Nearly all the lines will require a continued subsidy from the Government in the form of the Franchise Director, whose job it will be to set the terms and conditions of franchises.
One of the early candidates for privatisation, though not in the first wave of seven, is the Chiltern Line, on the face of it a desirable route because pounds 85m has been invested in it over the last two years.
The line runs from Marylebone in London to Banbury (now extended to Birmingham) and Aylesbury, covering 103 miles and 30 stations. It has been completely upgraded, with new signalling, new trains and refurbished trains.
The idea was to have it as a showpiece line to prove that investment can result in increased passenger numbers and satisfaction, and consequently trains are more frequent.
According to Roger McDonald, the line's director, the investment has paid off handsomely: 'The number of passengers has increased by around a quarter since the work was finished in the autumn. And satisfaction levels on all counts, such as punctuality, journey times and helpfulness of staff are at record highs according to our surveys.'
He says it is a 'virtuous circle' with increased investment leading to more passengers, cheerful staff and more trains. It now has the highest passenger satisfaction scores on Network SouthEast. The service to Banbury was last month extended every two hours to Birmingham Snow Hill, opening a new 'civilised' route to the second city as an alternative to the hectic Euston shuttle.
Much of the cost of the investment is, therefore, being recouped through reduced maintenance of trains and track, one-person operated trains, and the concentration of signalling for the whole line into one box at the London end. However, in bald terms the line still loses money. Revenue, mostly from the 30,000 weekday commuters, is about pounds 14m per year and it still requires a subsidy of probably half that sum to balance the books.
There are about 400 staff, but that will be reduced by 100 when Railtrack, responsible for the infrastructure, takes over in April next year. Some of the 76 trains are lent to the Thames line, which operates out of Paddington, but this arrangement may end after privatisation since the two lines, jointly administered, are to be separated.
A prospective franchisee would, therefore, need to be confident that a subsidy will be available when bidding for the line. In theory, the bidder requiring the least subsidy will get the franchise, but in practice it is expected that most lines will only have one bidder, which will almost certainly include the existing management team as part of a consortium.
But managers like Mr McDonald will need to know exactly how the financial sums stack up before becoming involved in a bid, especially as they will be expected to put their houses up as collateral to make up a 'performance bond' to ensure the trains can run in case of bankruptcy.Reuse content