Four firms shortlisted for South Central train franchise

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Four travel companies are in the running to operate the new South Central railway franchise, with the successful bidder to be named next summer.

The Government announced the shortlist for the tender yesterday. The National Express-owned NXSC Trains, Stagecoach's Southern Trains, Dutch Railways' NedRailways South Central and Govia, a joint venture between Go-Ahead and French group Keolis, made the cut.

Joe Spooner, an analyst at Royal Bank of Scotland, said: "Perhaps NedRailways is the only surprise." Govia was seen as the favourite.

The Rail minister, Tom Harris, said the Government looked forward to seeing strong bids from all competitors and improvements in service for passengers. The franchise will be formed from the Govia-run Southern franchise, which operates in London, Kent, Hampshire, Sussex and Surrey. The Tonbridge to Redhill line, which is part of the Southeastern service, and the Gatwick Express will also be included.

The contract runs from September next year until July 2015, although the final year is dependent on what the Department for Transport calls "acceptable performance levels".

Analysts said South Central is unusually short for a rail contract – they normally cover a period of seven to 10 years – although the department can extend the contract by two years. "The short length and complexity of the new franchise is seen to favour the incumbent," Mr Spooner said.

Public consultation regarding the project ended last week. The Department for Transport said it had found that overcrowding on peak-hour services was still a problem for commuters.

The bidders propose to increase the franchise's capacity by about 10 per cent, as well as introduce smartcards (which includes Oyster cards), safer stations, later services, improved reliability and better environmental performance.

The Government is demanding that the winning bidder help to extend the East London Line, which is due to open again in 2010, and that it take part in the £5.5bn Thameslink programme. Both projects are expected to increase capacity in London.

Mr Harris said it was vital that the winner helped "facilitate the delivery of major projects that, when complete, will substantially increase capacity on some of the busiest parts of the rail network."