It is understood that only one rival bidder has expressed interest in competing for the new South West Trains franchise, due to start next year

 

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Stagecoach is set to face very limited competition to retain its South West Trains franchise. It is understood only one other bidder has submitted an expression of interest (EOI) in competing for the new contract to the Department for Transport following the call for EOIs in November.

Industry sources indicated that the lack of interest is due to the glut of bidding opportunities over the next two years when six franchises will be tendered, and the planned start date of the new SWT contract in mid-2017.

Another factor in the lack of interest is said to be that the start date coincides with delivery of the new fleet of Desiro Class 707 trains and platform remodelling at Waterloo. The latter project is seen in the industry as importing significant risk to the new franchise due to unpredictable impact on patronage (PT113).

The DfT had been due to negotiate a short term franchise with Stagecoach lasting until April 2019. Negotiations failed because Stagecoach demanded a profit margin the DfT viewed as unacceptable.

City analysts told Passenger Transport that with so many franchises to be let in short succession, further reasons for lack of interest are likely to include high ‘contingent capital’ financial guarantees contract winners must provide to cover potential losses if growth targets are not achieved – £189m on TransPennine Express, the latest franchise to be let. SWT is a considerably larger contract.

Last year, the National Audit Office warned that changes to the franchising programme had created “a risk that the department will receive fewer expressions of interest than it might have”.

 

This article appears inside the latest issue of Passenger Transport.

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