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Wednesday 08 March, 2000

Shadow StrategicRail

2nd Franchise Replacement

Shadow Strategic Rail Authority
8 March 2000

Building a Better Railway:
Areas Defined for Second Franchise Replacement Round

Details of the three parts of the rail network on which the second round of
franchise replacement negotiations will be based were announced by Mike Grant,
Chief Executive of the Shadow Strategic Rail Authority (SSRA), today.

Today's announcement follows an invitation by the SSRA to existing and
potential operators to submit proposals under one or more of six strategic
themes (for details, see notes to editors).  

The three sectors identified today for replacement negotiations are:-

Replacement of the Central Trains franchise, with an option to include or
exclude services which extend north west and west of Shrewsbury, including
those that extend into Birmingham.
Proposals should also provide, within the franchise, for the creation of a
separate business unit focused on serving the West Midlands travel-to-work

Replacement of the existing South West Trains franchise, with the option to
include or exclude services between Waterloo and Salisbury / Exeter.

Creation of a new Trans-Pennine franchise comprising the inter-urban, limited
stop services currently operated by Northern Spirit Ltd.

A fourth area, Wales and the borders, is under discussion but requires further
study before the nature of the proposed  franchise is announced, in three
months time.

The objective of the current programme of negotiations is to replace most of
the shorter franchises (expiring by 2004) within about two years.

A third tranche of franchise negotiations is expected to follow in the summer
drawing on the responses received to the Franchising Director's earlier
invitation for strategic proposals from the industry. 

Mike Grant, Franchising Director and SSRA Chief Executive, said:

' Following receipt of several proposals from the industry, some of them very
innovative, I have chosen two of the most congested, and investment needy
areas - South West and Central - as my priorities for the second round of
replacement talks.

' I am also including the Trans - Pennine route, because of its strategic
importance in linking major cities in the North and its potential for
relieving motorway congestion. 

' I expect keen interest from parties wishing to pre - qualify to bid for
these franchises.  

' A fourth area currently under consideration is Wales where, following
consultation with the Assembly, I have commissioned a detailed feasibility
study to establish whether a dedicated 'Wales Rail' franchise could serve the
interests of Wales and the border counties more effectively'.

There will be a short pre - qualification process for interested parties and
applications should be made to Nick Newton, the Executive Director, Franchise
Management, at the Shadow Strategic Rail Authority, Golding's House, 2 Hay's
Lane, London SE1 2HB (tel. 020 7940 4200) in the first instance. Interested
parties should note that the pre-qualification deadline for the second group
of franchises has been set for 24 March 2000.

Notes to Editors

Maps of the franchise areas defined today are available with the press
release.  These maps are intended to give an indication of the new franchise
propositions, they do not show all the stations on lines likely to be served
by the replacement franchises.

In December 1999, the SSRA invited existing and would be operators to submit
proposals aimed at improving passenger rail services in six areas of strategic
interest.  The areas were:

Planning and implementing the Thameslink 2000 network of services North, South
and through central London.

Improving London commuter services and easing capacity constraints at
Waterloo, Liverpool Street and Paddington.

Relieving regional capacity bottlenecks around Birmingham and Manchester.

Introducing new services around London making use of the East, North and West
London lines.

Serving the interests of Wales and the North West more effectively.

Recognising the value of inter-urban trans-Pennine services.

By 1 February 2000, the SSRA had received 36 submissions from 18 substantial 
groups covering all, one, or a combination of the six areas above.

Details of the three franchises as currently operated are as follows:

Central Trains

The existing Central Trains franchise operates a variety of passenger services
covering a wide geographical area of central England, Wales and East Anglia. 
These services are largely based around a Birmingham hub and extend to,
amongst other places, Norwich, Cambridge, Cardiff, Aberystwyth, Liverpool and
Sheffield.  They fall broadly into the following categories:

Inter-urban services between major regional conurbations.

Birmingham commuter services provided to the Passenger Transport Executive

Rural stopping services that fall outside of the inter-urban and commuter
services e.g., Derby-Matlock.

Central Trains also provides contract services to Nottinghamshire County
Council (The Robin Hood line) and Leicestershire County Council (The Ivanhoe

South West Trains

South West Trains operates an extensive network providing a mixture of main
line and suburban passenger services.  Services are operated from London
Waterloo, the hub of the network, and extend as far as Exeter, Weymouth,
Reading and Windsor.  The franchise serves a number of commercial centres,
tourist attractions and resorts.  The majority of its revenue is derived from
commuters and (to a lesser extent) leisure and business travel.  Capacity
constraints at London Waterloo pose a significant and growing obstacle to the
development of the services provided by this franchise, and proposals for a
replacement franchise will be expected to include effective and cost -
efficient plans to ease these constraints.

