ECML franchise fails .... again....

[Robert Shrives]

Hi It might be a bit historic but I recall the fun and games when it was realised that trains paid for by you and me as tax payers were been dolled out cheaply to Roscos so we the taxpayer could hire back our own trains AND provide a profit for the shareholders. A former Intercity Director had Porterbook IIRC as a sort of management buy.  However when these businesses are boughtout by venture capitalists- I believe funded by overseas banks you can see how they were seen as an easy gold mine. more so when you  think the subsidies paid to TOCs  goes to funding stock contracts and where does that funding come from.. oh yes you and me!

 

I would think that ATW has repaid the 158s original build price several times over and still no sign of a trade in deal by the roscos. Cars have scrapage deals do trains ? The whole thing stinks and comments on patronage sit well. The days of violent change cannot be that far away as we slip backward into the mire.

Robert    

[jamie92208]

It’s not even as though there was no precedent for being unable to make money from railways, 1923 anyone?

 

From some research that I've done that was a case of Government getting the private sector to bail them out of mess that they'd caused during WW1.  I can't quote things exactly but I think that the way in which railways were reimbursed for costs incurred during state control of the railways during the war, was badly flawed and left them in a poor state.   The bigger and stronger companies managed to survive but postponed planned improvement projects like the Midland West Riding Line through Bradford.   They were then forced into amalgamation so that the big companies could keep the smaller ones afloat.  Some mergers, such as the Hull and Barnsley and NER and the L&Y and L&NWR took place before the grouping but I don't know the full reasoning behind those So once again it was Government trying to get other people to clear their mess up.

 

Jamie

[rockershovel]

Re #48 above, this brings us back to my earlier point; it’s necessary to understand how an industry functions, the level of return which can realistically be expected, and the level and nature of risk involved. Otherwise your predictions and decisions are more-or-less unsound.

 

That’s why the Dutch, for example, are making hundreds of millions of € from wind farms, and we aren’t. The Dutch thinking is roughly as follows;

 

1) we invest in capital construction plant and decide what is an acceptable return on that investment

2) we make sure, through the political process, that we get the contracts to provide work for that capital plant (thereby mitigating the risk)

3) we construct harbours for that workflow, thereby ensuring that we have a competitive edge

4) we build the wind farms

5) we make a profit

6) we look for more work for our capital assets

 

The GERMAN and Danish thinking is roughly as follows;

 

1) we invest in the fixed installations, having decided on a realistic rate of return on that investment

2) we place the contracts with our preferred contractors

3) we construct the wind farms, operate them and get electricity

4) we make a profit and retain our capital assets and dominant market position

 

Both sides then congratulate themselves, and each other on making money out of “more Europe” by following good business practice..

[Dunsignalling]

The Government has announced that the ECML will be managed as an "Alliance" from 2020.

 

Stagecoach, the de facto current operator of ECML and former franchisee of South West Trains, where the Alliance idea was first implemented, is walking away from ECML, also from 2020.

 

No connection, I'm sure.................

 

John

Edited November 30, 2017 by Dunsignalling

[Mallard60022]

Slightly off topic but can anyone explain why Hull Trains are such a success? Is it because they are a single route operator and is a limited service, also non Franachise open access?

Also does anyone know if Grand Central is successful? Is it because they also are are non Franchise open access?

Phil

[DY444]

Slightly off topic but can anyone explain why Hull Trains are such a success? Is it because they are a single route operator and is a limited service, also non Franachise open access?

Also does anyone know if Grand Central is successful? Is it because they also are are non Franchise open access?

Phil

 

Probably a combination of preferential Track Access Charges relative to the franchise operator and ORR sanctioned ORCATS raids

Edited November 30, 2017 by DY444

[enginelane]

knowing 'enginlane' I suspect that his tongue was firmly in his cheek.

 

Jamie

Correct I thought Ian and Duncan may have given it away. However I do believe that a government should work in the best interests of the nation and that if public ownership gives the best return in a particular service then that should be the way forward.

 

Having left a job and people because of the self interests of a Trust in education currently rebrokering all its 21 schools it’s not just railways this - give it back and walk away attutude exists.

 

I would if the shareholders of Carillion see HS2 as a publically funded milch cow to get the company out of the financial mess it is in.

