Transport User Voice – May 2020 – What’s next for rail franchises?

27 April 2020

Less travel means less income  

As all but essential travel has been cut, rail operators have seen drastic reductions in demand and face significant drops in their income.

In response to this, the Government has announced emergency measures to ‘support and sustain necessary rail services’. The Emergency Measures Agreements mean the Department for Transport will temporarily suspend normal franchise agreements and transfer all revenue and cost risk to the Government for a limited period. These have been taken up by all franchised operators and will initially be for six months.

Operators will continue to run services day-to-day for a small predetermined management fee. This is a maximum of two per cent of the cost base of the franchise before the pandemic began and is intended to incentivise operators to meet reliability, punctuality and other targets.

In response to the crisis, timetables have been amended and are operating at reduced service levels to provide just the necessary travel opportunities for essential workers. The open access operators (those that take full commercial risk) – Grand Central and Hull Trains – have currently suspended services.

Earlier in March, new contracts were announced for Great Western Railway and Southeastern as previous arrangements were due to expire. You can read our reaction here.

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