Between the Lines
The curse of the East Coast franchise has struck a third time. The last two private sector franchises have both failed because of over-optimistic revenue forecasts. The second time, National Express handed back the keys in 2009, and this was followed by a prolonged period of public sector operation by Directly Operated Railways. The franchise was relet to Virgin Trains East Coast (VTEC) in 2014, branded as Virgin but 90% owned by Stagecoach.
As with the previous franchises, VTEC’s plans were very ambitious, with new routes, major frequency increases and faster journey times, including an hourly London – Edinburgh service in four hours. These improvements were due to be implemented by 2020, but were dependent on the introduction of the ‘Azumas’, the new Inter-city Express Programme trains, and the delivery of Network Rail enhancement works, which are at best delayed, and may never happen. However, VTEC is already well below its revenue forecasts, even before the planned improvements were scheduled to come in.
Unlike the Virgin group, Stagecoach is a public company, so has to account for its financial performance in gory detail. The scale of the hit on Stagecoach’s overall business has…