[Steven B]

It makes a lot of sense for the railway to be owned by one company that has, ultimately, responsibility for both operations and the infrastructure.

 

 

Every other form of transport manages if the infrastructure is managed separately from the machinery.

 

The airlines don't own the airports. The container ship operators don't own the ports. The Highways agency don't own the road freight operators.

 

Why does there need to be single ownership of track and train for them to work?

 

Steven B

[RANGERS]

Slightly off topic but can anyone explain why Hull Trains are such a success? Is it because they are a single route operator and is a limited service, also non Franachise open access?

Also does anyone know if Grand Central is successful? Is it because they also are are non Franchise open access?

Phil

 

Hull Trains is a single route operator but purely in the sense that it only runs between two terminals on one route. Its owned by First who have a multitude of other rail interests.

 

Its success is largely down to being an open access operator, I believe it has access charges which are proportionately higher than those of other franchisees along the same route but doesn't have the constraints of meeting a franchise spec' or providing the returns expected of those, so covering costs and making a return is much simpler.

[jamie92208]

Every other form of transport manages if the infrastructure is managed separately from the machinery.

 

The airlines don't own the airports. The container ship operators don't own the ports. The Highways agency don't own the road freight operators.

 

Why does there need to be single ownership of track and train for them to work?

 

Steven B

 

I suspect because all those modes can and do re route without any problems. Even when at sea and in some cases whilst in the air.  Thus the terminal operators have to be at the top of their game to attract customers.   Railways by their very nature are fixed and do not have that flexibility.

 

Jamie

[phil-b259]

Every other form of transport manages if the infrastructure is managed separately from the machinery.

 

The airlines don't own the airports. The container ship operators don't own the ports. The Highways agency don't own the road freight operators.

 

Why does there need to be single ownership of track and train for them to work?

 

Steven B

 

However what none of these examples have is flippin meddling politicians who are always seeking to 'improve' matters by sticking their oar in. Either go down the London Overground route and let services as a proper concession or give nice long franchises and let TOCs get on with the job.

[4630]

Slightly off topic but can anyone explain why Hull Trains are such a success? Is it because they are a single route operator and is a limited service, also non Franachise open access?

Also does anyone know if Grand Central is successful? Is it because they also are are non Franchise open access?

Phil

 

 

If you can get to your nearest WHS* pages 64 to 67 of the current issue of Modern Railways contains a piece about First Hull Trains and Grand Central.

 

It's an interesting article and includes a table with the following figures;

 

                                                                    Income                                                  Surplus

                                                            2014/15     2015/16                                 2014/15     2015/16

 

Grand Central                                          38                44                                         3                 6

Hull Trains                                                29                29                                         4                 7

East Coast franchised operator             685               708                                     -10               13

 

All figures in £million.

 

 

*other newspaper and magazine outlets are available  

[rockershovel]

Correct I thought Ian and Duncan may have given it away. However I do believe that a government should work in the best interests of the nation and that if public ownership gives the best return in a particular service then that should be the way forward.

Having left a job and people because of the self interests of a Trust in education currently rebrokering all its 21 schools it’s not just railways this - give it back and walk away attutude exists.

I would if the shareholders of Carillion see HS2 as a publically funded milch cow to get the company out of the financial mess it is in.

... which was the point I was making, above.

 

The French, German and Dutch governments were confronted with the task of rebuilding their bankrupt and destroyed nations in 1918 and again in 1945. Consequently, they became focussed on the concept of a functional infrastructure, as inherently desirable. India and China have also had considerable success with the concept of controlling the productive assets in an economic system, so I’m told. Some (though by no means all) of the A8 nations have made this work, hence we have mass immigration from Poland, but not Czechoslovakia.

 

The British government settled on a policy of financialisation, from the 1960s onwards. The only priority is to maximise the return in a narrowly defined sense, which usually involves trying to make excessive profits at every stage of the cycle - because EVERY activity MUST produce a profit not less than EVERY OTHER activity. The problem with THIS is that it takes no account of the actual, wider outcome and tends to produce an unbalanced economy, prone to cycles of boom and bust.

 

The OTHER problem, of course, is that actual competency is progressively eroded until those retaining control of the system, no longer know how to operate it..

Edited November 30, 2017 by rockershovel

[cheesysmith]

But do those figures for virgin EC include the premium payments to DaFT for the franchise?