Trans-Pennine Express

Northern Spirit currently provides a variety of passenger services to meet a
range of journey purposes in northern England. Inter-urban services operate
between major cities such as Newcastle, Leeds, York, Manchester, Sheffield and

The Franchising Director proposes to create a new Trans-Pennine Express
franchise to incorporate the regional inter-urban network.  This will provide
an opportunity to focus management and financial resources on the development
and promotion of a high quality, limited stop service between key regional
towns and cities.

The SSRA will now begin discussions with the four PTEs and other interested
parties to ensure positive and timely development for the other parts of this
important franchise area. 

The full list of 25 passenger rail franchises with start and finish dates is
shown below:

Franchise            Franchisee             Franchise Length   Start  Finish
Anglia Railways      GB Railways Group Plc. 7 yrs 3 mth         1.97   4.04

Cardiff Railway      Prism Rail PLC.        7 yrs 6 mth        10.96   4.04

Central Trains       National Express Group 7 yrs 1 mth         3.97   4.04

Chiltern Railways    M40 Trains Limited     7 yrs               7.96   7.03
                     (John Laing plc)

Connex South Central Connex Rail Limited    7 yrs               5.96   5.03
                     (subsidiary of Vivendi SA).

Connex South Eastern Connex Rail Limited    15 yrs             10.96   10.11
                     (subsidiary of Vivendi SA).

CrossCountry         Virgin Rail Group      15 yr 3 mth         1.97   4.12

Gatwick Express      National Express Group 15 yrs              4.96    5.11

Great Eastern        FirstGroup plc.        7 yrs 3 mth         1.97    4.04

Great North Eastern  GNER Holdings Limited  7 yrs               4.96    4.03
Railway              (subsidiary of Sea Containers Ltd.)
Great Western        Great Western Holdings 10 yrs              2.96    2.06
                     Limited (subsidiary of FirstGroup plc).

Island Line          Stagecoach Holdings plc. 5 yrs             10.96   10.01

LTS Rail             Prism Rail PLC.         15 yrs              5.96    5.11

Merseyrail Electrics ARRIVA plc.             1 yr                2.00    2.01

Midland Mainline     National Express Group  10 yrs              4.96    4.06

North Western Trains Great Western Holdings   7 yrs 1 mth        3.97    4.04
                     Limited (subsidiary of FirstGroup plc).

Northern Spirit      ARRIVA plc.              1 yr               2.00    2.01

ScotRail             National Express Group   7 yrs              3.97    4.04

Silverlink           National Express Group   7 yrs 8 mth        3.97   10.04

South West Trains    Stagecoach Holdings plc. 7 yrs              2.96    2.03

Thames Trains        Victory Railways Holdings 7 yrs 6 mth      10.96    4.04
                     Limited (subsidiary of The Go-Ahead Group Plc).

Thameslink           GOVIA Limited             7 yrs 1 mth       3.97    4.04
                     (Go-Ahead Group and Via G.T.I. SA).

Wales & West         Prism Rail PLC.           7 yrs 6 mth      10.96    4.04

West Anglia Great    Prism Rail PLC.           7 yrs 3 mth       1.97    4.04

West Coast Trains    Virgin Rail Group         15 yrs            3.97    3.12

Important Notice

This news release is issued by the Franchising Director and its contents have
been approved for the purposes of section 57 of the Financial Services Act
1986 by KPMG Corporate Finance.

KPMG Corporate Finance is a division of KPMG which is authorised to carry on
investment business by the Institute of Chartered Accountants in England and
Wales. This news release has been prepared for general information purposes
only and is not intended to form the basis of any investment decision or
constitute an offer or invitation to bid for any passenger rail franchise or
to acquire shares in a train operating company. Neither this news release nor
any copy of it should be taken into or distributed in Canada, France, Japan or
the United States except in accordance with an applicable exemption. The
distribution of this news release in other jurisdictions may be restricted by
law and therefore persons into whose possession this news release comes should
inform themselves about and observe any such restrictions.

KPMG Corporate Finance is acting for the Franchising Director and will not
regard any other person as its client in relation to passenger railway
franchising or be responsible to anyone other than the Franchising Director
for providing the protections afforded to clients of KPMG Corporate Finance
nor for advising any other person on the contents of this news release or any
matter referred to in it. 

Media Enquiries:  SSRA Press Office  0207 940 4387/4339/4294

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