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National Express may tear up East Coast rail deal in crunch
Robert Lea7 May 2009
Speculation grew today that National Express could give up its contract to run the East Coast Main Line.
National Express signed up to run the King's Cross rail company two years ago in an aggressive outbidding of rival firms, in which it pledged to pay the Treasury £1.4 billion of profits over the seven years of its franchise.
However the company, run by the Government's former rail czar Richard Bowker, has admitted that the recession has ripped up its projections.
The debt-laden firm has reported that East Coast rail revenues, which were supposed to grow at a healthy rate year on year, have stalled, currently rising at just 0.3 per cent against a growth rate last year of nine per cent.
National Express chief executive Mr Bowker has also been forced to admit that profits on the line bringing passengers from Yorkshire, Newcastle and Edinburgh have plunged as travellers avoid higher fares.
Mr Bowker conceded business passengers have switched from first class to standard class while leisure travellers are taking care to pre-book cheaper advance tickets rather than pay more expensive “walk-on” fares. Mr Bowker refused to comment on his talks with the Department for Transport, except to say that National Express is in “regular discussions” with officials.
It is believed National Express could be attempting to negotiate an end to its East Coast agreement and instead sign up to a management deal in which it is paid a fixed fee to run the line and take no profits.
That would see National Express unable to succeed where its predecessor failed, as it only took on the East Coast Main Line after previous operator GNER went bust in 2006. The falling revenues on the railways is seeing other companies such as South West Trains and Arriva CrossCountry also fall into dispute with the Department for Transport over the terms of their contracts.
The City believes the financial crisis at National Express could see it go cap in hand to its shareholders in a £400 million refinancing rights issue.
Mr Bowker says a refinancing of the company's £1.2 billion debt mountain is not on the agenda at present but insiders at the company concede a rights issue may be needed later this year.
Reader views (21)
All they have done is cut cut down on all services on the norwich to london line ie staff cuts at stations No restaurant cars to try and make up some of the looses on the East Cost line all in the name of GREED AND MORE GREED.AS John .L. says FIRE the lost Let hope all the big shares do there JOB and try and get the bord FIRED
Michael. Suffolk
- Michael Baldwin Suffolk, Newmarket Suffolk, 13/05/2009 12:37
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GREED, GREED, GREED, they could not keep there hands off and they thought they new better than G.N.E.R., see what DEREGULATION does and we the travelling public have to put up with it.
HAS ANYONE SEEN "SID"?.I bet he give this one a miss?.
Everyone at the board table should be FIRED.
- John L., Scarborough North Yorkshire, U.K., 07/05/2009 22:20
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Just bought a return fare London-Edinburgh on NXEC for £18. If you are flexible on when you travel there's a £9 one way offer until midnight.
- Chloe, London, 07/05/2009 17:33
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Ok a bad example. But I just bought a return to London from Edinburgh via EasyJet for 70quid. Cheapest return via East Cost is 85quid.
- Neil, London, 07/05/2009 17:20
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Ok a bad example. But I just bought a return to London from Edinburgh via EasyJet for 70quid. Cheapest return via East Cost is 85quid.
- Neil, London, 07/05/2009 16:39
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Perhaps those comparing train and air fares should for once stop comparing the price of the very few in number cheapest advance flight ticket with on the day bought rail tickets.
I used an advance Edinburgh-London rail ticket that cost £13.70 last month - buying at Edinburgh Airport on the day of travel a flight was £179, a colleague had to go that route!
Far too many people fall for budget airline marketting scams plus you can carry as much luggage as you want and wee as often as you want all incuded in the price on the trains!
- Sue, London, 07/05/2009 15:44
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I hope the rude idiot of a conductor on National Express who tried to charge me another 120 pounds on top of my perfectly valid ticket gets the chop in all this.
- Sarah, Leeds, 07/05/2009 14:58
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Neil, London; you're comparing chalk and cheese there, of course the walk on fare on trains is going to be more expensive than an advance purchase airline fare! Try comparing advance purchase airline fares with advance purchase rail fares, and walk up train fares with walk up airline fares, and then you'll have a more realistic comparison. For your ref, a single fare on Easy Jet for same day travel is £153.99, which doesn't compare too badly for walk-up fares of £135.50 peak single for the train, or £108.80 off peak return. Of course this is still too much for many families, but the Easy Jet comparison is totally bogus.
