Branson warns Greening not to be swayed by unrealistic bids

August 3rd 2012

The race to run the West Coast franchise is hotting up, with Sir Richard Branson writing to Transport Secretary Justine Greening, copying in David Cameron, urging the government not to be swayed by unrealistic high bids.

Tensions have been raised amid reports that First Group and incumbent Virgin are in a two horse race for the franchise, with First Group outbidding Virgin by £1 billion.

Branson has hit back by saying the only way such a bid could be made would be by reducing the quality of service.

Virgin has offered the government £6 billion to run the 14-year franchise that commences in December.

First is thought to have offered £7 billion, which equates to a £500m a year payment to the taxpayer.

Sources at the Department for Transport (DfT) say this would roughly equate to the operator paying them £16 per passenger journey, before any money is used to fund operating costs.

Branson claims that Virgin was the runner up in the race for the East Coast franchise on two occasions, but instead the franchise was awarded to first GNER then National Express, both who walked away before the franchise end after putting in over optimistic bids.

Branson has hit back by saying the only way such a bid could be made would be by reducing the quality of service.

The war of words follows a press conference last December in which Branson stated that Virgin would retain the franchise if customer service was judged to be an important factor.

When asked for his opinion on rival bidders Keolis, backed by France’s SNCF, and Abellio – an offshoot of the Dutch national rail business – he replied: “State-run companies generally speaking do not do that great a job, I believe.”

Mr Branson went on to say that Virgin’s bid would represent “a late Christmas present ” for George Osborne, “bringing literally billions of pounds to his coffers when this country desperately needs cash”.

Since Virgin began operating the West Coast franchise passenger figures have risen from 14 million to 30 million and the the operator has replaced their entire fleet of trains.

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