Sir Richard Branson has said he is “devastated” by a franchising decision made by the government, which could mean Virgin Trains will disappear from Britain’s railways.
Virgin Trains is 51% owned by Virgin Group but Stagecoach, which owns the remaining 49%, has been barred by the Department for Transport (DfT) from bidding for three contracts amid an ongoing row over pensions.
The decision by the DfT means the operator’s bid to run trains after its current deal expires in March 2020 has been barred.
Virgin Group boss Branson wrote in a blog post that he was “baffled” that the government chose not to discuss the issue prior to the decision, claiming that Virgin Trains is “one of the best train companies in the UK, if not the world”.
Virgin Trains has run West Coast services since 1997 and recent research by Transport Focus found that the operator has a 90% customer satisfaction rating, which is the highest for all long-distance franchises.
It has been praised for introducing a number of passenger benefits such as automatic delay compensation payments, scrapping Friday afternoon peak ticket restrictions and launching free on-board entertainment system Beam.
In the blogpost, Branson wrote: “Running the railway comes with many challenges and the West Coast Main Line was struggling when we took it over, but we were determined to turn it around.
“With new trains, new track and our incredible team, we have become renowned for the award-winning way we look after our customers.”
“We are still looking closely at the decision and we are now considering our options.”
He added: “We’re baffled why the DfT did not tell us that we would be disqualified or even discuss the issue – they have known about this qualification in our bid on pensions for months.”
The winning bidder for the West Coast Partnership franchise – due to be awarded in June – will be responsible for services on both the West Coast Main Line from March 2020, and designing and running the initial HS2 high-speed services from 2026.
A joint bid had been entered by Virgin, Stagecoach and SNCF.
Stagecoach said it was informed by the DfT that it has been banned from the East Midlands, South Eastern and West Coast Partnership franchise competitions after submitting non-compliant bids “principally in respect of pensions risk”.
Bidders for the franchises were asked to bear the full long-term funding risk on relevant sections of the Railways Pension Scheme, Stagecoach said.
The firm’s chief executive Martin Griffiths said: “We are extremely concerned at both the DfT’s decision and its timing. The department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.
“We have drawn on more than two decades of rail experience and worked in partnership with local stakeholders to develop high quality proposals to improve each of these rail networks.”
The DfT claimed Stagecoach “breached established rules” and insisted the company is “responsible for their own disqualification”.
It added: “We have total confidence in our process.”
Dutch state-owned company Abellio will take over the East Midlands franchise from Stagecoach – which has its headquarters in Perth – on August 18.
Passengers will benefit from new trains with more peak-time seats, reduced journey times and more than £17 million of station improvements, the DfT said.