Arriva drops out of Welsh rail franchise bid

[DavidB-AU]

The firm that runs most of Wales' rail network has pulled out of the contest to continue running it from 2018.

 

Arriva has said Arriva Trains Wales was "no longer participating in the Wales and Borders competition", adding it had "not been an easy decision".

 

http://www.bbc.com/news/uk-wales-politics-41809874

 

 

And from IRJ.

 

http://www.railjournal.com/index.php/main-line/arriva-pulls-out-of-wales-borders-franchise-contest.html

Edited October 31, 2017 by DavidB-AU

[John_Hughes]

Unless the muppets in charge of the Southern franchise are awarded the job, it's hard to see how anyone else could do worse. Generally grubby and over-crowded trains with filthy loos, made up of stock that's well-past its sell-by date - they tick all the boxes!

 

Though in fairness their front-line staff generally do their best, and deserve to be commended for it.

[Zomboid]

Unless the muppets in charge of the Southern franchise are awarded the job...

Aren't the WAG making the decision? If so, then they're not likely to appoint the DfT...

[Signaller69]

Aren't the WAG making the decision? If so, then they're not likely to appoint the DfT...

Yes . . . And no. Transport For Wales (a wholely owned WAG company) are overseeing the bidding process according to this report: http://www.walesonline.co.uk/business/business-news/arriva-rail-wales-pull-out-13833745?service=responsive

[phil-b259]

Aren't the WAG making the decision? If so, then they're not likely to appoint the DfT...

I'm sure that nice Mr Wilkinson and his Whitehall colleagues would be quite happy to assist if WAG want any tips on Union breaking as part of the next franchise though.

[Mike Storey]

Unless the muppets in charge of the Southern franchise are awarded the job, it's hard to see how anyone else could do worse. Generally grubby and over-crowded trains with filthy loos, made up of stock that's well-past its sell-by date - they tick all the boxes!

 

Though in fairness their front-line staff generally do their best, and deserve to be commended for it.

 

Only the Dutch, the French and the Chinese are now left in the running.

[Robert Shrives]

Hi, Fully agree about staff - all my experiences of travelling and working with  the cambrian lines  staff since I first travelled in 1979 has been excellent. Never enough stock of course in summer and a rag tag bag. Only new stock I guess were the 1960 diesels and then the 150 sprinters.  The 158s are a hole dug by RETB with the older system not working on 170s when it was tried IIRC.  However ERTMS is a new toy and never tried on a 170 as a result of the privatisation carve up.

 

Mach depot without a wheel lathe is always going to struggle and the other week 3 sets to Longsight lathe due flats is a pretty dire position to be in. Nodoubt the next holder will rush in with c£5M to put one in... Of course the whole fleet is aging and from 2020 mainly non compliant, only retention fitted sets are 175.  

 

Arriva bid team will have done the maths and know it does not add up what is being specified  and costs expected and have walked away. It might be  a wake up call for all involved that the process is flawed. But then WAG is oft a littlw slow on the uptake and in this case the DfT is mudding the water.  The Wrexham MP comments just reinforces the North /south divide  that exsists in Wales and I guess he will rue the day at the next election

Robert       

[black and decker boy]

Talk elsewhere that the ITT includes a cap on profits and / or WAG getting a significant slice of any profit over a set %.

 

So a high risk / onerous contract, profits capped and in a period where ridership levels are stagnant or falling. Is it any surprise that Arriva have decided to save themselves tens of millions in bid costs.

[John_Hughes]

Arriva also walked away from their bus contract with Ceredigion County Council a few years back, giving the minimum notice for doing so. Oh for the days of Crosville Motor Services, with their smart green buses, their uniformed drivers and their sharp time-keeping!

[lmsforever]

Whenever I read the news from Wales it is like reading   reports from the third world the government is always in turmoil and cant make up its mind on any subject especially transport.The Traws Cambria buses are in doubt due to mix ups of funding and general meddling ,reading the comments from the mp,s no one has a clue as to what is needed to provide good transport.The Cardiff Metro seems to have no idea wether or not its trams or heavy rail and is not helped by the comments of a professor who rubbishes every development proposed by government he never has any alternatives all in all no one has a clue and rail companies must wonder what they are letting themselves in for.Maybe Westminster should take back control of Wales as the current administration is a flawed group of disparate groups ,when it happened most people did not want the current system and it is a money pit for Englands money.

