ECML franchise to be broucht back under Public Ownership

[david.hill64]

Forgive me, I am a bear of small brain, and an engineer to boot, so my financial understanding isn't what it should be.

Why does leasing an asset make it "fit & forget"?

It depends very much on the type of lease, classically identified as wet or dry (with various shades of dampness thrown in for good measure!).

 

If you rent a car from a car hire company it is very much a case of fit and forget: all you have to do is drive it and put in fuel. If anything goes wrong, the lease/rental company sorts it out. Some railway leases are also like this 'power by the hour' was another way of describing it.

 

Most rail leases were somewhat drier, with the TOC responsible for light maintenance activities. This is pretty much how all of the initial passenger train leases were set up. TOC's did the light maintenance and the ROSCOs the heavy overhauls. 

[jjb1970]

Forgive me, I am a bear of small brain, and an engineer to boot, so my financial understanding isn't what it should be.

Why does leasing an asset make it "fit & forget"?

 

As others have said it depends on the type of lease but taken to its conclusion a lease can become a total service arrangement and in some applications it stops being even a lease and becomes a contract for service provision. That means somebody else is responsible for maintenance and servicing, through life issues, spare parts provision, staff associated with all of that (including the HR, training, payroll functions etc), prosaic things like making sure the trains are clean etc. Hence as an operator you get enough trains to operate your service, everything behind that provision is somebody else's problem. That is at one end of the spectrum, the other extreme would be that you lease an asset but keep all aspects of asset management in-house. And there is probably an infinite number of variations in-between. There are large organisations that work on the basis of service provision contracts and limit themselves only to making the best use of the service they've bought. Things like critical spares provision becomes somebody else's problem and risk. Clearly there is a cost to all of this and whoever provides it is taking on a lot of risk and needs to make a profit. Whether or not it is the right option for a particular business depends on all sorts of considerations but there are plenty of profitable businesses who utilise these types of arrangement very successfully and do not see themselves as being ripped off. Hence my use of the simile "fit and forget".

[locoholic]

Leasing is not in any way like sub prime mortgages.... whoever owns something it costs to finance it (even Government's money is not free - gilts cost money, the rest they borrow from us). The ROSCOs are all strong investment grade counterparties with real, tangible assets and long term cash flows from a mature network. Sub prime mortgages are/were loans to individuals with aspirations to own property with borrowers who don't have the income to support it. Nor is leasing "financial engineering." If you buy a car on finance, that's a lease. If you have a photocopier in the office, chances are that's leased too. Equipment leasing is about as vanilla a finance option as you get. Financial engineering is generally significantly more complex and often looking to recreate a superficially simple transaction to take advantage of some form of arbitrage.

My problem with all this is the fact that such complicated arrangements bring hordes of extra lawyers, bankers and accountants into the equation, and thus further separates the "customer" (i.e. the passenger or freight company) from the supplier. The current trend for new trains to be less comfortable than the old ones is, I believe, one consequence. All the extra interests also expect to make a profit, too.

[Ron Ron Ron]

I've just done an ECML return journey from London Kings Cross to York, this weekend with VTEC.

No sign of the impending changes.

A good service on clean well presented trains.

 

The return late afternoon yesterday was 15 minutes late due to issues on the line further north, but that wasn't down to VTEC.

It was also very busy, so I bought the on-board First Class upgrade and grabbed one of the few remaining seats.

 

Overall no complaints, however the return was on an HST and I have to say that the ride was awful.

The northbound journey in the IC225 mk4 was smooth and although not the best seats, it was quite a comfortable journey.

In contrast, the return in the HST mk3 was one of the roughest riding rail journeys I've done in ages. Only the nice comfy First Class seat made up for it.

Getting onto a SWR Class 444 from Waterloo to the south coast was a smooth magic carpet ride in comparison.

 

On my only other recent HST journeys, on GWR, it was less than impressive, with bogie or wheel noises (it might have been a wheel flat on one trip?) and rattling panels.

 

Summary.

I've got no complaints about VTEC. Excellent service.

On the other hand, replacement of the once excellent HST's can't come soon enough based on my recent experiences of these trains.

