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National Express awarded contract for growth on InterCity East Coast

Stock Market statement

For immediate release: 0700hrs 14th August 2007

The Department for Transport today announced that NXEC Trains Ltd, a subsidiary of National Express Group, has been awarded the contract to operate services on the InterCity East Coast rail franchise.

The franchise comprises of services connecting London with Scotland via Peterborough and the north of England.  It will start on 09 December 2007 until 31st March 2015, with the last 17 months conditional on set performance levels being reached.

£1.4bn (NPV) will be paid over the life of the franchise in premium as a contribution to DfT’s rail budget. 

The contract will deliver:

  • The current (May 2007) timetable, which includes Leeds half-hourly services, until 2010.  From December 2010, there is provision for up to 25 extra train services -  around 14,000 seats - each weekday.  Up to 40 more carriages will be brought into use to deliver increased capacity
  • Included within this, a new London - Lincoln service will operate at 2 hourly intervals.  A new London - York service will also operate at 2 hourly intervals and will call at intermediate stations 
  • Faster journeys: London - Leeds services in 2 hours, London - York in 1 hour 45 minutes, and more London - Edinburgh trains taking around 4 hours 20 minutes
  • Better performance, so that 9 out of 10 trains run on time. NXEC is committed to reducing its delay minutes by 29% by the end of the franchise
  • Environmental benefits, including a commitment to reduce fuel consumption per passenger kilometre by 28% over the franchise term, designate four ‘green stations’ and £400, 000 invested in reducing energy use at station and depots
  • A simpler website that will highlight the cheapest tickets available and the expected seat availability on each train.  Smartcards introduced by 2010
  • £7.4m to upgrade stations. Up to 2000 more car parking spaces to be provided by the end of the franchise with half of these expected within the first 2 years 
  • On board trains, Wi-Fi will be free in Standard Class and full dining services reatined on 87 weekday trains

The Rail Minister said:

"We want to grow and develop our rail network.  In our White Paper we set out plans to deliver increased capacity, better performance and improved connections between key towns and cities. Franchise awards are already delivering these benefits.

“Passengers travelling on the East Coast Main Line will see similar enhancements. There is provision in this contract for extra services and fewer delays.  NXEC will also invest in stations and on-board services.”

Overall, regulated and unregulated fares together are likely to rise by RPI + 1.6% each year throughout the course of the franchise.

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

As with all franchises, unregulated fares will be the responsibility of the operator. NXEC have indicated that they may wish to raise unregulated fares by an average of 2.1% above inflation each year over the course of the franchise.

ENDS

Notes to Editors:

1. The Net Present Value of the premium is £1.414bn. The premium profile is:

Year   1 2 6 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   
All the figures are in £'000
(brackets represent subsidy)
                   
Franchise payments (from FA) (6,742)  84,756  133,162  178,687 228,569  300,599  346,157  394,722  1,659,909 
Nominal franchise payments 2 (6,742)  86,858  140,053  192,986  253,574 342,239  403,761  471,762  1,884,490 
PV of nominal franchise payments  (6,706)  82,660  125,392  162,552  200,937  255,137  283,177  311,276  1,414,423 

 

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/Support:

  • Revenue Share - 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 - If actual revenue out-turns between 98% and 94% 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. Timetable - NXEC has worked closely with Network Rail during the preparation of their bid, and will continue to work with Network Rail and the Office of the Rail Regulator to put in place extra services from December 2010, based on the conclusions of Network Rail’s East Coast Route Utilisation Strategy. The new timetable could provide:

  • An increase in the number of weekday trains from 136 to 161, including five trains in each off-peak hour from King's Cross - two to Leeds, two to Newcastle (with half of those trains extended to Edinburgh, and some to Glasgow, Aberdeen and Inverness, as happens today), and a fifth train running in alternate hours to Lincoln and to York;
  • An additional 14,411 seats each weekday over and above the current timetable
  • A new two hourly direct service between London and Lincoln and a new two hourly London to York service, calling at intermediate stations, giving good connectivity whilst enabling trains between London and Leeds, York, Newcastle and Scotland can be accelerated.

4. Trains - Existing Inter-City East Coast rolling stock will be retained, with HST powercars re-engined to reduce fuel consumption. 

  • Additional services will be operated on rolling stock previously used on the West Coast Main Line
  • DfT is in the process of procuring the next generation of intercity trains (the Inter-City Express Programme) to be introduced across the network from 2014.  A pre-series batch of the new trains will be introduced on the East Coast Main Line from 2012 before production of the full fleet begins

5. Stations – NXEC will continue to manage 12 stations across the franchise, and will invest in improvements to lighting, toilet facilities, better signing, lounge and waiting facilities, seats, cycle facilities and cleaning, painting and decorating.  Stations that will receive improvements include: Newcastle, Grantham, Retford, Doncaster, Durham, Dunbar, Darlington, Wakefield, Peterborough and York.

6. Environmental: NXEC will also:

  • appoint an Environmental Manager with specific responsibility for coordinating environmental activity within the franchise
  • conduct an annual environmental audit
  • trial the installation of an electricity consumption meter to enable energy efficiency of trains to be monitored 
  • reduce waste disposal, water consumption and hazardous waste levels throughout the course of the franchise

7. Car Parking -  NXEC will seek to increase car parking capacity by up to 33% over the life of the franchise with an additional 2000 spaces; half of these are dependent on a development scheme at Peterborough, but other stations for which capacity is planned include Retford, Dunbar, Newcastle, Newark Northgate, York and Wakefield Westgate

8. Catering - NXEC will provide a buffet and trolley service throughout First and Standard Class, and an at-seat service to standard class customers enabling them to order hot food which will be delivered to seat. NXEC will provide a full restaurant service on 87 train services Monday to Friday with an improved range of full meals.  Currently, a full restaurant service operates on 88 train services Monday - Friday. 

9. Performance - NXEC is committed to achieving 90.1% PPM by January 2010.  A 29% reduction in delay minutes attributed to the TOC will be achieved by the end of the franchise

10. Delay/Repay compensation arrangements - As with recent franchise awards, a single compensation policy for all passengers will be introduced.  Discounts on renewal for season tickets valid between one month and one year in compensation for poor punctuality and reliability will be replaced by compensation based on delays to individual journeys, known as Delay/Repay. Under the new system, all passengers will be entitled to claim compensation for all delays, whatever their cause. 

  • 50% of the price paid for a single-leg journey delayed by between 30 and 59 minutes;
  • 100% of the price paid for a single-leg journey delayed by between 60 and 119 minutes; and 
  • 100% of the price paid for a return journey delayed by more than 119 minutes
  • The changes will also start to standardise disparate compensation arrangements for single, return and weekly season ticket holders on different train operators.

11. Further details from the franchise competition are available on the DfT website http://www.dft.gov.uk

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.