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National Express on track for first class line; PUBLIC TRANSPORT.

Byline: By Duncan Tift Business Staff

National Express, which is set to move its UK headquarters to Birmingham, has won the race to operate the UK's prestigious East Coast Main Line with a pledge to pay the Government pounds 1.4 billion over the life of the sevenyear deal.

The transport group, best known in the region for operating Central Trains and Travel West Midlands, beat off strong competition from Arriva, Virgin/Stagecoach and First Group for the franchise, which starts in December.

The main line, which runs between London and Aberdeen, had formerly been operated by Great North Eastern Railway, which won the franchise in 1997 and retained it in 2005.

GNER was obliged to pay the Department for Transport a pounds 1.3 billion premium for the service but the ministry retendered the contract after the company struggled to meet the payments.

The situation had been made difficult due to GNER's parent company, Bermuda-based Sea Containers, filing for bankruptcy in the United States and revenues from the main line service failing to live up to expectations.

National Express said yesterday that differences between the new contract and the previous deal were expected to act in the company's favour and it was confident it would avoid the problems that beset GNER.

Factors in the company's favour include a new timetable from 2010, 20 per cent more capacity and potential boosts to demand presented by events such as the London 2012 Olympics.

The DfT said the National Express bid vehicle, NXEC, may raise unregulated fares by an average of 2.1 per cent above inflation each year over the course of the franchise. Regulated fares will continue to rise by inflation plus one per cent per year.

Anthony Smith, chief executive of customer watchdog Passenger Focus, welcomed the details of new and improved services.

But he added: "We remain concerned at the accumulative affect of year-on-year unregulated fare rises way above inflation."

East Coast runs services from London King's Cross to Peterborough, Leeds, York, Newcastle, Edinburgh and Aberdeen.

The new contract is expected to generate total annual revenues of pounds 600 million in its first full year.

National Express had been favourite to win the deal, which was the last to be awarded in the current round of franchises. Analysts had said National Express needed to win the franchise in order to boost its rail portfolio, which had taken a hit in recent times from the loss of a number of deals due to bid failures and reorganisation of franchises.

The group lost out to Stagecoach for the East Midlands franchise, while it also failed to win the Cross Country franchise. It hands over its Gatwick Express contract to Go-Ahead Group's Govia unit next year.

National Express chief executive Richard Bowker, former head of the Strategic Rail Authority, said the company was confident it would be able to grow the business and increase passenger numbers.

"Our plans have been developed through consultation with a wide range of stakeholders," he said. "We look forward to working with them to deliver a truly worldclass railway."

The DfT said the franchise includes provision for up to 25 extra train services from December 2010 and up to 40 more carriages will be brought into use to deliver increased capacity.

There will be new two hourly, faster services between London and Lincoln, London and York and more London-Edinburgh trains.

Other improvements include an updated catering offer, a simpler website highlighting the cheapest tickets and the expected seat availability, a pounds 7.4 million to upgrade stations and provision of up to 2,000 more parking spaces by the end of the franchise, with half expected within the first two years.

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National Express chief executive Richard Bowker; A Midland Mainline Train. National Express has won the battle to run the prestigious London to Scotland rail franchise
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Title Annotation:Business
Publication:The Birmingham Post (England)
Geographic Code:4EUUK
Date:Aug 15, 2007
Words:642
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