I'm the first to complain about high rail fares, but daft comparisons such as that don't really help matters. I hope you're all commenting on the article about Tory cutbacks, as if they get into power, rail fares will not be going down, NR will not be being renationalised, and infrastructure investment will fall through the floor.
- Mark Lee, Vauxhall, 07/05/2009 13:22
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Edinburgh to London £20.68 on Easyjet! - 50 mins
Dear Person who does the train fares London to Scotland
`WHY` do your fares not even come close ! Do you think
that by ignoring your obivious competition, it will
just go-away ?
I can book nine months in advance by plane, not poss on
the train.
- Doug, Stirling Scotland, 07/05/2009 12:50
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Privatised railways have brought us increases in fares that British Rail would never have dared consider, yet at the same time increases in subsidy that British Rail would never have expected in their wildest dreams. Yes, some lines have new trains, but that's mostly because the health and safety people set a deadline for the removal of the old 'slam-door' stock.
The solution is simple and obvious: bring back BR!
- Roy, England, 07/05/2009 12:32
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Why bother discussing GNER versus NX. It is privatisation that has failed full stop. We need to find a totally new way of running our railways, with some form of collective ownership. Just like the banks, another private sector failure!
- Robert C, London UK, 07/05/2009 12:01
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If you charge too much the customer numbers will decline. Simple really.
- Alan In Bow, London, 07/05/2009 11:33
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Considering the walk on fare for Edinburgh to London is almost double what you pay on Easyjet, what do they expect. The service is no faster than in the 80s, most trains taking 4 hours 30 at least. If the fares were somewhat more realistic people might use the train more. And considering almost every weekend you have to change onto a coach for a part of the journey, most people would rather drive. Oh and until very recently the rolling stock was pure 1970s, filthy seats, broken springs and dirty carpets. Yuck.
- Neil, London, 07/05/2009 11:26
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Of course if NXEC's passengers (customers to Rail company folk) can't pay the fare it is fare dodging (what ever the excuse). If NXEC can't afford their franchise fee then their directors should suffer too.
- Martin, Aberdeen, 07/05/2009 11:09
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i agree with the above , they should go , they're customer service has declined since the demise of GNER , the fares have gone up , 1st class customer service cut , its terrible ,the trains are scruffy , even the staff are fed up with them .. we should have a company that wants the franchise and not just the bottom line .
- Mike Bolam, grantham , lincs, 07/05/2009 11:09
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'Ian' I travel to Newcastle from Carlisle to use Nat Exp trains to London as their customer service is far superior to that of Virgin. However both companies time tables are a joke if you want to leave London late on a Saturday or early on a Sunday.
- Alan, carlisle uk, 07/05/2009 10:57
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Get rid of National Express and bring back GNER who were better on almost every level. National Express should never have got the contract in the first place. They are dreadful
- Max, london, 07/05/2009 10:47
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In answer to Mike swift, there is no VAT on any public transport fares in the UK.This is another company only too happy to make enormous profits in the good times, but as soon as the going gets rough running to the taxpayer, I think we've been here before, several times. If they can't hack it, let them go bust.
- Mick Isaacs, London, 07/05/2009 10:45
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Tough luck. They took on a commercial risk, made a mistake of judgement and now they want out on easy terms. How many small businessmen would like that option, rather than ending up bankrupt? Isn't it time to review the whole rail franchise thing anyway? It's never worked properly with the whole short-term rape and pillage view seeming to be the main reason anybody takes on a franchise.
- Robbo, London, 07/05/2009 10:45
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I don't know the terms of the agreement between National Express and the Government but wouldn't it be more stable if National Express paid the fee out of any profits they make?
That way in good times the Treasury will receive more and in the lean times less but at least it will minimise the risk of the carrier going bust.
That said, National Express' customer service needs to improve drastically.
- Ian Gilbertson, Newcastle, 07/05/2009 09:42
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i can do this guys job. its bums on seats. not profit related bonuses for him and his cronies/ suprise suprise. people dont want to pay virgins rip off fares. remeber. everyticket price increase is more money in vat to labour. when was the last time you heard brown critisising train ticket price rises? never. wake up britain. its called stealth tax.
- Mike Swift, peterborough uk, 07/05/2009 09:40
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