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2006-12-15 DfT-001
Department for Transport

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Competition commences for operator of Intercity East Coast franchise


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Department for Transport



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Department for Transport

Competition commences for operator of Intercity East Coast franchise
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related documents


2006-12-15 GNER enters into new management agreement with Department for Transport to operate Intercity East Coast Mainline (Sea Containers)

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date
15 Dec 2006 00:00
source Department for Transport
type Press release



The Department for Transport today announced it is inviting Expressions of Interest to operate services on the InterCity East Coast Mainline. It is expected that the operator for the new franchise will be in place in 12 to 18 months.

Until that date, the Government has entered into agreement with the current operator GNER, to operate the franchise on the Department's behalf under a temporary 'Management Agreement'.

Under this agreement, GNER will continue to deliver train services and will help ensure a smooth transition to the holder of the new franchise. Most of the net worth of the company passes to the Government and GNER has agreed to cover the Department's costs of re-letting the franchise early.

Companies with an interest in running the franchise have been asked to submit expressions of interest to the Department by 15th January 2007.

Short listed bidders will later be asked to bid against a specification based on a consultation published today. It proposes that current services are maintained and that the Leeds half hourly service continue.

For passengers and staff, services will continue to operate as normal. All tickets will be valid and passengers can book and reserve tickets in exactly the same way they do today.

Secretary of State for Transport, Douglas Alexander said:

"The Government made it clear that rail operators that fall into financial difficulty should expect to surrender the franchise and not receive financial support. To do otherwise could set the precedent that we are willing to bail out operators at extra cost to the taxpayer.

"This agreement protects the interests of both passengers and taxpayers. It will ensure services operate as normal until a private sector franchise operator can be put in place."

ENDS

NOTES FOR EDITORS:

1. The Management Agreement:

A performance bond will remain in place to ensure GNER's continued performance against the new agreement. If the Management Agreement is terminated early, the department would be able to use the Bond to cover any further costs. Equally the Bond ensures GNER's continued co-operation at the end of the Management Agreement.

There will be no management fee to GNER for running the Management Agreement.

DfT in conjunction with its advisers, has set a realistic revenue target based on revenue and costs for GNER, which represents that revenue which it would reasonably expect to achieve in any eventuality. If GNER exceed that target, which would add value to the overall Franchise, then they will receive an incentive payment. Otherwise DfT retain all revenue earned during the life of the Management Agreement.

GNER will remit to DfT the majority of the company's net worth.

GNER will fund all DfT's costs of reletting the franchise

The Management Agreement can be terminated from the end of September 2007 at two months notice. The DfT has flexibility over the termination date of the Management Agreement in order to ensure an orderly transition as soon as reasonably possible.

2. Information for those companies interested in bidding for the ICEC franchise is available from the DfT's website. Advertisements will be published in the national press.

3. Consultation documents on the specification are also available from the DfT website. The Closing date for responses is 15th February 2007.

4. The agreement has been backdated to, and is effective from 10th December 2006 to coincide with the start of the current 4-weekly railway accounting period.

5. Proposals for the new specification include:

Timetable: Existing services will remain. A regular half-hourly service between London and Leeds is also included.

Fares: Fares will be set in a manner consistent with current Government policy.

Smartcards: It is proposed that the winner of the franchise competition puts in place a smart ticketing system across the franchise area and to look at opportunities to offer passengers new ticketing products.

Stations: Bidders will be expected to demonstrate improvements in safety, security and accessibility at stations.



Railhub Archive ::: 2006-12-15 DfT-001





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