Friday, May 15, 2009

Not a National Express rant

There is a possibility that National Express may have to give up the East Coast franchise. The idea has been doing the rounds for some weeks. It appears clear that, as the bid for the franchise was made during the Brown boom years, they have offered too much. Now that we are in the Brown bust years, the projections of revenue and passenger numbers are simply not enough to provide the income to pay the £1.4 billion they are required to pay over the next few years.. The franchise is going belly up.

The East Coast is the only profitable line on the rail network. Far from operating on a subsidy, it operates, or at least it did, at a profit. Companies bidding to operate the route, did so by offering a premium. On all other routes, train companies offered to run the trains on the least subsidy. The East Coast in effect was paying the subsidy for elsewhere on the rail network.

Now National Express is struggling. They have been caught out by the economy going belly up, having successfully bid for the route just as the credit crunch was kicking in. Just as Northern Rock was sinking into a sea of debt, National Express was sailing out onto the sea of train travel from its normal port of All-Things-Bus-And-Coach.

With future passenger figures evaporating, the talk is of their renegotiating or abandoning the franchise. Contrary to what you may think, I am not keen that National Express lose the franchise. I want them to run trains and a good rail service. I want them to stop cancelling the 7.40am on a Monday morning. But the idea that the trains will improve by yet another demoralising change in the franchise is not a view to which I subscribe. That said, I haven't a clue how to solve the problem on paying for and running the railways. State ownership saw the railways normally at the rear end of government investment plans. It meant having a rail system owned and operated by a body that was more interested in putting money into something else. Remember, Beeching was a government appointment and a government act of transport vandalism. So calling for nationalisation may get some people turned on and excited, but they have not yet demonstrated any evidence that the government's buying up of all railway operators will in any way benefit the rail system.

That said, the ownership of the infrastructure by the government is a sensible option. The collapse of Network Rail demonstrated that and there is an interesting comparison with the roads. Both are owned by the state but both are used by private operators.

Which still does not bring me to a solution to the East Coast franchise. Any ideas?

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