FirstGroup Outbids Virgin Trains to Buy British West Coast Rail Line
By James Ruggia
September 06, 2012 10:07 PM
In something of a surprise early this month, the British government awarded its West Coast Rail Line to FirstGroup PLC. According to reports in British journals, FirstGroup outbid Virgin Trains, 5.5 billion pounds ($8.7 billion) to 4.8 billion pounds ($7.65 billion). For 15 years, the line had been run by Virgin Trains, the Virgin-branded rail company co-owned by Richard Branson.
First Group will begin operating the service in December. The West Coast Rail Line runs between London and Scotland, generating about $1.4 billion annually. Most observers in Europe foresee a time in the not-too-distant future when high-speed rail will be the primary feeder of airport hubs, essentially replacing short-haul domestic flights. It may have been more than a coincidence that when FirstGroup won the bid on the West Coast Line, Virgin Atlantic Airways entered British domestic service with new Heathrow to Manchester service.
“Flying between Heathrow and Manchester is just the start for Virgin Atlantic’s new short-haul operation,” said Virgin Atlantic Chief Executive, Steve Ridgway at the time. “We have the means to connect thousands of passengers to our long-haul network as well as to destinations served by other carriers. Our new service will provide strong competition to omnipresent BA -- keep fares low and give consumers a genuine choice of airline to fly to Heathrow and beyond.”
As Virgin's only rail route, Virgin is for the time being out of the rail business. “The branding will change,” said Tim Roebuck, ACP Rail’s vice president of sales and managing director of the BritRail division. “The trains and service won’t change. The schedule will be the same, the service the same, the trains the same, even the staff the same. Only the managers will change and the colors will change to reflect FirstGroup’s branding. As far as the customer is concerned, there’s no significant change.”