Virgin Loses The West Coast Rail Contract To FirstGroup

Virgin Pendolino at EustonRichard Branson’s Virgin Trains company has lost its contract for the West Coast Rail, ending its 15 year partnership. Richard Branson is livid, saying that the coalition government’s decision is “insane” and that the bidding system is totally flawed.

FirstGroup put in a £5.5 billion bid, which Branson believes will lead to “almost certain bankruptcy”.

The End of Virgin Trains?

According to The Guardian, Virgin is now “extremely unlikely” to bid for another rail franchise. The West Coast line runs from London to Manchester and Glasgow. Virgin has invested heavily over the years in making improvements to its trains and infrastructure to provide an excellent service. However, Branson said that to spend more than £5.5 billion on renewing the contract would force Virgin to shed staff and increase fares – not good for rail users or the jobs market. He was no willing to make such sacrifices in the name of business.

Richard Branson has blogged about the process on the Virgin blog – On Virgin Trains:

“I am immensely proud of our staff for turning the West Coast line from a heavily loss-making operation into one that will return the taxpayer billions in the years to come.  Last year we paid a net premium of £160 million to the taxpayer and have created a franchise worth more than £6 billion which is hugely valuable to the country.

These achievements have counted for little – as this is the fourth time that we have been out-bid in a rail tender. On the past three occasions, the winning operator has come nowhere close to delivering their promised plans and revenue, and has let the public and country down dramatically.”

It the government simply taking the biggest bid to get more cash now without any consideration for the long-term investment opportunities in working with a company with an excellent track record? Richard Branson certain thinks so.

The West Coast mainline could well become another public liability if it is not well managed. With the increasing importance of Glasgow as a new financial hub in the UK, business cannot afford to have a shoddy and unreliable service.

Photo by Andrew Butcher.

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