National Express is preferred bidder for ScotRail franchise End of the line for British Rail as final franchisees chosen
Tuesday 11 February 1997
The decision marks the end of the franchising process after a spurt of activity in January saw four franchises sold off in one day. Civil servants admit that the impending election has forced the pace of the sell-off.
The only remaining franchise in public hands is Regional Railways Central, which runs services from Wales to East Anglia. Managers from First Bus and National Express were meeting last night to present their final bids. A decision is imminent.
ScotRail's service will be heavily regulated by the Strathclyde Passenger Transport Authority (PTA), which is expected to rubber-stamp the decision a week on Friday.
National Express beat off rivals Stagecoach, the bus and rail group, Prism, the quoted train company, a management buyout bid and a consortium including Go Ahead bus group.
ScotRail presented civil servants with many problems. Stagecoach was thought to stand little chance after officials announced it would be referred to the Monopolies and Mergers Commission if it won. Although the bus company has a 20 per cent share of the Scottish bus market, Brian Souter, the company's executive chairman, said his company would not have bid if there had been insurmountable problems.
The Scottish rail service generates more than pounds 110m in ticket sales, but also requires a substantial subsidy of more than pounds 240m - mostly to keep its ``socially necessary" routes going.
ScotRail could have proved politically difficult to sell as councillors were initially opposed to the sale. However, Patrick Hetherington, the Opraf official handling the sale, managed to talk round most of the sale's opponents.
Labour-controlled Strathclyde PTA was also instructed by party officials not to delay the letting of the franchise. The party leadership was concerned that having a single train operating company in the public sector could become a political embarrassment after a Labour victory.
National Express has already successfully attracted passengers on to its Midland Mainline services carrying passengers from London to Leeds with innovative new fares and is now one of the largest groups controlling Britain's railways.
With ScotRail, which is the company's fourth franchise, the company's rail team will have met senior managers' target of a passenger revenue stream of pounds 300m.
The group has ambitious plans for ScotRail , including new rolling stock and a refurbishment programme. The company is also considering building a new station at South Dalgetty in Fife and looking at plans for an airport link from Glasgow airport to the city centre.
ScotRail will prove a difficult railway to run. Almost half its revenue comes from the Strathclyde area, where ticket prices are largely controlled by the passenger transport authority.
However, a high frequency service between Edinburgh and Glasgow could attract passengers from the congested motorway that links the two cities.
The leisure market, analysts predict, will be another profit centre. ScotRail runs the Fort William sleeper service and many of the highland routes.
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