The order for eight luxury trains is one of the biggest since the rail industry was privatised and was won by Metro-Cammell in competition with up to 20 other rolling stock companies.
Michael Heseltine, the Deputy Prime Minister, hailed the news, saying: "Rail privatisation has opened the way for new investment and better services. At last our railways are free to raise standards and put the customer first."
However, the Save our Railways pressure group, which has campaigned against rail privatisation, said that investment in new trains was lagging far behind that achieved under the old British Rail and it described the fleet replacement plans of the privatised rail industry as "derisory".
The new trains will start to enter service in December 1998 and will cut the journey time from London Victoria to Gatwick from 30 to 25 minutes. There will be three standards of travel - executive, first and standard. "We aim to make the on-board service more like an airline experience than a traditional train journey," said the Gatwick Express managing director, Mac Mackintosh.
Gatwick Express will lease the trains direct from GEC Alsthom over a 12-year period. GEC Alsthom will design, build and maintain them. The extension of Gatwick Express's franchise from seven to 15 years was contingent upon it placing the order for new rolling stock.
Other train orders in the pipeline are a pounds 250m order due from Cross Country Trainsand an order worth up to pounds 650m for tilting trains for the West Coast Mainline.