London Midland operator holding talks with DfT on franchise extension
LONDON Midland train operator, Go-Ahead Group has said it remains in talks with the Department for Transport over a possible extension of the franchise until June 2017.
In its interim results, the company said the first half performance by London Midland had been strong with growth in passenger revenue and journeys – an indication of why the business would like to retain the franchise for as long as possible.
It said: “Revenue growth in London Midland remains strong and in the first half of the year the franchise contributed directly to the Government through the revenue share mechanism. There is a planned extension period for the franchise to June 2017 and we await discussions with the DfT.”
An indication of the strength of the London Midland franchise is that it became eligible to receive revenue support in November 2011 but has never required it due to its strong performance. It is the only franchise of its type that has not required this support.
Go-Ahead’s overall rail division, which also includes the Southern and Southeastern franchises, generated half-year revenues of £973m (H1 2013: £915.3m). Operating profit was £10.5m (H1 2013: £6.7m). Passenger revenue growth at London Midland on a like for like basis was 10.1% with volume growth of 5.4% on the same basis.
Go-Ahead warned that in the second half of the year no material rail profits were expected as its premium profile became more challenging and Southeastern began a seven-month extension period, which is expected to be unprofitable.
“A more modest revenue yield is expected in the second half of the year as January 2014 fare increases were lower than last year,” it said.
The company has recently submitted its bid for Transport for London’s Crossrail franchise and it is awaiting the outcome of the DfT’s Thameslink franchise competition, due in the spring.
It has also received the Request for Proposal (RfP) from the DfT for the planned Southeastern franchise extension to June 2018 and it said its discussions on this were continuing.
“We remain focused on delivering value over the remaining lives of our existing franchises and are committed to securing our future rail portfolio,” it said.