[corneliuslundie]

To be fair to Arriva, the franchise was let on a no-growth basis so there has been no opportunity to acquire extra stock. With a subsidised franchise this would affect the required subsidy.

But worse, what stock will there be around for a new franchisee to take on? I can't see the WAG stumping up for new trains.

Jonathan

[John_Miles]

Whenever I read the news from Wales it is like reading   reports from the third world the government is always in turmoil and cant make up its mind on any subject especially transport.The Traws Cambria buses are in doubt due to mix ups of funding and general meddling ,reading the comments from the mp,s no one has a clue as to what is needed to provide good transport.The Cardiff Metro seems to have no idea wether or not its trams or heavy rail and is not helped by the comments of a professor who rubbishes every development proposed by government he never has any alternatives all in all no one has a clue and rail companies must wonder what they are letting themselves in for.Maybe Westminster should take back control of Wales as the current administration is a flawed group of disparate groups ,when it happened most people did not want the current system and it is a money pit for Englands money.

 

And Westminster and DaFT are better??? 

[Mike Storey]

To be fair to Arriva, the franchise was let on a no-growth basis so there has been no opportunity to acquire extra stock. With a subsidised franchise this would affect the required subsidy.

But worse, what stock will there be around for a new franchisee to take on? I can't see the WAG stumping up for new trains.

Jonathan

 

It was let on an assumption of no growth, but Arriva have still committed to a further £1m on new stock within the remaining year or so of their franchise. So I cannot quite understand your comment (unless Arriva renege, but their MD has just confirmed, publicly, that they will go ahead, despite withdrawing their bid)?

[Mike Storey]

Talk elsewhere that the ITT includes a cap on profits and / or WAG getting a significant slice of any profit over a set %.

 

So a high risk / onerous contract, profits capped and in a period where ridership levels are stagnant or falling. Is it any surprise that Arriva have decided to save themselves tens of millions in bid costs.

 

I believe you will find it is cap and collar, which also provides protection for the franchisee in the event of lower revenue than expected, and is pretty standard now. I do not believe for one moment that this was the reason.

 

It is interesting that a German FOC (DBC) and now a German TOC (Arriva) are progressively withdrawing from, or at least severely reducing their exposure to the UK market. What is it that they know that we don't?

[4630]

 

 

It is interesting that a German FOC (DBC) and now a German TOC (Arriva) are progressively withdrawing from, or at least severely reducing their exposure to the UK market. What is it that they know that we don't?

 

 

To borrow Donald Rumsfeld's phrase, it's probably the "known unknowns" that's got them spooked.

 

There's just too much uncertainty about the direction of the UK over the life of the franchise for them to want to bid and risk winning the franchise.

[pete_mcfarlane]

To borrow Donald Rumsfeld's phrase, it's probably the "known unknowns" that's got them spooked.

 

There's just too much uncertainty about the direction of the UK over the life of the franchise for them to want to bid and risk winning the franchise.

I never quite understood why Rumsfeld got slated for his 'known unknowns and unknown unknowns' speech. It was a perfectly good summary of risk management. 

 

As you say, businesses don't like risk, so the current uncertainty of what the relationship between the UK and EU will look like, and how an EU company will be able to trade in the UK, has probably tilted the decision. Ariva probably know as much about the outcome of the negotiations as we do. 

[RANGERS]

I believe you will find it is cap and collar, which also provides protection for the franchisee in the event of lower revenue than expected, and is pretty standard now. I do not believe for one moment that this was the reason.

 

It is interesting that a German FOC (DBC) and now a German TOC (Arriva) are progressively withdrawing from, or at least severely reducing their exposure to the UK market. What is it that they know that we don't?

 

I doubt they know anything that we don't, it doesn't take a genius to work out that the stability of the franchises in the UK is now questionable and with such huge sums at stake and global competition driving margins to be wafer thin, the two sides of the model are incompatible.

 

Add outside influences (choose from DfT/ TfW/TfS/ TfL), all of whom seem to know how to make it work better than the incumbent operators, mix with the shadow of possible nationalisation with little/ no compensation and hey presto, the appeal of running a rail franchise loses its gloss. With so much at stake, the operators will be thinking, why bother? The only ones it seems who can afford the risk are those with government backing, its just that very little of it seems to be coming from our government.

