BA wins race for high-speed tunnel rail link

EUROSTAR is to be handed over to a consortium headed by British Airways and National Express - beating off arch-rivals Virgin in the race to run the high-speed train service.

John Prescott, the Deputy Prime Minister, is to meet London and Continental Railways (LCR), the troubled project's sponsor, today to confirm the details before making a statement to MPs.

He is expected to promise that the 68-mile link will be built to St Pancras in central London, but the Government could not "guarantee" it. The pounds 5bn line is not expected to be completed until 2008 - five years later than its original start date.

Britain has had to watch enviously as its Eurostar partners, France and Belgium, have had trains running at 186mph following the completion of their high-speed links.

Mr Prescott has found another pounds 700m to rescue the project after the link foundered when LCR's original management could not meet their passenger targets and saw ticket sales dry up. In January, the then management went back to Mr Prescott and asked for an extra pounds 1.2bn to save the line - a request which he rejected.

The decision by the Government marks a rare victory for Bob Ayling, chief executive of British Airways, over Richard Branson - whose winning ways ion the battles between the rival airlines has infuriated BA.

Under the ambitious scheme, Railtrack - the owner of nation's rail network - will build the first stage of the link which will join the Channel Tunnel to Ebbsfleet in north Kent. Until the second stage is completed, trains will continue to go into Waterloo, but will run relatively slowly through the suburbs of south London. Completing this section will, however, lop 15 minutes of the current trip from London to Paris. Railtrack will pay for this first leg out of its own pocket - a mere pounds 1bn - and recoup the cost through charges to Eurostar.

Ministers say that Eurostar is key to generating the bumper sales to fund the construction of the second phase. It was thought that the consortium headed by BA and National Express offered more "realistic" projections than Virgin's plans.

The next stage of the Channel Tunnel Rail Link - which will carry trains at high speed north to St Pancras via a new international station at Stratford in east London with connections to the north of England - is a riskier proposition. Although Mr Prescott is prepared to stump up an extra pounds 700m cash - on top of the pounds 1.8bn on offer - no firm commitment has been extracted from the private sector.

Railtrack has an option to build the later, more expensive sections of the line but does not want to commit itself to the entire pounds 5bn project with no clear idea of how well Eurostar is doing.

The strategy angered organisations lobbying for the whole route to be built. Richard Arthur, deputy chairman of one of the campaigning groups, Fast Tracks, said that more than 100,000 jobs depended on the whole link being built. "We have heard the rumours and would want to see the details of the proposals to make sure they are in line with the Channel Tunnel Act," he said.

Ministers were keen that after a false start and demands for more taxpayers' money to complete the link, there should be no further hitches in the prestige plan to build a new fast service from the Channel Tunnel across the River Thames to St Pancras.

Mr Prescott supported LCR in going for a bigger consortium with more experience. Sources said that ministers were aware of the rivalry between BA and Mr Branson's airline. However, they stressed that BA was a minority shareholder in the consortium which includes the French railway company, SNCF, and the Belgium national railway, SNCB.

BA's plan also involves the new Heathrow Fast Train service which became fully operational this week from Paddington. The airline hopes that this track could be extended to meet international trains at St Pancras.

Experts say that coupled with another innovative scheme - Airtrack, which links the wealthy commuter belt to the west of London to Heathrow - BA's proposals would make the international airport a major transport hub.