The story
Background
The original InterCity East Coast franchise was awarded to the Bermuda-based transport and container leasing company Sea Containers, which operated it from April 1996 until April 2005 via its subsidiary Great North Eastern Railway (GNER). While Sea Containers successfully bid for the award of a new seven-year franchise by the Department for Transport (DfT) commencing in May 2005; the award was subject to criticism that, amid aggressive bidding between the different companies competing for the franchise, GNER had committed itself to fulfilling an overly generous arrangement that may not be financially realistic, and was accused as having overbid to secure the franchise. During the original franchise, the company had been receiving subsidies from the British government to support its operations; however, the terms of the second franchise reversed this to have the operator making payments to the government, specifically a £1.3-billion premium which was due to the DfT over a ten-year period. Within two years, the company's financial difficulties had become a public concern.
In October 2006, Sea Containers filed for bankruptcy protection under the US Chapter 11 process, During December 2006, the DfT announced its intention to strip Sea Containers of its franchise, although GNER continued to operate it via an interim fixed fee management contract while another competitive tender was organised. In February 2007, the DfT announced that Arriva, First, National Express and Virgin Rail Group had been shortlisted to lodge bids for the new franchise. In August 2007, the DfT awarded the Intercity East Coast franchise to National Express, leading to the creation of National Express East Coast (NXEC) shortly thereafter.
Under the terms of its franchise agreement, National Express committed to paying a £1.4-billion premium to the DfT over a time span of seven years and four months. However, numerous rail analysts at the time promptly voiced concerns that the company had paid too much for the franchise, and had effectively repeated GNER's mistake in order to secure the franchise. According to railway industry periodical Rail, NXEC quickly garnered a reputation for cost-cutting and a decline in service levels, particularly in terms of the onboard catering. By 2009, NXEC was under increasing financial pressure due to various factors, including compounding rises in fuel prices and the poor economic climate of the time, commonly known as the Great Recession. During April 2009, National Express confirmed that it was pursuing talks with the government over possible financial assistance with the franchise, either through a reduction in the premium due or some other form of assistance.
Formation
In July 2009, it was announced that National Express was intending to default on the franchise, having failed to renegotiate the contractual terms of operation; National Express stating that it would not be providing any further financial support necessary to ensure NXEC remained solvent. This meant NXEC would run out of cash by the end of 2009. As a consequence of this decision, the DfT announced it would establish a state-owned company to take over the franchise from National Express. The failure of the NXEC franchise sparked widespread calls amongst industry officials and members of the public for the InterCity East Coast franchise to be permanently placed into state ownership, or even the complete scrapping of the entire franchise system. In response, the Secretary of State for Transport Lord Adonis reiterated the findings of a 2008 National Audit Office (NAO) report which had concluded that the rail franchising system delivered good value for money and steadily improving services.
On 13 November 2009, NXEC relinquished its operation of the franchise, at which point the DfT took over through its newly formed subsidiary, East Coast.
Changes
According to Rail, East Coast's management strategy was typically adverse to initiating changes and that relatively little had changed across the organisation's operations during its eight years of running the franchise. Karen Boswell, the managing director of East Coast, disputed this observation and pointed to substantial investment in terms of both staff and assets since assuming control of the franchise in 2009, and also observed that the operation was financially sound and that East Coast had become one of Britain's most profitable train operating companies by 2015.
During May 2011, East Coast introduced a major new timetable known as "Eureka"; changes included an extra three million seats per year, a decrease in general journey times and the adoption of a more regular service pattern. Within a few years of these changes, both train performance and punctuality figures had noticeably improved. Beyond the timetable changes, the Eureka programme was accompanied by various service changes, such as a nearly £10 million investment in staff training and to modernise its catering carriages, facilitating the introduction of complimentary catering for all First Class travellers.
Prior to October 2010, East Coast offered free Wi-Fi to passengers in both First and Standard Class coaches. From 5 October 2010, the operator introduced a charge of £4.99 per hour or £9.99 for 24 hours for only Standard Class passengers; a 15-minute free allowance was still provided. In 2011, East Coast announced an investment of £600,000 for upgrading Wi-Fi equipment across its fleet, these new uplinks used a combination of satellites and lineside 3G/HSPA masts.
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On 28 February 2015, the final operating day of East Coast, Virgin branding and public relations material begun to be deployed at various stations. Furthermore, East Coast's website, Twitter and Facebook pages were updated overnight to reflect Virgin's branding. That same day, multiple coordinated anti-privatisation protests were held in several cities, including Edinburgh, Doncaster and London, which were organised by the National Union of Rail, Maritime and Transport Workers (RMT). On 1 March 2015, Virgin Trains East Coast assumed operations.
From Wikipedia’s article on East Coast (train operating company), shared under CC BY-SA 4.0.3
