So you want to run a railway?: Brian Wilson explains why bidders are not queuing up to run the 'easiest' BR route

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The Independent Online
WHAT COULD be simpler than operating the Gatwick Express? Seven trains run 27 miles between two points, with a captive market. There are few less complex parts of the British Rail network - and it makes a profit. So it is not difficult to understand why ministers have decided that the Gatwick Express should become the first franchise to be offered to the private sector, as early as next year. From the safety of a Department of Transport desk, it must seem scarcely more complicated than an old Hornby Dublo.

But as British Rail begins yet again to reorganise itself to replicate the Government's break-up model, the apparently free-standing nature of the Gatwick Express looks a little more complicated, and confirms the complexity of everything connected with rail privatisation.

In fact the 'straightforward' Gatwick Express will require 140 contracts between the different companies involved to establish who is responsible for what and on which terms. They will cover the operator's relationships with, among others, Railtrack, the companies which will own and lease rolling- stock, the maintenance companies, the depot owner, Victoria Station, other operators sharing facilities, the railway telephone system, the insurance companies, the safety consultants and so, endlessly, on.

Until now, the great majority of these relationships have been contained within British Rail which, for instance, carries its own insurance. The private operators of Gatwick Express will, in each case, have to make and pay for their own arrangements.

At present, the fast link between Victoria and London's second airport is part of the Anglia and Gatwick Express profit centre, within InterCity. The Government's determination to fragment InterCity, which has operated for the past five years without subsidy, will leave Gatwick Express to set up its own management structure, losing whatever benefits of scale are gained from the larger organisation. Throughout the network, the proliferation of new 'companies' - initially within British Rail and then in the private sector - will lead to an explosion in the number of management posts.

In 1991-92, Gatwick Express carried 5 million passengers and earned pounds 24.6m in fares. It currently makes a modest contribution to the overall profitability of InterCity. But it currently has one advantage that will be lost under privatisation - it pays nothing for use of the tracks. Network South-east foots the bills and Gatwick Express gets a free ride. Once Railtrack is established on a user-pays basis, there will be no such cosy arrangements.

The modest success of Gatwick Express owes much to a good marketing trick. On arrival at Gatwick, prospective rail passengers are guided to a ticket office which offers the express, direct service. Only a well-informed traveller is likely to know there is also a Thameslink train to the City every 30 minutes, while South Central operates a slower, cheaper service into Victoria.

At present, these services don't try to compete for passengers to central London. That will change. Gatwick Express is not a cheap journey, at pounds 8.60 for a second-class single. The other operators charge pounds 6.80 for a journey just three minutes longer, and will have no problem in under-cutting and advertising the fact. Of course, in such a competitive situation, each operator will then require its own ticket office at Gatwick.

It becomes clearer why there is no queue forming for the right to buy this easiest of all franchises. The present modest profit means virtually nothing. A franchisee would face higher management costs; must negotiate those 140 contracts, each with a profit margin; would have to pay for access to tracks; will face competition . . .

The few million pounds trading surplus Gatwick Express now achieves would not begin to cover these additional costs, far less give a franchisee the profit element it would require. So how would a franchisee generate the additional income which would make the investment worthwhile?

Increasing fares would scarcely be an option, given the competition. One way the government could make the route financially worthwhile for a franchisee would be to subsidise it. What a Tory triumph that would be. Overnight, an unsubidised public railway service would be transformed into a subsidised private one. Would the money come out of the rest of the rail system, or is John MacGregor's hidden agenda really to spend more on subsidising the railway? I doubt it.

The other proposition which has been floated is that nobody should be allowed to compete against Gatwick Express, so that the monopoly on travel between the airport and central London would ensure a captive market. But how could this be done? Would passengers be deprived of the right to board the opposition at Gatwick, even if they did not wish to go to Victoria? Would advertising by Thameslink or South Central be banned? Would fare competition be outlawed in order to cosset a private monopoly?

The current British Rail reorganisation will result in internal division into 65 companies, along the privatisation model; InterCity alone will be splintered among 14. Of the 65 companies, 26 will be involved in running trains; the remainder in infrastructure, train leasing and commercial services. The appointment of managing directors for all of them is imminent.

It is difficult to believe that this could ever lead to a more efficient railway network. Bureaucracy and cost would be the hallmarks of a fragmented system. The Gatwick Express is not particularly awkward; it is first in line for privatisation because it is considered the most straightforward.

But if the railways are privatised nothing will be straightforward, least of all determining responsibility in a fragmented network when something goes wrong.

The writer is a Labour spokesman on transport.

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