The financial returns promised by Abellio will rely on a challenging annual growth of 10% or more, which the company expects to achieve through introducing the new fleet of trains now on order and an improved timetable.
The offer by Abellio to pay £3.7 billion in premium payments exceeded rival bids of £3.1 billion from First Group and £2.7 billion from National Express.
In the quality element of the bid, which made up 8% of the evaluation, First Group was marginally ahead with a credit of £187 million compared to £184 million scored by Abellio. However, National Express’s quality assessment was somewhat lower, as there was a reduced commitment to introduce new trains. This is in contrast to the total fleet renewal planned by Abellio, which involves introducing 1043 vehicles to replace the 937 in the existing fleet (see Headline News last month).
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Calculations made by analysts show that the franchise winner will need to increase revenue by more than 10% annually, which takes an optimistic view of passenger response to greater service frequency and the better product offered by new trains.
Read more in November’s issue of RE