Global operators are battling to win £2bn franchises to run trains in London

Our reformed approach will give more flexibility to operators on how they configure services

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The operator of Hong Kong's metro system, the French state rail group SNCF plus FirstGroup, National Express and Stagecoach of the UK are among 13 transport operators who have been shortlisted by the Government to run the £2bn Great Western, Thameslink and Essex Thameside train franchises.

Graphic: Rail franchises up for grabs

The Rail minister Theresa Villiers said the Great Western route from Paddington to Penzance, which is run by FirstGroup and brought in revenues of £679m last year, will either by retained by First, or awarded to its rival Arriva, a division of Germany's Deutsche Bahn, National Express or Stagecoach. The new franchise will run for 15 years, with the contract starting in April 2013, and the successful bidder is to be announced in December.

The short list for Essex Thameside, a route currently known as c2c, has Abellio, a division of Holland's national rail company, plus FirstGroup, MTR Corporation, which runs the Hong Kong rail network, and National Express, the incumbent operator. The Department of Transport said it will name the successful bidder next January, with the 15-year contract starting in May 2013.

The Thameslink route from Bedford to Brighton via St Pancras is operated by FirstGroup. Its new contract, lasting only seven years due to upgrade work on the line, will gradually take over some services run by Go-Ahead, including some of its Southeastern line and all of its current Southern franchise.

Those in the frame to take on the route are FirstGroup, Abellio, Stagecoach, MTR and Govia, a joint-venture between Go-Ahead and SNCF, the French state-run rail group. That contract will be awarded next May and commence in September 2013.

Ms Villiers said: "Our reformed approach to franchising will give more flexibility to train operators on how they configure services and run their business. We welcome the strong interest shown in these three competitions by the rail industry."

FirstGroup was the only operator to be short-listed for all three franchises, whilst NatEx and Stagecoach totted up two each. Go-Ahead was only chosen for one, despite also bidding for the Essex Thameside franchise.

A spokesman for the trains group said it was planning on "seeking feedback" from the Department for Transport about why it was not selected.

Ms Villiers added: "The new Great Western franchise operator will be closely involved in improving rail services."

A squeeze on buses

Shares in FirstGroup crashed 14 per cent to 247.4p yesterday after the transport giant admitted margins on its bus business will be squeezed by more than a third this year and announced a £100m sell-off.

Britain's biggest bus operator said it was suffering from Northerners struggling to afford its buses and reported a growing "North-South divide".

It added that neither ticket sales – up 1.5 per cent in the year to April – nor its own cost-cutting was enough to offset lower government subsidies and a higher fuel bill. It warned bus margins in 2013 – forecast by the City to be about 12 per cent – will fall to 8 per cent. As a result, FirstGroup said it was "accelerating a comprehensive plan to reposition the portfolio in the coming year".