South Western Railway (SWR) is at risk of having its franchise transferred to a public sector operator, according to the Department for Transport (DfT).
The DfT has started preparing “contingency measures” for rail routes due to poor performance and indications that the “franchise is not sustainable in the long term”.
The DfT has outlined options to ensure transport services continue, including a new short-term contract with SWR with tighter defined requirements, or termination within the next 12 months and transferring of services to a public sector operator.
Grant Shapps, secretary of state for transport, said the DfT had also issued a request for proposal (RFP) regarding the franchise.
The DfT will “evaluate responses to determine how best to secure the continuation of passenger services on this part of the network”.
Shapps said: “The poor operational performance, combined with slower revenue growth, has led to the financial performance of SWR to be significantly below expectation since the franchise commenced in August 2017.”
Shapps added that the franchise had “not yet failed to meet their financial commitments” and will be “held to their financial obligations”. However, the DfT “must prepare suitable contingency measures, under the Railways Act 1993”.
The franchise is owned by the British transport firm FirstGroup and state-owned Hong Kong firm MTR. The contract was set to end in August 2024.
Union strikes and operational issues have disrupted recent services, and the franchise lost a reported £137m in the 2018-19 financial year.
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