Dutch group named as preferred bidder for the new East Anglia franchise – but nine-year deal requires it to pay the government a £3.7bn premium

 

stadler_anglia383 electric and bi-mode vehicles will be supplied by Switzerland’s Stadler

 

Abellio has committed to a £3.7bn premium and a 93% performance target in its winning bid for the East Anglia franchise.

The franchise premium, payable over nine years, compares with a premium of around £3.3bn which Virgin Trains East Coast is due to pay over eight years. The average annual premium payment for East Anglia will exceed £400m.

A Department for Transport spokesman said the profile of annual premium payments during the franchise would not be published for reasons of commercial confidentiality. However, he said: “In the final year of the Direct Award franchise, the premium was around £2m.”

Abellio’s current Direct Award contract has an 89.7% performance target. Its Moving Annual Average is currently 89.42%, measured by arrivals within five minutes of schedule. The new franchise, which will run from October 2016 until 2025, will have a 93% target, a level which the DfT describes as “tough”.

Abellio East Anglia will purchase over 1,000 new vehicles. Bombardier will supply 660 new carriages from its Derby factory. A further 383 vehicles will come from Switzerland’s Stadler.

Dominic Booth, managing director of Abellio UK, said: “Our plans will greatly improve our customers’ experience.”

An industry source said the £3.7bn premium sounded “heroic”. Revenue growth alone was unlikely to bridge the gap, notwithstanding population growth and additional train capacity. “They must be doing something on costs,” he said.

Another source said the 93% performance target sounded challenging.

 

Further East Anglia franchise coverage in the latest issue of Passenger Transport:

 

Abellio promises Anglia transformation
A full fleet refurbishment, over 1,000 new trains and London-Norwich in 90 minutes are among the commitments in the new East Anglia franchise

‘Norwich in 90’ campaigners pleased
‘We presented the government with a compelling case’

Disappointment for NEG and first
UK groups defeated by European rival again

New entrant to British rolling stock market
Switzerland’s Stadler will supply 383 vehicles

 

This article appears inside the latest issue of Passenger Transport.

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