 

How about this for a new idea? We run the ECML just like the gov alllowed to happen with the busses. Every train path is open to any bidder. The highest bidder gets the path, subject to meeting the required specification (type of train etc). Then the unprofitable ones are paid for directly by DaFT, with the profits off the premium paths used to subsidise these. The fares are standardised, and reinue is split via orcas as now, but each company can sell company/train specific tickets.

 

It would be a lot more free market than now, without the betting game as is with the franchise gambling on how much it can repay to DaFT in profits. At present, if it gets it right it makes monies for the private companies, but if it gets it wrong a set of very expensive laywers come in to ague how the private company can get out of it. We tried shared risk/profit, but this still made the betting bigger, as the numbers made it needed to win with the DaFT shareing the pain as fall back if the numbers were wroong.  Direct awards, where the private companies just run it for DaFT, as in GWML & WCML ust let the DaFT interfere.

[Mike Storey]

This news may also be very unwelcome at a time of proposed new franchise models. Let's hope it is not much more than a blip....

 

https://www.theguardian.com/business/2017/oct/05/fall-in-rail-journeys-raises-questions-for-train-franchise-firms

[Coryton]

Slightly off topic but can anyone explain why Hull Trains are such a success? Is it because they are a single route operator and is a limited service, also non Franachise open access?

 

 

In a sense, any open access operator that survives is by definition a success because if it fails it just disappears - there will be no bail-out or replacement by the government.

 

They are also presumably able to make whatever profit they are able without having to offer premium payments to the government in the way that is required to win a profitable franchise. And - as with coach companies and airlines - they can choose to run just the services that make the money (albeit within strong constraints).

 

Every other form of transport manages if the infrastructure is managed separately from the machinery.

 

The airlines don't own the airports. The container ship operators don't own the ports. The Highways agency don't own the road freight operators.

 

Why does there need to be single ownership of track and train for them to work?

 

Steven B

 

Well I don't think it is clear that single ownership is necessary.

 

But the examples you give are a bit different in the sense that these modes of transport don't require all the operators to agree a joint timetable in some fashion (though presumably something similar happens with slots at busy airport).

[rockershovel]

In a sense, any open access operator that survives is by definition a success because if it fails it just disappears - there will be no bail-out or replacement by the government.

 

They are also presumably able to make whatever profit they are able without having to offer premium payments to the government in the way that is required to win a profitable franchise. And - as with coach companies and airlines - they can choose to run just the services that make the money (albeit within strong constraints).

 

 

 

Well I don't think it is clear that single ownership is necessary.

 

But the examples you give are a bit different in the sense that these modes of transport don't require all the operators to agree a joint timetable in some fashion (though presumably something similar happens with slots at busy airport).

The right Slots at airports are critical to any airlines business model, and making port on time is critical in shipping.

[Coryton]

How about this for a new idea? We run the ECML just like the gov alllowed to happen with the busses. Every train path is open to any bidder. The highest bidder gets the path, subject to meeting the required specification (type of train etc). Then the unprofitable ones are paid for directly by DaFT, with the profits off the premium paths used to subsidise these. 

 

But that's not how bus services work. With busses, all the profits from profitable services go to the shareholders, leaving the unprofitable ones to be paid for out of the very limited resources of local authorities. 

 

Furthermore, I believe a bus company isn't allowed to subsidise its own loss-making services from other routes because that could constitute unfair competition. (While I can see the sense to such a rule to prevent companies from 'artificially' lowering fares to kill of competitors, any route that needs subsidising is hardly likely to suffer from a new entrant muscling in).

[Coryton]

The right Slots at airports are critical to any airlines business model, and making port on time is critical in shipping.

 

I'm sure.

 

But shipping companies, airlines and coach companies don't have to get together and decide whose ship/plane/coach is going to occupy which bit of sea/air/road at 2.37 on a Tuesday afternoon.

 

Perhaps more importantly when considering vertical integration, line closures for maintenance/improvements generally have a much bigger impact on rail than any equivalent for other modes of travel.

 

Road replacement trains are very rare.

[jamie92208]

 

 

Road replacement trains are very rare.

 

The only examples I can think of are Workington after the bridge collapsed and the extra services over the Forth bridge when there were problems on the older road bridge.

