The return of Virgin Trains: Can Richard Branson give Avanti a good kicking?

Virgin is set to make a return to Britain's railways

Avid train enthusiasts were given a jolt of excitement on Monday after it was revealed Sir Richard Branson’s Virgin Trains had submitted a bid to return to Britain’s west coast main line.

It harkens back to 2012 when the billionaire emerged triumphant over the government after launching a legal challenge against a decision to award the London-Manchester-Glasgow line to rival Firstgroup.

Three senior civil servants were suspended, but Branson would ultimately lose the franchise in 2019 after Virgin’s partner and stakeholder, Stagecoach, was barred from bidding.

Virgin Trains and Firstgroup now look set for another round as the latter owns Avanti West Coast, the beleaguered operator currently running the route.

Branson’s new ‘open access’ service is designed to give mainstay train companies a push by boosting competition. It will take full commercial risk and run without being subject to hefty government franchising fees, regardless of Labour’s nationalisation policy.

What would Virgin’s return mean for passengers?

The rail industry is divided on the benefits of the open access model. Proponents argue it brings down fares and improves service, but others view it as inefficient, while unions have described providers as “parasites.”

However, the Avanti case is exceptional, given that it has long been one of the most under-fire train operators in the country. It was placed on two consecutive short-term contracts in 2022/23 to help it develop a recovery plan before being awarded a nine-year contract in September.

Things have failed to pick up though and Greater Manchester’s Labour Mayor Andy Burnham said he’d “completely run out of patience,” in March. Most Northern leaders in business and politics want it brought under an Operator of Last Resort contract; ie nationalised.

The west coast route is certainly ripe for competition, but could Virgin Trains be the kick up the arse Avanti needs? Possibly.

Paul Bickerdyke, editor of the Railway Magazine, said Branson’s outfit running an open access operation on the main line could “only be a good thing” for passengers.

“On the East Coast Main Line, [open access] services run by Hull Trains, Grand Central and Lumo have given passengers more choice of services to more destinations, and helped keep fares competitive,” he told City A.M.

He added: “There have been no open access operators on the West Coast route to date, but at least two new operators plan to run from Euston to Shrewsbury and Wrexham, and Euston to Stirling.”

When Virgin Trains left the UK in 2019, the number of passengers using the London-Glasgow line had increased from 8m to 42m per year, while services had tripled on key routes. It has a proven track record at a time when the rail sector desperately needs an uptick in passenger numbers.

The firm has also been highly innovative in the past and is credited with bringing back so-called tilting trains to the UK. These trains have the potential to travel up to 140mph and slash journey times by a quarter.

Bickerdyke said: “When Virgin held the West Coast franchise, they had a good reputation with passengers for developing the service and for competitive fares. They only lost the franchise in 2019 after 22 years because their operating partner Stagecoach was barred from bidding.”

Even if passenger numbers and journey speeds prove a challenge, Branson’s red uniformed staff developed a reputation for excellent service and championed automatic refunds for delayed trips.

It marks a stark contrast to Avanti’s dire public image, which hit rock bottom in January after an internal presentation describing government subsidies as “free money” was leaked to the press.

One thing less guaranteed for passengers is low ticket fares. Open access can undercut larger companies and the Competition and Markets Authority (CMA) warned when Firstgroup took the contract in 2019 that a lack of competition could impact prices.

But Branson’s outfit oversaw unregulated peak fares from London to Manchester rise higher than a holiday in Europe, all while hauling in tens of millions in dividends.

His other subsidiary, Virgin Trains Ticketing, is pushing for a less confusing rail retail model, a criticism often levied by campaign groups. However, passengers won’t be pleased if peak fare prices are near previous levels.

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Branson’s back? Virgin Trains looks to show up Avanti in bid for west coast route