Docklands Railway Management, a consortium of senior DLR managers backed by the facilities management group Serco, won the seven-year franchise in competition with a bid by the bus company Go Ahead and VIA of France.
John Gummer, the Environment Secretary, said that the franchising of the DLR would mean improved efficiency, reliability and quality of service and reduced public subsidies. Last year the DLR, which carries 61,000 passengers a day, received grant aid of pounds 21m.
The buyout team will receive a fixed annual fee to cover the DLR's operating losses, all fare revenues and income from commercial activities. The fixed fee will be cut if minimum service levels are not met and the new operators will have to meet any shortfall themselves. Investment of pounds 45m is earmarked over the next seven years.