The company also plans to spend pounds 100m this winter revamping its fleet of 100 trains following a large number of complaints about the air conditioning, toilets and buffet facilities on board its InterCity trains.
The volume of complaints has been such that passengers have been unable to get through to Virgin Trains' customer services centre in Birmingham. Telephone lines are jammed on some days and on others calls go unanswered.
From next weekend Virgin's booking service and customer complaints department will be run centrally with customers nationally able to telephone an 0345 number in Edinburgh. An extra 30 staff are being taken on to supplement the 270 sales staff already in Edinburgh and 22 staff in Birmingham dealing with customer complaints.
Virgin took over Cross Country services in January and InterCity West Coast in March. Since then it has run into punctuality problems on the North-west and Scottish sections of the West Coast line which could trigger compensation payments for season ticket holders.
A spokesman for the Office of Passenger Rail Franchising said: "We are disappointed with the performance of Virgin's West Coast service." However, he added that the penalties it could impose on Virgin were limited because it was not subject to the same kind of performance regime as the commuter rail franchises.
"We judge that the amount of competition Virgin faces from road, rail and, in some cases, air should be enough incentive for them to improve their performance," he said.
The charter standard published by the Office of Passenger Rail Franchising sets Virgin a target of running 90 per cent of services on time or within 10 minutes. If that figure drops to below 87 per cent then passengers are entitled to discounts. Up to the middle of June, punctuality on parts of the West Coast line was only reaching 78 per cent to 81.5 per cent.
The pounds 100m revamp will include new toilets, new seating and baby-changing areas on some trains, refurbishment of buffet areas and new uniforms for staff. Virgin also plans to spend pounds 8m to improve air conditioning on its West Coast trains.
A spokesman conceded that it had received a large number of complaints but said this compared with 12,000 over the same period last year when the two franchises were still under British Rail's control.
"The reason we have had a lot of complaints is that people's expectations are very high," he said. "But they must be patient. We inherited a mess. The West Coast was the worst part of the BR network. There were 250 vacancies in catering, some of the stock had not been repaired for 10 years and uniforms were threadbare. We are proud of the improvements we have achieved so far."
He said that 60 per cent of the complaints it had received over the summer related to air conditioning which was designed so that it only operated at temperatures of more than 29 degrees celsius. The punctuality problems had been caused mainly by the collapse of a bridge over the West Coast line at Nuneaton which had forced Railtrack to impose a 5mph speed restriction.
The West Coast franchise lasts for 15 years and requires Virgin to invest in a pounds 600m fleet of tilting trains as part of the modernisation of the line.
The Government subsidy this year is pounds 77m but from 2001 Virgin starts to pay an annual fee for the franchise rising from pounds 3.9m to pounds 220.3m. The Cross Country franchise also runs for 15 years and will result in the payment of pounds 576m in subsidies to Virgin.
However Virgin has to replace the entire fleet of Cross Country trains by 2002.