[4630]

I never quite understood why Rumsfeld got slated for his 'known unknowns and unknown unknowns' speech. It was a perfectly good summary of risk management. 

 

 

 

I agree.  I've used his complete phrase several times in my business career as it neatly compartmentalises issues and helps to give a notional structure to work around.

Edited October 31, 2017 by 4630

[Talltim]

It is interesting that a German FOC (DBC) and now a German TOC (Arriva) are progressively withdrawing from, or at least severely reducing their exposure to the UK market. What is it that they know that we don't?

Not sure that DB ever really wanted EWS, just their licence to operate in France. And the Arriva purchase was possibly mainly to get rid of their competitor in Germany Edited October 31, 2017 by Talltim

[Mike Storey]

Whenever I read the news from Wales it is like reading   reports from the third world the government is always in turmoil and cant make up its mind on any subject especially transport.The Traws Cambria buses are in doubt due to mix ups of funding and general meddling ,reading the comments from the mp,s no one has a clue as to what is needed to provide good transport.The Cardiff Metro seems to have no idea wether or not its trams or heavy rail and is not helped by the comments of a professor who rubbishes every development proposed by government he never has any alternatives all in all no one has a clue and rail companies must wonder what they are letting themselves in for.Maybe Westminster should take back control of Wales as the current administration is a flawed group of disparate groups ,when it happened most people did not want the current system and it is a money pit for Englands money.

 

This is the same WAG that has actively supported the, very successful, upgrading of the Valley Lines and the Barry route, along with progressive improvements in the capacity requirements for commuting into Cardiff and Newport over the past 15 years? As well as the same WAG that has re-introduced the first trans-Wales services since the 1960's (?), and actively promoted the re-instatement of the West Wales line up to Aberystwyth?

 

You might care to compare these successes they managed under the Blair government compared to the endless promises and then continuing breaking of those promises by the Cameron and now especially the May governments. Electrification under heavy rail conditions, as promised under the 2011 strategic plan submitted by DfT, of the Valley Lines and Cardiff to Swansea, are now in the dustbin. A cheaper, tram based solution is under discussion for the Valleys, but the technical arguments surround the cost-benefit issues, when one sees the tripling of the cost of such a scenario, emerging from the South Yorkshire Tram-Train trial, now three years late and still unproven. How can any strategy settle under such a great unknown?

 

If you also care to follow the money, they get very little compared to the Barnett formula application, and devolutionary powers, as applied for Scotland (for transport anyway - they do get special measures for Health in terms of A&E coverage and similar distance over population issues), and of course, now for Northern Ireland (if the courts do not stop that in its tracks). Wales has only very recently been devolved an element of powers over transport policy and franchising (still much less than the equivalent Scottish powers), and the Westminster DfT has largely dictated the application of policy, hence the disparity. The fact that Tory and UKIP Assembly Members, along with Westminster Tories are rubbishing public transport provision and thus giving claim to a hiatus in consensus on policy by the Labour-dominated WAG, is hardly a matter of great revelation. If you intend to look at this objectively (and I cannot claim any such perfection) you should at least understand the context and the options.

 

On buses, I have no idea, and bow to your opinion, in the absence of others.

[Mike Storey]

To borrow Donald Rumsfeld's phrase, it's probably the "known unknowns" that's got them spooked.

 

There's just too much uncertainty about the direction of the UK over the life of the franchise for them to want to bid and risk winning the franchise.

 

No, sorry, don't buy it. DB has taken enormous risks across Europe, especially their investment in Schenker, the one that has really paid off, but could have equally gone the other way, particularly in France. Their re-constitution last year actually gave them more powers, and protections, to take risk, away from their controlling mind. This is not true of Abellio and Keolis, who are still bidding, under their protective state confinements. There is money to be made in variations, of which there are likely to be many across numerous franchises over the next several years. Your theory does not explain this, unless civil servants have magically taken over a commercially run subsidiary of DBAG.

 

There is more here, and I suspect it will emerge as times goes on. I know I sound like David Icke, but I have been following this kind of issue for the past 20 odd years and the pattern has suddenly changed. Brexit alone (for there are already many ways around that status) only provides an explanation of uncertainty around the economy, not the commercial viability of domestic franchises within a relatively large economy (howsoever diminished or otherwise, post 2019).

