Virgin on the ridiculous

Virgin will only need a minor edit to their current advertising campaign.

Away, but not too far away, from the debate on HS2 there has only been one transport story in the last week, the decision to award First Group the West Coast Mainline Franchise and the subsequent plans from Virgin to compete with British Airways in providing flights from Heathrow to Manchester and Scotland.

It had been well trailed that First Group were in line to topple Virgin on the WCML, with Richard Branson threatening legal action before the decision was made last week, and Chancellor George Osborn being reported as saying that DafT would threaten HS2 if they did not take the highest bid. Virgin have until today to launch a legal challenge. Also today, a Government e-petition calling for the decision to be reconsidered has hit the 100,000 target to trigger a parliamentary debate and the chair of the Transport Select Committee has asked for a delay in signing the contract, which is due to happen on Tuesday.

The decision to appoint First Group seems bizarre to say the least. Regularly referred to as ‘Worst Group’ by commuters and the media alike, DafT seem to have not learned from the mistakes of the past as whilst Worst still run the Great Western franchise, they have chosen to copy what GNER did with the East Coast Mainline in 2009 and walk out of the franchise three years early in March next year (though it looks like they will keep running trains for longer as the new bidding process has not yet been set up by DafT), as soon as they were due to pay the Government serious money. Notably, and their bid for the WCML which was £700 million higher than the Virgin bid is again stacked so that the serious money they are due to pay to Government comes in the last couple of years of the contract.

The petition which will now have to be considered by Parliament when they return makes the point clearly that DafT have never seem to quite ‘got it’ when it comes to thinking strategically;

“FirstGroup consistently rate amongst the worst of the train operators in passenger satisfaction surveys – they should show improvements in their existing services before being able to bid on more. Any previous time Virgin have lost a bid in a rail tender the winner has failed to deliver promised plan and revenue – the East Coast is still under Government ownership. The Government should look at more than the highest bidder – look what happened with G4S at London 2012.”

Louise Ellman MP, the Chair of the Parliamentary Transport Select Committee has also weighed in, saying;

“The Government decision to award the West Coast rail franchise to First West Coast Ltd has raised a number of concerns. I want the Transport Committee to have the opportunity to explore these issues and will be consulting my colleagues shortly. I have therefore written to Justine Greening, Secretary of State for Transport, asking her to delay signing the final contract papers – planned for 28 August. This franchise will affect millions of passengers and last for up to 15 years. A great deal of public and private money is at stake. I have no fixed view on the matter and no preference for any of the bidders. My wish is simply to bring greater transparency to the process.”

Whatever happens to the franchise, the one thing which is certain is that both bids have damaged the case for HS2. Both promised quicker journey times and greater capacity, so the already floundering business case must be recalculated as the baseline comparison will move and the benefits of building HS2 will reduce.

Of course the other odd thing to throw in is Virgin Atlantic stating that they will start competing with British Airways on internal flights, which may well result in a price war. One of the things DafT completely failed to put into the HS1 business plan was how airlines, especially operating on low cost, would adapt their business model to compete. It seems this time they may have no excuse to ignore this factor as it may already have started well before HS2 is built.

The STOP HS2 campaign is currently running an urgent funding appeal.

 To pay direct into our bank account or preferably set up a standing order to help ensure we have regular funding, the details are; Lloyds-TSB, Sort Code 30-94-93, Account no, 34934760. Anyone wishing to donate to Stop HS2 should send a cheque made payable to “Stop HS2″ to Stop HS2, c/o Roger Waller, Treasurer, The Outlook, Dunsmore, Wendover, Bucks. HP22 6QJ.