 

Jamie

[Coryton]

The only examples I can think of are Workington after the bridge collapsed and the extra services over the Forth bridge when there were problems on the older road bridge.

 

Jamie

 

I think there was a 'heritage' railway of some kind that helped out in the North of Scotland during a road closure entailing a long diversion.

 

And it's been done in the US during major highway works.

 

We are, however, digressing somewhat from the ECML.

 

What I don't understand is why it suffers so much from bidders winning bids by offering unrealistic premiums when other Intercity franchises don't seem to have this problem. 

 

Would the WCML have been the same if it had been retendered when the ECML was?

[62613]

What a brilliant idea, why didn't someone think of that?

Oh, wait, 1st January 1948.

 

Mike.

15th September 1830, or whenever it was, although they did at first allow certain colliery owners the right to run their locos on their line

[enginelane]

I think there was a 'heritage' railway of some kind that helped out in the North of Scotland during a road closure entailing a long diversion.

 

And it's been done in the US during major highway works.

 

We are, however, digressing somewhat from the ECML.

 

What I don't understand is why it suffers so much from bidders winning bids by offering unrealistic premiums when other Intercity franchises don't seem to have this problem. 

 

Would the WCML have been the same if it had been retendered when the ECML was?

Perhaps retendering could be part of the next series of the Apprentice?

[ejstubbs]

I think there was a 'heritage' railway of some kind that helped out in the North of Scotland during a road closure entailing a long diversion.

 

That was the Leadhills and Wanlockhead Railway - hardly in the 'north' of Scotland (map), it's south of Glasgow and only ~50 miles from Gretna Green by road (by contrast, John O'Groats is ~360 miles from GG).

 

I believe a bus company isn't allowed to subsidise its own loss-making services from other routes because that could constitute unfair competition. (While I can see the sense to such a rule to prevent companies from 'artificially' lowering fares to kill of competitors, any route that needs subsidising is hardly likely to suffer from a new entrant muscling in).

 

Stagecoach did pretty much exactly that in the early days of local bus deregulation.  In Darlington, for example, Souter drove the competing bus company out by letting people ride his buses for free.  The Monopolies and Mergers Commission described Stagecoache's tactics as "predatory, deplorable and against the public interest".  But he got away with it.

[The Stationmaster]

It makes a lot of sense for the railway to be owned by one company that has, ultimately, responsibility for both operations and the infrastructure. All that was (is) required in accordance with EU rules is that operations and infrastructure are commercially separated and that the railway owner provides open access to other operators. That does at least allow issues that straddle the operations/infrastructure interface to be dealt with in a proper integrated manner without resort to commercial wrangling between the two sides.

 

The arrangements that HMG created when the railways were privatised, ie a complete separation of operations and infrastructure into completely independent companies were quite unnecessary, and quite often held as the prime example of how not to do it. Sanity might be beginning to prevail. It isn't entirely novel either - until the change of franchise SWT and Network Rail were getting along quite well as an alliance, and something of the same ilk has been working in Scotland.

 

Jim

 

Regrettably though that is not what is going to happen on the ECML.  The ECML 'operrator' will get into bed with NR and that is that.  OIF it is anything like the events that took place with South West trains it will then amount o 's*d every other operator and look after us'.

 

Grayling appears to love on a planet far, far away - in one place he's lauding this sort of cosy arrangement (presumably without fully understanding how it might work in practice) while in another there is 'consultation' about creating an additional operator over a substantial section of route where line capacity is limited and carful liaison between the existing operators is already required when developing timetables - adding another to that mix sounds daft to me (as well as actually increasing overall costs).  Mr Grayling appears to be pursuing ideals which simply do not exist - he'd do far better giving NR a good kicking to ensure that it understands that its train operator customers actually pay goods and passengers who pay to be conveyed in a timely manner and that means running a properly maintained and resilient railway and not one with a massive central bureaucracy and insufficient boots on the ground to maintain and deliver such maintenance and resilience.

 

Shutting a mainline route for half a day and leaving passengers to mainly fend for themselves just because a piece of plug-in circuit board has gone bang and there is no back up for such an eventuality smacks of p*ss poor 'management to me on the part of a concern which is allegedly 'managing' its network - nearest replacement component was well over 100 miles away, the bloke to install it was the same distance away in another direction and there was nobody to get trains moving until several hours had been spent trying to find the handful who could; appalling.