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East Coast Franchise awarded to Virgin and Stagecoach Joint Venture

East Coast Franchise awarded to Virgin and Stagecoach Joint Venture

On Thursday the Government announced East Coast’s return to private ownership after details were given about the winning consortium. A joint venture between Virgin Group and Stagecoach called Inter City Railways were the successful bidders for the east coast line. The group already operates the west coast line, which was hit by controversy in after problems with the competition for the franchise. The new company has promised many things for the east coast railway including a 50% increase in seats across the franchise, an extra 3,100 seats for peak time travel by 2020, new trains and station improvements, along with new routes and a reduction in journey time.

The deal comes as a blow to First Group after it pinned its hope on a successful bid after losing the First Capital Connect and ScotRail franchises. Its share price fell 10% on the news. Rumours on Wednesday night suggested that the eight-year deal had been awarded to a group part owned by the French state owned railway SNCF. Labour and Trade Unions were against the re-privatisation of the route stating that it has made big returns while under state ownership. Transport Secretary Patrick McLoughlin pointed out the fact that this new franchise deal will bring in £3.3 billion in eight years for the Treasury compared to £1 billion in five years. The franchise will begin in March next year.

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