Never thought I'd say that.

 

 

 

.

Edited May 21, 2018 by Ron Ron Ron

[Clearwater]

My problem with all this is the fact that such complicated arrangements bring hordes of extra lawyers, bankers and accountants into the equation, and thus further separates the "customer" (i.e. the passenger or freight company) from the supplier. The current trend for new trains to be less comfortable than the old ones is, I believe, one consequence. All the extra interests also expect to make a profit, too.

We’ve had this debate before. All of these professional service providers bring expertise and understanding. If you’ve not worked with a best in class accountant/lawyer/banker, I appreciate it may be difficult to see the value they bring. The level of analysis and problem anticipation is extremely valuable and helps prevent money being wasted later. Think about it like hiring a builder for your extension. A bad one will cost you more when you later have problems even though their initial quote may be less. To jjb1970’s point above, it’s not a zero sum game. I can spend more upfront and get a cheaper overall deal. If a banker/solicitor/accountant helps identify a risk and manage it (eg FX risk to take a straightforward and understandable example), then the deal becomes better for all parties. (In that example, if you’re buying components from overseas, buying a forward contract to lock in the rate means that if sterling declines vs the purchase currency, your purchase doesn’t suddenly become unaffordable. There’s a cost to that, and the fx trade has to earn the bank it’s return on capital, you need a contract in place and you’ll have to account for the trade, but those costs can pale into insignificance if the consequence of a 20% fall in sterling would mean that the underlying operating cash flows can’t pay the new higher purchase cost. Even if you think we should make all our trains in the UK, we’d still need to import the raw materials...).

 

I don’t think you’re right about this process “increasing separation from the passenger.” If you’ve ever lent or invested money, and the professional services firms act on those persons instructions, then you understand that unless your asset delivers a service that the customer will pay for, then you won’t get your money back.

 

Your point on seat comfort has also been debated at length: the trains were dft specified.

[rodent279]

I've just done an ECML return journey from London Kings Cross to York, this weekend with VTEC.

No sign of the impending changes.

A good service on clean well presented trains.

 

The return late afternoon yesterday was 15 minutes late due to issues on the line further north, but that wasn't down to VTEC.

It was also very busy, so I bought the on-board First Class upgrade and grabbed one of the few remaining seats.

 

Overall no complaints, however the return was on an HST and I have to say that the ride was awful.

The northbound journey in the IC225 mk4 was smooth and although not the best seats, it was quite a comfortable journey.

In contrast, the return in the HST mk3 was one of the roughest riding rail journeys I've done in ages. Only the nice comfy First Class seat made up for it.

Getting onto a SWR Class 444 from Waterloo to the south coast was a smooth magic carpet ride in comparison.

 

On my only other recent HST journeys, on GWR, it was less than impressive, with bogie or wheel noises (it might have been a wheel flat on one trip?) and rattling panels.

 

Summary.

I've got no complaints about VTEC. Excellent service.

On the other hand, replacement of the once excellent HST's can't come soon enough based on my recent experiences of these trains.

Never thought I'd say that.

 

 

 

.

I have to say, the one time I've been truly scared on a train, and baled as a result, was last year on an FGW HST. I got on at Reading, and sat in the front of the TGS, behind the power car. The rhythmic noises coming from below were something I've never experienced before, in the thick end of 35 years of travelling on UK trains.

I know what a wheel flat sounds like, and this didn't sound like one-it really sounded like something was working loose and rubbing or in some way bearing on the wheels. I baled at Swindon, the driver wasn't bothered when I mentioned it to him!

I remember thinking if this is the next Eschede then I'm not staying on it!

Edited May 21, 2018 by rodent279

[Reorte]

Sad to hear about those HST reports. Lack of long-term maintenance since they're not going to be used for that much longer, or just fundamentally almost worn out from years of heavy use?

[Hobby]

the driver wasn't bothered when I mentioned it to him!

 

It depends on the driver, TBH you should have spoken to the Guard, not the driver, he could have gone down there and seen what the issue was when the train was moving (something the driver couldn't as he'd be up front driving!) and then done something about it...

