Monday, May 16, 2011

Franchise Goes West

We took a trip down to Taunton on Saturday to take some more of our locos to Mikron Models for weathering by Alex. However, more of that in a future posting.
Of course we went by train, taking a First Great Western HST from Castle Cary, and this in the wake of FGW's announcement earlier this week that it intends to give up its franchise in March 2013 when its initial 7-year contract comes to an end. 
They did have the option to extend this contract until 2016 but have decided not to proceed with this.
Their reason for this announcement is that the current economic climate has meant the Company is not generating as much money as it had forecast to be able to pay the Government for the right to operate the franchise. Under the terms of the agreement, FGW would have had to pay in the region of £1 billion to the Government for the extra 36 months which, they say, they could not afford.
Looking at the latest figures they do show that FGW’s operating profit fell from £364.2m in 2009 - 2010 to £309.3m this year.
Meanwhile, annual passenger numbers have actually increased from 76 million to 90 million since 2006 but, according to FGW, fewer people are paying for first class peak fares than was predicted. Well, when you see how much this can cost, it is hardly surprising quite frankly.
I doubt many people will mourn the loss of FGW since they are far from being the most popular train operating company and are in fact widely known by the derogatory nickname of Worst Great Western, an epithet with which I have a modicum of sympathy.
Some people might even argue (me included) that FGW should be prevented from bidding as a punishment for walking away from the franchise. However, since they are simply not exercising their option to take up the extra three years, they are not, strictly speaking, backing out early and so I daresay they will be allowed to bid.
Indeed, when the franchise is put out to tender by the Government, FGW have already said that it would bid for a longer-term contract - with a reduced premium payment to the Department for Transport.
Of course whoever bids will not be bidding to pay the £1bn that FGW would have paid for those three extra years between 2013 and 2016 so it will doubtless be the tax payer who foots that bill.
I ask you, what a Flamin'' Good Way to run a railway!

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