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Department for Transport announces winner of New Cross Country franchise

Stock Market statement

For immediate release: 10 July 2007

New rail franchise to increase capacity between major cities

The Department for Transport (DfT) today announced that Arriva plc has been awarded the contract to run the New Cross Country rail franchise.

It combines the majority of the existing Cross Country franchise services currently operated by Virgin Cross Country and the Nottingham - Cardiff and Birmingham - Stansted Airport services currently operated by Central Trains.

The new franchise will begin on 11th November 2007 and end on 1st April 2016. DfT has the right to terminate the franchise after six years if the operator fails to meet agreed performance targets. Over the life of the franchise (eight years and four months) DfT will pay a subsidy of £1.056 bn (NPV) to Arriva.

The contract will deliver increased capacity, better performance and improved customer services. Passengers will benefit from:

  • 40 extra train carriages for operation on long distance services, using High Speed Trains (HSTs), refurbished to the standard of the existing Voyager Trains. This, together with internal changes to the current fleet of Voyager trains, will provide nearly 3,000 more seats each day on the busiest routes at the busiest times. Internal changes on the Voyager trains will also provide for a 20-25% increase in luggage storage space;
  • Increased staff visibility with the busiest long distance services having at least three members of staff passing through the train;
  • A new web-based ticketing system which will be introduced from December 2009;
  • Refurbished Class 170 units on Birmingham - Stansted and Cardiff - Nottingham services including extra seats, and first class on all trains;
  • Help and advice for passengers who need to change trains.

The Government will continue to limit annual rises of regulated fares in line with national policy, which is currently RPI+1%.

As with all franchises, unregulated fares will be the responsibility of the operator. Arriva have indicated that they may wish to raise unregulated fares by an average of 3.4% above inflation each year.

Passengers will benefit from new arrangements to be compensated for delays and poor performance.

Notes to Editors

1. The subsidy profile for the New Cross Country franchise is:

Year   1 2 3 4 5 6 7 8 9 TOTAL
Year ending 31st March Notes 31
Mar
08
31
Mar
09
31
Mar
10
31
Mar
11
31
Mar
12
31
Mar
13
31
Mar
14
31
Mar
15
31
Mar
16
 
All the figures are in £'000                      
Franchise payments (from FA) 1 98,320 245,092 222,156 190,168 156,152 113,911 77,691 44,346 5,649 1,153,486
Nominal franchise payments 2 98,320 251,796 234,380 206,143 173,960 130,515 91,763 54,367 8,144 1,249,389
PV of nominal franchise payments 3 97,177 238,538 208,890 172,845 137,223 96,856 64,065 35,709 5,032 1,056,335


      Note:
      1. Franchise Payments are taken directly from the Franchise Agreement and represent the sum of the fixed, RPI
      and AEI related payment elements in 2007/08 prices.
      2. Nominal Franchise Payments are determined by applying DfT's forecast of RPI and AEI to the Franchise
      Payments in the Franchise Agreement.
      3. The Present Value (PV) of Nominal Franchise Payments are calculated using HM Treasury's real discount rate
      (3.5%) adjusted for inflation.

2. Revenue share arrangements are as follows: if actual revenue out-turns between 102% and 106% of target revenue, then 50% of the excess between 102% and 106% will be shared with DfT. If it out-turns above 106%, then 80% of the further excess will be shared with DfT.

Revenue support arrangements are as follows: if actual revenue out-turns between 94% and 98% of target revenue, then DfT will provide support equivalent to 50% of the shortfall between 98% and 94%. If it out-turns below 94%, then DfT will provide support equivalent to 80% of the further shortfall. Revenue support arrangements only apply after the first four years of the franchise.

3. The current operator of the Cross Country Franchise is CrossCountry Trains Limited, a subsidiary of Virgin Rail Group Limited. The current operator of the Central Franchise is Central Trains Limited, a subsidiary of National Express Group plc.

4. The parties invited to submit bids for the New Cross Country franchise were Arriva Trains Cross Country Limited (Arriva plc), First Cross Country Limited (First Group plc), NXC Trains Limited (National Express Group plc); Virgin Voyager Trains Limited (Virgin Rail Group Limited).

5. Performance - Arriva is committed to a 25% reduction in delay minutes attributed to the TOC by the end of the franchise.

6. The new passenger refund system, Delay/Repay, will compensate season ticket holders for delays to journeys they have actually taken, not on the basis of overall performance. This is the same compensation system as currently operates for single, return and weekly ticket holders. Refunds will be on the basis of the proportional daily cost of season tickets, with a 50% single refund for delays of 30-59 minutes, 100% single refund for delays of 60-119 minutes, and 100% return refund for delays of 120 minutes+. This system will be rolled out nationally during the term of each new franchise.

7. More details are available on the Department for Transport website at www.dft.gov.uk