 

since they're not going to be used for that much longer,

 

Yes they are, Scotrail are using them (and XC no doubt if they could get some). Most "wear" items can be replaced so that shouldn't be an excuse for poor running, though I agree with the general point, our ones on XC are equally as bad, or at least more susceptible to poor trackwork than the 22x and 170s...

Edited May 21, 2018 by Hobby

[rodent279]

It depends on the driver, TBH you should have spoken to the Guard, not the driver, he could have gone down there and seen what the issue was when the train was moving (something the driver couldn't as he'd be up front driving!) and then done something about it...

 

 

Yes they are, Scotrail are using them (and XC no doubt if they could get some). Most "wear" items can be replaced so that shouldn't be an excuse for poor running, though I agree with the general point, our ones on XC are equally as bad, or at least more susceptible to poor trackwork than the 22x and 170s...

I was going to, but he was somewhere down the back working his way forward I assumed. It obviously made Bristol safely.

[Mallard60022]

I've just done an ECML return journey from London Kings Cross to York, this weekend with VTEC.

No sign of the impending changes.

A good service on clean well presented trains.

 

The return late afternoon yesterday was 15 minutes late due to issues on the line further north, but that wasn't down to VTEC.

It was also very busy, so I bought the on-board First Class upgrade and grabbed one of the few remaining seats.

 

Overall no complaints, however the return was on an HST and I have to say that the ride was awful.

The northbound journey in the IC225 mk4 was smooth and although not the best seats, it was quite a comfortable journey.

In contrast, the return in the HST mk3 was one of the roughest riding rail journeys I've done in ages. Only the nice comfy First Class seat made up for it.

Getting onto a SWR Class 444 from Waterloo to the south coast was a smooth magic carpet ride in comparison.

 

On my only other recent HST journeys, on GWR, it was less than impressive, with bogie or wheel noises (it might have been a wheel flat on one trip?) and rattling panels.

 

Summary.

I've got no complaints about VTEC. Excellent service.

On the other hand, replacement of the once excellent HST's can't come soon enough based on my recent experiences of these trains.

Never thought I'd say that.

 

 

 

.

Interestingly I had a 36E to Kings X journey by HST on Saturday early afternoon, in Coach B and it was clean, tidy, just the right temperature, not stuffed, comfy seats and a beautiful clean view out of the window with a table to ourselves as two passengers didn't turn up. It was smooth, no nasty sounds, great sound from the Power Unit just next door and got a 4 minute defecit back to a two minute early arrival. Win some, lose some I suppose? Oh, and only cost us £16 Standard Class.

Phil 

[The Stationmaster]

There have been a number of GWR HSTs running around with minor flats and apart from that some bogies have clearly put in a lot of mileage and are in need of overhaul hence I try harder than ever to avoid travelling above them.  Some Voyagers seem to ride just as badly - if not worse.

[rodent279]

There have been a number of GWR HSTs running around with minor flats and apart from that some bogies have clearly put in a lot of mileage and are in need of overhaul hence I try harder than ever to avoid travelling above them. Some Voyagers seem to ride just as badly - if not worse.

Oh Voyagers are bad enough, this thing was almost as noisy, but not particularly rough.

[locoholic]

We’ve had this debate before. All of these professional service providers bring expertise and understanding. If you’ve not worked with a best in class accountant/lawyer/banker, I appreciate it may be difficult to see the value they bring. The level of analysis and problem anticipation is extremely valuable and helps prevent money being wasted later. Think about it like hiring a builder for your extension. A bad one will cost you more when you later have problems even though their initial quote may be less. To jjb1970’s point above, it’s not a zero sum game. I can spend more upfront and get a cheaper overall deal. If a banker/solicitor/accountant helps identify a risk and manage it (eg FX risk to take a straightforward and understandable example), then the deal becomes better for all parties. (In that example, if you’re buying components from overseas, buying a forward contract to lock in the rate means that if sterling declines vs the purchase currency, your purchase doesn’t suddenly become unaffordable. There’s a cost to that, and the fx trade has to earn the bank it’s return on capital, you need a contract in place and you’ll have to account for the trade, but those costs can pale into insignificance if the consequence of a 20% fall in sterling would mean that the underlying operating cash flows can’t pay the new higher purchase cost. Even if you think we should make all our trains in the UK, we’d still need to import the raw materials...).

