It seems that whenever I speak with anyone from Virgin Trains these days there is just one topic of conversation - refranchising. Even before the next franchising process for the West Coast route kick’s off I’m sure Virgin has a team in place modelling and producing projections.
Virgin Trains had been awarded a franchise to run the West Coast franchise until March next year, but during last year was awarded two six month extensions - there was an option to extend by 12 months in the original award. Virgin is now guaranteed to run the route for another two years and will see it celebrate 21 years of West Coast operation.
The new franchise, if it can be called that, will kick off at the start of April 2018. According to information from the Department for Transport the franchise spec will be published in just a few months time (June) with the Invitation to Tender issued to shortlisted bidders in November. The award announcement is not expected until November 2017.
The franchise spec will be far from straightforward, the winner will face significant disruption as work on HS2 reduces the number of lines into and out of Euston to just four and for a lengthy period means that the dive under will be out of use.
Indeed, the impact of HS2 on West Coast is a big unknown. Bidders must allow for growth pre-HS2 - indeed HS2 is based on a prospering West Coast Main Line - and then predict abstraction post HS2. For those reasons my take is that the next West Coast franchise has to be based on a high level revenue/risk share which has the risk of modelling it more as a management contract than a commercial franchise and some would argue that virgin Trains is best placed to manage the transition through what will be a demanding period - let’s not forget it has been through similar transition before.
I’m sure Virgin will fight hard to retain the franchise, and has experience of running the West Coast through what is effectively a building site but it will need assurances that engineering works are properly planned and don’t result in overruns - something that still affects its current operations. But the big question is who will also be waiting in the wings to snatch the franchise……