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Railhub Archive 2000-08-10 SRA-002 Shadow Strategic Rail Authority0
New Chiltern agreement brings £370 million investment
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         New Chiltern agreement brings £370 million investment _______________________________________________________________

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type Press release
The Shadow Strategic Rail Authority (sSRA) has signed heads of terms with M40 Trains Ltd as the preferred operator for a new Chiltern Railways franchise, under which a capital investment programme involving Railtrack plc and M40 Trains, a subsidiary of John Laing plc, is planned to bring up to £370million worth of investment and major benefits to passengers. M40 Trains own the Chiltern Railway Co Ltd, which currently operates passenger train services throughout the M40 corridor between Birmingham and London, and Aylesbury and London. The current seven year franchise would expire in July 2003: the new franchise will be for 20 years, with provision for shortening the term if certain projects are not implemented. Proposals were invited in December 1999 for this franchise, and three parties submitted proposals - M40 Trains, The Go-Ahead Group plc and Arriva plc. In March 2000, it was announced that Go-Ahead and M40 Trains had been shortlisted for negotiations on the replacement franchise. The sSRA has now signed heads of terms with M40 Trains, opening the way to definitive, contractual negotiations. In the absence of final agreement on those contracts, the existing franchise would continue. Early Benefits The heads of terms envisage a set of agreements later this year which will provide users of the Chiltern network with the following benefits to be achieved within the first four years: Additional capacity by investing in two additional platforms at Marylebone by October 2003, and in extra tracks (using existing railway land) between South and West Ruislip, at Beaconsfield and between Bicester and Aynho Junction by October 2002. 50% more train miles overall on the Chiltern network, including doubling the frequency of service between London Marylebone and Birmingham Snow Hill from the current hourly level to half-hourly from October 2002. Off-peak frequency between Marylebone and High Wycombe will increase from four to six trains per hour. London to Birmingham trains will be extended to Stourbridge (by 2001) and Kidderminster (by 2002). Journey time reductions of 12 minutes between London and Birmingham by 2003. Reopening the terminus at Moor Street, Birmingham to provide extra capacity. More capacity through additional signalling between Banbury and Leamington Spa, a route of growing future importance for freight as well as passengers. Improvements in operational performance - M40 Trains to commit to meeting the sSRA's objective of 15 out of 16 trains running on time from April 2004, underpinned with a doubling of the incentive payment and penalty regime. Passengers' Charter - The 'trigger' at which season ticket holders are compensated for poor reliability is to be raised to 99% a t the start of the new franchise (98% at present). The trigger at which passengers are compensated for poor punctuality is to be 92% from April 2004 (compared to 90% at present). By 2004, all Chiltern trains to be new or completely refurbished. New rolling stock will be leased to meet growth in demand. Station improvements - M40 Trains is to invest £27million in station improvements and transport integration including additional car parking, and security during the first five years of the franchise. Accessibility for disabled passengers is to be improved significantly, with level access being provided at all stations managed by Chiltern. M40 Trains is to invest up to an additional £28million in station improvements over the remainder of the franchise, depending on the final term of the franchise. The investment plans for the first five years are estimated to cost £343million, of which £150million is to be invested by or in association with Railtrack; £153million is to be for the purchase of new rolling stock to be leased to M40 Trains; and £40million is to be funded by other investors including the John Laing Group. Long Term Benefits M40 Trains has undertaken to present plans to the SRA for infrastructure improvements between Marylebone and Aylesbury via Amersham for review no later than December 2003. Negotiations will be required with London Underground to secure the upgrading of this route, involving considerable investment of over £80 million including additional rolling stock. The franchise may be as long as 20 years depending on the outcome of a review by the SRA in 2005, of the progress made by M40 Trains, on a list of further enhancements to the franchise network. On the list are: An interchange station at West Hampstead. New services over the route between Aylesbury/Oxford and Bletchley/Milton Keynes (closed in the 1960s). A new route serving an M40 Parkway station and Oxford. Examination of an extension north of Aylesbury, to a new Parkway station for the M1 and M6. Extra tracks between Tyseley and Dorridge on the approach to Birmingham via Solihull. Safety The proposal includes funding for train protection systems, the details of which are to be determined following recommendations from the Cullen inquiry. Chief Executive of the sSRA and Franchising Director, Mike Grant, said: "I am delighted to be able to announce a deal containing significant passenger benefits for what is the first franchise to be announced in our replacement programme. The decision to select M40 Trains as the preferred operator followed a tough competitive process involving two strong sets of proposals, but we are confident we have made the right decision. In particular, we were pleased with the willingness of M40 Trains to bear a greater burden of risk as far as the planned investment is concerned. Our evaluation also included its record as an existing franchisee and its commitment to further improvement. We consulted regularly with Centro (the West Midlands PTE), concerning services into and from that area. "There has been significant passenger growth of around 15% per annum on Chiltern since the start of the current franchise in 1996. By selecting a preferred operator now we can proceed to put the mechanisms in place for the increases in capacity required on the route over the next 10-20 years. We have taken into account the willingness of M40 Trains to invest and the length of franchise will enable the franchisee to earn an appropriate return." Chairman of the sSRA, Sir Alastair Morton, said, "We have fulfilled our commitment to agree heads of terms on the first replacement franchise by Summer 2000. The replacement programme is on target for completion next year, three years before the 18 short-term franchises would have expired. The way opens for substantial investment in this growth segment of Britain's railways." Note to Editors Final subsidies/premia have not been set at this stage. Details will be announced at the time of awarding the franchise. Important Notice This news release is issued by the Franchising Director and its contents have been approved for the purposes of section 57 of the Financial Services Act 1986 by KPMG Corporate Finance. KPMG Corporate Finance is a division of KPMG which is authorised to carry on investment business by the Institute of Chartered Accountants in England and Wales. This news release has been prepared for general information purposes only and is not intended to form the basis of any investment decision or constitute an offer or invitation to bid for any passenger rail franchise or to acquire shares in a train operating company. Neither this news release nor any copy of it should be taken into or distributed in Canada, France, Japan or the United States except in accordance with an applicable exemption. The distribution of this news release in other jurisdictions may be restricted by law and therefore persons into whose possession this news release comes should inform themselves about and observe any such restrictions. KPMG Corporate Finance is acting for the Franchising Director and will not regard any other person as its client in relation to passenger railway franchising or be responsible to anyone other than the Franchising Director for providing the protections afforded to clients of KPMG Corporate Finance nor for advising any other person on the contents of this news release or any matter referred to in it.
Railhub Archive ::: 2000-08-10 SRA-002
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