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INFORMED SOURCES January 2000

New franchise geography looms

If you thought franchising in the ‘90s was turbulent, the ‘oughts' promise to be something else

There are 25 passenger franchises only because British Rail's three passenger business were split up into roughly that number of profit centres. And if you look at this Table of Franchise renewal dates – to the day, please note, you will see that I have listed the franchises under the legal names and not the temporary names franchisees may have given them. And these names are all 'old BR'.'

But now that the privatised railway is firmly established, and 18 of the 25 franchises are up for ‘replacement', SSRA Chairman Sir Alastair Morton reckons it is time to draw the franchise map.

This is a game we all can play, and there are some pretty obvious opportunities to rationalise the present structure, even before you take into account the effects of devolution - with England to come.

Scope in the north

Deliberately, the SSRA is leaving the big former regional railways businesses to last. These are always going to need substantial subsidy, where the former Intercity franchises should make a profit and the late lamented Network SouthEast franchise beak even at least.

Since the ‘Regionals' are largely concerned with serving the metropolitan conurbations, a logical move could be to strip out the suburban services for Manchester, Newcastle, Leeds, Birmingham and so on and turn them into PTE focused franchises like Merseyrail Electrics on steroids.

Such a move would establish a separate set of cost centres with true local accountability for performance and service levels. From the rump of the North East and North West franchise a new 'trans-Pennine' super franchise to be created.

Now for the West

Wales & West is not a highly desirable franchise. But if its services in Wales were devolved to the Assembly, you could rationalise rail services in the West of England,

At present there are several anomalies in the West Country. Not least, Under British Rail London-Exeter was only part of Network South East because it lost money. It is in no way a 'commuter' or urban service service.

So, having stripped internal Welsh services out of Wales & West, the logical move would be to separate Waterloo Exeter from SWT to create a new West of England Regional franchise. Why give it Waterloo-Exeter? Because it will help keep Great Western honest.

Sarf Lunnon metro

SWT is now a pure commuter franchise. If franchises in the rest of the country are Old BR, the three south of the Thames franchises are pre-Grouping.

And there is plenty of scope for rationalisation

Operators like Connex and Thameslink are already aspiring to 'metro' type services on their inner surburban routes. So why not group the inner suburban services of Network South Central and SWT into another new London Metro Super-franchise that would offer an integrated metro-type service with a unified approach, a mirror of the Underground north of the Thames in fact.

Ideally, of course, Connex South Eastern would add its Kent ‘inners' to this scheme, which might be difficult to organise given the 15 year franchise term.

Taking the inners out of NSC and SWT could make merging these two into a ‘super franchise' attractive.

Anglia opportunity

Readers may choose to consider other opportunities for rationalisation. Does East Anglia really merit so many franchises? Combining Anglia , Great Eastern and the West Anglia half of WAGN could generate synergies for investment and service development?

In his public pronouncements Sir Alastair Morton talks of reducing the present 25 to, perhaps 18 or less. Table x shows my stab at the new architecture. However whether such major surgery can be achieved with the current freestyle approach under which Train Operating Companies and 'third parties' come up with ideas which the SSRA then has to fit into its jig saw puzzle, is debatable.

But, Sir Alastair is clear that change is high on the agenda. 'We have invited franchises to turn their minds to amendments to franchise geography and said we want to redevelop and we want to talk', he told me. I suspect that in most cases creating the new geography will parallel the pig and the hen collaborating to provide bacon and eggs. TOCs may be less than enthusiastic about being the pig,

Show me the money

On top of which there is some very hard bargaining ahead. Deputy Prime Minister John Prescott seems to think that the new franchisees will need less subsidy and put in more investment.

Sir Alastair is more realistic. 'If a train operator says 'Gee, Railtrack will spend a lot and the ROSCOs will spend a lot' that is not the way to go. TOCs have to be risk taking before anyone gets a long franchise.'

Fighting talk, but a franchise is an asset free zone, lease and rental rather than bricks and mortar. And of course, in business you only take on risk you can manage - which in the case of a TOC is revenue.