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Virgin Trains inks 2-year UK West Coast deal

Interim deal ends uncertainty on key rail route for two years

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Virgin Trains has inked an interim contract to continue as the rail franchisee of the UK West Coast intercity mainline for a further two years.

In a statement on Thursday, the rail operator said its new contract will commence on 9 December and run until 8 November 2014. However, Virgin Trains clarified that the agreement may be terminated earlier if a new long term rail franchise is ready to commence prior to the expiration date.

The announcement comes on the back of a contractual fiasco. Earlier this year, rival First Group had been named as the winning bidder for the route beating a bid by Virgin Trains, only for tendering process irregularities to surface which led the government to cancel the bids.

Subsequently, the entire bidding process for UK rail franchises was on hold pending an official review. At the time, Virgin Trains had offered to run the West Coast service since it was the current franchisee.

Under the new agreement, Virgin Trains will initially earn a fee equivalent to 1 percent of revenue with the Department for Transport taking the risk that revenue and/or costs differ from those currently expected. However, Virgin Trains and the Department for Transport have also agreed to seek to negotiate revised commercial terms that would see Virgin Trains take greater revenue and cost risk for the period to 8 November 2014.

Tony Collins, CEO of Virgin Trains, said, "We will not be sitting back in the coming months, but are keen to introduce more improvements to the service, which is already the most popular long-distance service in the country.”

“We are proud of what we have achieved since 1997, but there is undoubtedly more to come and we will work closely with the Department for Transport to bring even better services in future," he added.

The trains will continue to operate under the Virgin brand name, serving London, the Midlands, the North West, north Wales and Scotland.



Virgin Trains inks 2-year UK West Coast deal
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