[lmsforever]

The assembly in Cardiff has a history of bad management look at the state of their health service one of the worst in the UK and the money for the improvements made under Blair came from the UK at the expense of work in England.The assembly is not fit for purpose and direct rule from Westminster will be the way to to correct these problems then the DFT can show just how hopeless they are compounding the previous mistakes made in managing the franchise.Arriva must have been really worried about the form of the new franchise to pull out maybe the vague ideas for the Metro in south Wales plus direct control by the assembly was a step to far we will never know.The arguments between Cardiff and London have been going on for at least two years and a settlement will be hard to attain as money is a stalling point.If it goes wrong I bet London will get the blame not the ameteurs in Cardiff.

[black and decker boy]

I believe you will find it is cap and collar, which also provides protection for the franchisee in the event of lower revenue than expected, and is pretty standard now. I do not believe for one moment that this was the reason.

 

It is interesting that a German FOC (DBC) and now a German TOC (Arriva) are progressively withdrawing from, or at least severely reducing their exposure to the UK market. What is it that they know that we don't?

The source of this is a respected journalist who has tracked and written about many franchises & ITT terms so for him to report the cap, it must be more draconian than the norm.

 

I understand that even DfT have reduced / removed this from all recent franchise awards with what protection remains being quite late in the franchises and not as favourable as it used to be.

 

Abellio are apparently having to put hard cash into scotrail to cover operating shortfalls with little prospect of cap & collar helping out

[Mike Storey]

The source of this is a respected journalist who has tracked and written about many franchises & ITT terms so for him to report the cap, it must be more draconian than the norm.

 

I understand that even DfT have reduced / removed this from all recent franchise awards with what protection remains being quite late in the franchises and not as favourable as it used to be.

 

Abellio are apparently having to put hard cash into scotrail to cover operating shortfalls with little prospect of cap & collar helping out

 

Roger Ford has long predicted the demise of franchising along the lines of Christian Wolmar's "what is it for?". But your explanation, using his or A.N.Other journo's comments, does not explain why only Arriva have dropped out. You may say that only they know the real numbers. Well, that does not sit with the fact that all the accounts submitted to DfT and DfT current projections have to be fully available to qualified bidders. So it only works if Arriva (or indeed DfT/TfW) are hiding something, a rather difficult thing to do these days.

 

It also does not sit well with the fact that there continue to be sufficient numbers of bidders for each franchise for there to have to be a competition, with several new players entering the market (but mostly using the same advisors as the old hands have done in the past).

 

Thus we still have three, apparently competent bidders, all commercial operations as much as Arriva (as subs of state entities, or in MTL's case, a protected species in a closeted home market), still going ahead.

 

So, we are still left with wondering - why only Arriva?

[wombatofludham]

Whenever I read the news from Wales it is like reading   reports from the third world the government is always in turmoil and cant make up its mind on any subject especially transport.The Traws Cambria buses are in doubt due to mix ups of funding and general meddling ,reading the comments from the mp,s no one has a clue as to what is needed to provide good transport.The Cardiff Metro seems to have no idea wether or not its trams or heavy rail and is not helped by the comments of a professor who rubbishes every development proposed by government he never has any alternatives all in all no one has a clue and rail companies must wonder what they are letting themselves in for.Maybe Westminster should take back control of Wales as the current administration is a flawed group of disparate groups ,when it happened most people did not want the current system and it is a money pit for Englands money.

 

I don't know where you get the idea that Traws Cambria is in doubt.  The Llywodraeth Cymru is investing in new vehicles for the operators and has committed funding to replace the services Arriva peremptorily withdrew in Gwynedd and Ceredigion.  The reason why there seems to be "no idea" as to what to do for the Hwntws in Greater Cardiff is because the new rail franchise is being let to technically and operationally advise and implement an integrated transport system for the region - it may be whoever gets the gig might work with Network Rail and Transport Wales to evolve a light rail, intermediate rail or heavy rail solution, and I suspect it was this dual role of operating the current network whilst advising as a technical and operational advisor on the future investment priorities for the development of a suitable system for the Greater Cardiff area that probably spooked Arriva/DB.  As for Cardiff Bay, it may not be perfect but I for one am glad it is here and can see and have benefitted from the devolved assembly.  Westminster has ignored Wales for centuries and would continue to do so.  You can keep direct rule from Whitehall for Ulster, we're perfectly fine this side of Offa's Dyke.