Foreign state railways line up to bid for UK franchise

[John Ashworth]

Foreign state railways line up to bid for UK west coast franchise

Four government-backed rail companies – Deutsche Bahn, Renfe, Abellio and Trenitalia – express interest in profitable main-line route currently operated by Virgin Trains

* Dan Milmo
* The Observer, Sunday 6 February 2011

Der zug? El tren? De trein? Il treno? At least four government-backed European rail operators have expressed interest in replacing Virgin Trains as operator of the London-to-Glasgow west coast rail franchise, which is up for grabs next year.

Germany's Deutsche Bahn, Spain's Renfe, Abellio of the Netherlands and Trenitalia are among the companies weighing up bids for the franchise, which will start in 2012 and run until 2026, when the government hopes to open the first phase of its proposed £17bn north-south high speed rail line.

DB, Renfe and Abellio attended a recent Department for Transport seminar on the west coast franchise while Trenitalia has already expressed an interest in bidding as part of a joint venture with France's Veolia. A government source said: "This shows that Britain is open for business. It is no surprise that high-quality bidders are interested in such a prestigious franchise."

The franchise's recent financial performance is also expected to lure bidders from the private sector. Virgin Trains, a joint venture between Sir Richard Branson's Virgin empire and Stagecoach, posted a pre-tax profit of £76.4m in 2009 and gave its shareholders a dividend of £67.3m last year. The line now carries 28 million passengers per year, having shaken off its reputation for constant delays during the £9bn overhaul of the route. Virgin is likely to fight vigorously to win the new franchise.

DB and Abellio, with their pitch that state backing provides the stability and commitment that franchises need, have become established figures in the UK rail market. DB recently acquired Arriva, the owner of the Arriva Trains Wales and Cross Country franchises, and also owns Chiltern Railways. Abellio, an offshoot of Nedrailways, operates Northern Rail and Merseyrail as well as buses in London and Surrey. DB's British ambitions also extend to international rail and the company hopes to launch a Frankfurt-to-London high speed service via the channel tunnel in 2013.