Newspaper article The Journal (Newcastle, England)

GNER Clinch Rail Victory

Newspaper article The Journal (Newcastle, England)

GNER Clinch Rail Victory

Article excerpt

Byline: By Graeme King

Rail company GNER last night looked to have won the battle to retain its East Coast Main Line route ( with a pledge to pay the Government a massive pounds 1bn for the privilege.

Sources close to the franchise competition said yesterday that GNER had been awarded the deal to run the line for at least seven years from May 2006.

An official announcement is expected in two weeks' time.

But already there are concerns that the company's decision to offer around four times its current premium to Treasury coffers to secure the franchise will undermine the service it can deliver. Union and rail passenger voices have warned that the massive payments to government are likely to see cuts to staff numbers or service levels.

There has also been criticism of the franchising system which does not oblige rail companies to invest in infrastructure, or for the premiums paid for the East Coast franchise to be re-invested in the railways.

Neither the Strategic Rail Authority nor GNER would officially confirm the company's victory yesterday but it is understood the decision will be made official within two weeks.

The other companies vying for the franchise were Danish Railways (DSB), FirstGroup and a collaboration between Virgin and Stagecoach.

The SRA was expected to select a

preferred bidder last month, with an announcement to be made this month, but the timetable has slipped, with transport secretary Alastair Darling not expected to announce the preferred bidder until mid March.

The operator taking over on May 1 next year will run the line for seven years, with an option to extend it for three years if performance targets are met.

It is understood GNER has offered the Strategic Rail Authority a premium of pounds 100m a year ( a potential total of pounds 1bn and more than four times the train operator's present annual contribution of pounds 22.5m.

GNER has increased passenger numbers by 34pc between 1996 and 2004, and it is believed the company is confident of growing numbers still further to drive the revenue needed to pay the increased premium to government. …

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