First Great Western to Give up Franchise?

[whole diary]

[ChrisB]

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

THat's been my take for a while now....

[chopper1944]

BBC^» (British Broadcasting Corporation - home page) Spotlight have just reported that FGW^▸ (First Great Western) will NOT be extending their current franchise to 2016

[Brucey]

From the BBC^» (British Broadcasting Corporation - home page) website: http://www.bbc.co.uk/news/uk-england-13351368

First Great Western bids for longer rail franchise deal

The rail operator First Great Western (FGW^▸ (First Great Western)) 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^▸ (Chief Executive Officer) 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.

[woody]

British transport operator FirstGroup said it would not take up the option to extend its First Great Western franchise for three years beyond 2013 so it can bid for a longer-term deal.
http://uk.reuters.com/article/2011/05/11/firstgroup-idUKLDE74A0A520110511?rpc=401&feedType=RSS^▸ (Regional Spatial Strategy)&feedName=companyResultsNews&rpc=401
Surprise Surprise

[ChrisB]

No surprise there then.

[ChrisB]

'Negotiate' a new deal?

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

[Richard Fairhurst]

It was already running the Intercity and Thameslink services

Oooops.

[ChrisB]

Close, but no banana!

[TheLastMinute]

Makes better long term business sense to do this. There's going to be a franchise renewal before 2016 whatever happens, so they might as well get it out of the way sooner rather than later. I suspect First's view is that if they are going to loose the franchise before 2016, it's better to do it before all the disruption from the electrification work starts and the increased franchise payments beyond 2013 kick in.

TLM

[ChrisB]

It's the franchise payments they are getting out of.

Commercial risk of losing the franchise vs Saving the near ^1billion in payments

[Zoe]

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

As First own the HSTs^▸ (High Speed Train (Inter City class 43 125 units)) 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^▸ (Intercity Express Program / Project. This will offer more capacity on routes, save money, give a consistent and safe service and meet customer requirements. Intended to replace HSTs.) they wouldn't have had this trump card to play.

[Super Guard]

Why do you assume that if First lose the franchise, they won't a.) lease/sell hsts to new franchisee or b.) use said hsts on other franchises (East Coast/West Coast maybe ?)

[Zoe]

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

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.

[paul7575]

As First own the HSTs^▸ (High Speed Train (Inter City class 43 125 units)) 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^▸ (Intercity Express Program / Project. This will offer more capacity on routes, save money, give a consistent and safe service and meet customer requirements. Intended to replace HSTs.) they wouldn't have had this trump card to play.

The franchise competition has to be fair and open to all.  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^▸ (First Great Western)'s bid would be identifiable to those making the decision, surely?

As far as I can see it is inconceivable that the DfT^» (Department for Transport - about) will allow the existence of the HSTs to sway their decision one way or another.  

Paul

[paul7575]

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.

Totally illegal under EU^» (European Union - about) procurement rules I reckon...

Paul