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Rail network loses its virginity

Rail network loses its virginity

🕔16.Aug 2012

When it comes to rail travel or indeed flying through the air, thousands are proud to be  virgins.

Personally, when I travel on board a Pendolino I am overcome with a feeling of nausea. I suspect Sir Richard Branson will experience the same sensation from now on.

Of course, Sir Richard is going to feel bitter that Virgin Trains have lost the franchise to operate the West Coast Mainline. It was a major and high profile component of his business empire. Trains gave the Virgin brand an opportunity to touch a customer base that wouldn’t be so easily reached with other Virgin products. I have always suspected too that it also gave Sir Richard the train set to play with he may have been deprived of as a child.

But I think he may have a point in being so angry about the process of re-tendering for such an important plank of our transportation network. There is no doubt that Virgin has moved rail travel forward. They have shown innovation- not least the sickly Pendolinos – and they have made the corresponding investment to make it happen. They have also given a rather bland business sector a touch of brand magic. Virgin is a brand with value, a sexiness if you will, a touch of glamour. And they have worked hard to make their part of this busy network of rail services efficient and effective.

It would seem because Sir Richard’s chequebook was somewhat more restricted- he would claim more realistic – than that of the First Group- the past 15 years counts for nothing. This is worrying. If rail franchisees begin to feel that a 15 year contract is the most likely period they will get to operate a service then inevitably this will result in compromises to service and investment.

Would any large scale, high cost business have a serious plan in place where the lifespan of their business would be a maximum of 15 years? I cannot think of any. Business plans for the long haul. That’s how they build expertise, skill, customer loyalty and with that comes profit.

Virgin Trains, or indeed any other operator, should not have guarantees that they can operate a franchise for an unlimited time. Of course not.  It is only right that government of whatever colour review and have robust checks and balances in place to ensure passengers are getting a good service and value for money. Not a phrase that sits that easily in terms of rail fares – I agree. But this process of re-tendering in my view is not a good model when it comes something like rail services. It is short termism writ large.

Surely it is not sensible to award franchises to operate such important services as this by a judgement on who can offer the government most money. Of course, the taxpayer should expect a return. The government need to maximise and sweat its assets particularly in the current economic times – fair enough. But this process appears to have been too simplistic – too cash orientated. Sir Richard believes the First Group figures don’t add up, services will be compromised, jobs will be lost. The RMT agree. Not usual bedfellows.

Time will tell. First Group have made some pretty impressive claims on investment, new services and improved passenger experience. It is now in their hands to prove the government right.

The Prime Minister spent his formative years in commercial television. Therefore, he should know only too well how commercial auctions work and how good, well performing companies have their livelihoods stripped away for the sake of the weakness of a chequebook in a bid process. It would appear that he is happy for the same principles to be administered on our railway system despite the lessons of the TV franchise debacle of the eighties and nineties.

I am not an apologist for Branson or the Virgin Group. The Virgin Group will continue just fine. Sir Richard I am sure will brood on the decision from one of his many luxurious homes located on a beach in the sunshine. He will be just fine too. But that shouldn’t cloud our judgment as to whether this decision is the best for our rail system. I have yet to be convinced it is.

I also hope that First Group stands by the infrastructure they will inherit in January and jobs will not be lost.

As for the government they now have to hope that the allure of a few extra pennies doesn’t come back to haunt them. It’s too late for this virgin –  but I hope somewhere at the DfT someone might feeling a tad guilty the morning after.

 

Tim Rudman is a Director of Birmingham-based strategic PR consultancy Urban Communications

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