Bus giant beats Branson to run east coast rail

It has paid a massive £1.4 billion for the King's Cross-to-Scotland line, raising fears of fare rises.

There could now be year-onyear increases of two or three per cent above inflation on unregulated fares.

Regulated fares will rise by one per cent above inflation.

The bus and coach giant beat off stiff opposition - including from Sir Richard Branson, owner of the rival West Coast Main Line - by agreeing to pay the government £1.4 billion over the life of the franchise.

That's more than paid by previous owner GNER as it struggled to meet the £1.3 billion it had agreed to pay for its 10-year franchise, which began in 2005.

GNER labelled the franchise as "unsustainableî when it threw in the towel.

Guy Dangerfield of Passenger-Focus, the national rail watchdog, said he was "concerned" about fare rises to fund the new deal.

Industry experts warned that GNER had paid too much to win the franchise - now there are fears that National Express may have done the same.

GNER made the agreement estimating that passenger numbers would increase by nine per cent following a range of increased services and cut-price tickets - but the expected increase was only three per cent, with many travellers put off coming to London because of the 7 July bombings.

GNER also underestimated huge increases in fuel costs.

Richard Bowker, NXEC chief executive - and former rail czar - promised "improved reliability, more trains and seats, an easier way to buy tickets and updated catering.î The popular ECML dining cars will continue, said Bowker.

Overcrowding will be eased with an additional 14,411 seats each weekday, when NXEC takes over in December.

The extra seats will be provided by 25 additional train services from December 2010, including a new London-to-Lincoln service every two hours.

NXEC pledged faster journeys with London to Leeds in two hours and London to York in one hour 45 minutes. There will be more fast trains between London and Edinburgh, taking around four hours 20 minutes.

The company also promised improved train performance with nine out of 10 trains on time (currently it is just over eight out of 10 on schedule.)

GNER said it was "disappointed" that it had failed in a joint bid to retain the franchise, but that it would work towards a smooth handover. The new franchise will be called the National Express East Coast.