National Express East Coast - A
National Express East Coast - A
National Express East Coast (NXEC) was a train operating company in the United Kingdom, owned by National Express, that operated the InterCity East Coast franchise on the East Coast Main Line between London, Yorkshire, North East England and Scotland from December 2007 until November 2009.
During December 2006, the previous franchisee Sea Containers, operating via its subsidiary Great North Eastern Railway (GNER), was stripped of the franchise after failing to meet overly-generous payments.
During August 2007, National Express was awarded the franchise via a competitive tender, its bid was criticised for having offered similarly onerous payments to GNER. Within months of commencing operation in December 2007, NXEC became known for its cost-cutting measures and a noted drop in service level. The company became unable to meet its payment obligations, having forecast greater ridership than actually experienced while fuel costs had risen considerably.
By early 2009, National Express was in talks with the government over possible financial assistance with the franchise. Months later, in light of National Express' plan to default on the franchise, the Department for Transport announced that the franchise would be re-nationalised. Hence, operations passed to the publicly-owned East Coast on 14 November 2009.
National Express East Coast History
National Express East Coast 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). Within only a few years, the future franchising arrangements of the East Coast route had already begun to be evaluated.
During March 2000, the Shadow Strategic Rail Authority announced that two companies, Sea Containers and Virgin Rail Group, had been shortlisted to bid for the next franchise. During January 2002, the Strategic Rail Authority announced that the refranchising process had been scrapped, with an interim extension to GNER's contract being given as a stopgap measure.
During October 2004, the Strategic Rail Authority issued the Invitation to Tender for the InterCity East Coast franchise to the four shortlisted bidders, Danish State Railways/English Welsh & Scottish, First, GNER and Virgin Rail Group.
Sea Containers emerged as the victor, being awarded a new seven-year franchise by the Department for Transport, commencing in May 2005, along with an option for a three-year extension dependent on performance targets being met. However, the awarding was subject to criticism that, amid aggressive bidding between the competing companies, 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 Department for Transport over a ten-year period. Within two years, the company's financial difficulties had become a public concern, particularly those of its parent company.
In July 2006, rumours began circulating that Sea Containers would be prepared to sell its GNER franchise in an effort to stave off resorting to Chapter 11 proceedings to secure itself from its creditors. In October 2006, Sea Containers filed for bankruptcy protection under the US Chapter 11 process, During December 2006, the Department for Transport announced its intention to strip Sea Containers of its franchise, although continued to GNER operate the franchise on a fixed fee management contract in the interim while another competitive tender was organised.
National Express East Coast Tender and Award
In February 2007, the Department for Transport announced that Arriva, First, National Express and Virgin Rail Group had been shortlisted to lodge bids for the new franchise. In August 2007, the Department for Transport 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 Department of Transport 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 industry periodical Rail, even the Department of Transport had classified National Express' bid as having "medium risk", although this would not be made public until years later. Professor Felix Schmid of the University of Birmingham's Centre for Railway Research and Education, has claimed that National Express had gambled that it would receive a significant amount of revenue via compensatory payments for delays attributable to the East Coast's infrastructure owner, Network Rail.
Furthermore, National Express had allegedly spent a reported £23 million in its attempts to retain or win new franchises around this period, and had been stripped of several, including Midland Mainline, Gatwick Express and Silverlink, which may have motivated the company's management team to be more generous to emerge with something from its efforts.
National Express's bid had included the stated ambition to increase capacity on its services, specifically to add up to 25 extra services each weekday from December 2010 along with a direct London-Lincoln train that would be operated at two-hourly intervals.
However, there was no mention of any new trains for achieving this capacity increase, instead, a number of recently withdrawn British Rail Mark 3 coaches that had been previously operated by Virgin West Coast would be transferred over to NXEC's control. Other promised improvement included the introduction of free Wi-Fi for passengers travelling in standard class, the provision of an additional 2,000 car parking spaces in close proximity to a number of its major stations, and a general reduction in journey times.
National Express East Coast Overview
National Express East Coast Franchise(s): InterCity East Coast
National Express East Coast Route Map