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Virgin Trains is to continue operating the West Coast Main Line rail franchise for up to two years while the Department for Transport (DfT) conducts a new tendering process to find a full-time franchisee.
The train operator, which successfully challenged the DfT decision to award the London-to-Glasgow line to First Group, will continue running the franchise until 9 November 2014, after which the winning bidder from the tendering process will take over. Under the terms of the deal, both cost and revenue will be borne by the DfT, while Virgin will take a 1 per cent margin on top of its operating costs. There is also the option for terms to be changed for Virgin to take on more risk to potentially generate more revenue.
Tony Collins, CEO of Virgin Rail Group, said: “I’m delighted we have an agreement with the Department of Transport that gives us the chance to continue providing high-quality services to our customers. We have had great support from staff and customers in recent months and we will repay that loyalty with even better service.”
Despite being a temporary arrangement, Virgin has committed to making changes to how it operates the franchise. It will upgrade station facilities and provide an easier-to-use compensation scheme to enable passengers to claim refunds if trains run significantly late.
The selection of First Group as preferred bidder through the original process was cancelled in October after the DfT accepted Virgin’s allegations that there were “significant technical flaws” in the procurement process.
The final report into the flawed bidding process, written by Centrica CEO Sam Laidlaw, was expected to be published this week. However, it has been postponed following legal action lodged by Kate Mingay, a DfT official who was suspended over the fiasco who is fighting the suspension.