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Tuesday 14 March, 2000

Shadow StrategicRail

Franchise Negotiations

Shadow Strategic Rail Authority
14 March 2000

Building a Better Railway:                                                    
Six Companies Shortlisted for First Franchise Replacement Round               
Details of the parties that have been selected for the first phase of         
franchise replacement negotiations for the GNER, Chiltern and Connex South    
Central franchises were announced by SSRA Chief Executive Mike Grant today.   
Two parties are to go forward for negotiations for each franchise.  The       
companies selected for negotiation are as follows:                            
GNER:                     Sea Containers (incumbent owner of Great North      
                          Eastern Railway)                                    
                          Virgin Rail Group in conjunction with Stagecoach    
Chiltern:                 M40 Trains (incumbent owner of Chiltern Railways -  
                          subsidiary of Laing Group)                          
                          Go-Ahead (franchisee of Thames Trains)              
Connex South Central:     Connex Rail (incumbent owner of Connex South        
                          Central - subsidiary of Vivendi SA)            
                          GoVia (franchisee of Thameslink)                    
On the South Central franchise, SSRA is looking for evidence that the         
operators are committed to a radical improvement in service quality. In       
particular, SSRA will be looking for early achievement of higher performance  
standards, including  cleanliness and provision of information.  Proposals in 
these areas will need to be far more ambitious than the ideas outlined so far.
We appreciate that passengers will be looking for the signs that potential    
operators are serious about making improvements.                              
Negotiations for both South Central and Chiltern are expected to last several 
weeks, with a view to replacement franchises being determined in late spring  
and becoming effective in the second half of the year.                        
On the GNER franchise, the proposals are associated with extensive upgrade of 
the East Coast Main Line, so the decision process will take longer.  With the 
Virgin & Stagecoach proposal, SSRA will need additionally to be convinced that
it is in the interests of passengers that the two major London to Scotland
franchises should be in the hands of a single owner.                          
SSRA Chief Executive, Mike Grant, said:                                       
'After careful consideration of the merits of the various proposals, we have  
selected which companies' proposals we wish to take forward for negotiation.  
'The negotiation process will now start in earnest to decide the future owner 
and duration of these three franchises.  Throughout the process, we will be   
aiming to ensure the best possible deal for the passenger in the final        
outcomes, with strong commitments to investment and improved customer service,
along with value for the taxpayer.'                                           
Notes to Editors                                                              
The pre-qualified parties who were unsuccessful in moving forward to the
negotiation stage for round one are Arriva (for the Chiltern franchise)and
Stagecoach (for the Connex South Central franchise).                      
On March 8, the SSRA invited companies to pre-qualify for the three  
franchises which would form the second round of franchise replacement         
(franchise propositions based on the existing Central Trains franchise, and   
the South West Trains franchise and a new franchise proposition, Transpennine 
Express, which forms part of the franchise currently operated by Northern     
Spirit Ltd).  It also announced the setting up of a feasibility study into the
possibility of a dedicated 'Wales Rail' franchise.                            
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 4387/4234/4294                    
Further information and announcements by the SSRA are contained on our new    

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