the West Coast would change DfT thinking?....

Rumours are that Hammond is coming down in favour of "how much money will you give me for this franchise?" - with no specification for ANY customer service aspect or even timetables etc. We all know what has happened to onboard service at TOCs where "the bottom line" has been the only thing that matters - AXC and NXEC as examples.

Hammond is being revealed as another Tory who only wants as much money out of the railways and has little or no interest in how customers are treated...that's from insiders getting some briefings on what he wants from the next franchise

Also, more longer term (if awarded the next franchise) then possible electrification of the branches (as mentioned previously) as well as a commitment to run the East-West Rail Link, with a possible Milton Keynes to Gatwick via Oxford/Reading service, might all form part of the deal.