I don’t think you’re right about this process “increasing separation from the passenger.” If you’ve ever lent or invested money, and the professional services firms act on those persons instructions, then you understand that unless your asset delivers a service that the customer will pay for, then you won’t get your money back.

Your point on seat comfort has also been debated at length: the trains were dft specified.

I'm sure many persuasive arguments can be made for the current way our railway is financed (or at least arguments so full of jargon that hardly anyone can fully understand them), but I always remember why the current set-up happened. It wasn't because of any technical, operational or even financial motive - it was purely driven by the political dogma of John Major's government. That alone suggests a very sub-optimal arrangement, and brings us neatly back to the current state of the ECML.

[The Stationmaster]

I'm sure many persuasive arguments can be made for the current way our railway is financed (or at least arguments so full of jargon that hardly anyone can fully understand them), but I always remember why the current set-up happened. It wasn't because of any technical, operational or even financial motive - it was purely driven by the political dogma of John Major's government. That alone suggests a very sub-optimal arrangement, and brings us neatly back to the current state of the ECML.

 

So do you mean that if privatisation hadn't happened BR could have funded the replacement of HST/Mk3 stock and Class91/Mk4 stock on the ECML before now?  Or do you mean BR would have had no choice - due to public spending restrictions - but to go out and lease  replacements for those trains?

 

Somehow I suspect i might know the answer as the only more modern trains (than the ones I mentioned) to have run on the ECML, i.e. leased Regional Eurostar sets, were privately funded under a deal arranged by BR.

[newbryford]

Just had this (spin) from Virgin Trains.

 

On 16th May it was announced that on the 24 June 2018 the East Coast Main Line will no longer be operated by our sister company Virgin Trains East Coast. From that date the LNER (London North Eastern Railway) will take over, carrying on all their hard work. As you can imagine, we’re all disappointed with the decision. 

Just to reassure you that our West Coast services are completely unaffected by the decision. Your travel plans won’t be impacted or amended by this news.

 

 We’re obviously sorry to see our East-Side twin go, but are looking forward to continuing to serve you. So, from all of us, thank you for choosing to travel with Virgin Trains.

 

The Virgin Trains West Coast Team

I thought that VTEC had handed the keys back?

Reading this, it implies that the EC franchise was taken away from them.............

 

Cheers,

Mick

[The Stationmaster]

Just had this (spin) from Virgin Trains.

 

On 16th May it was announced that on the 24 June 2018 the East Coast Main Line will no longer be operated by our sister company Virgin Trains East Coast. From that date the LNER (London North Eastern Railway) will take over, carrying on all their hard work. As you can imagine, we’re all disappointed with the decision. 

 

Just to reassure you that our West Coast services are completely unaffected by the decision. Your travel plans won’t be impacted or amended by this news.

 

 We’re obviously sorry to see our East-Side twin go, but are looking forward to continuing to serve you. So, from all of us, thank you for choosing to travel with Virgin Trains.

 

The Virgin Trains West Coast Team

I thought that VTEC had handed the keys back?

Reading this, it implies that the EC franchise was taken away from them.............

 

Cheers,

Mick

 

Mick, I think it's called 'putting a positive spin on the story'

[cravensdmufan]

Just had this (spin) from Virgin Trains.

 

On 16th May it was announced that on the 24 June 2018 the East Coast Main Line will no longer be operated by our sister company Virgin Trains East Coast. From that date the LNER (London North Eastern Railway) will take over, carrying on all their hard work. As you can imagine, we’re all disappointed with the decision. 

 

Just to reassure you that our West Coast services are completely unaffected by the decision. Your travel plans won’t be impacted or amended by this news.

 

 We’re obviously sorry to see our East-Side twin go, but are looking forward to continuing to serve you. So, from all of us, thank you for choosing to travel with Virgin Trains.

 

The Virgin Trains West Coast Team

I thought that VTEC had handed the keys back?

Reading this, it implies that the EC franchise was taken away from them.............

 

Cheers,

Mick

Typical Virgin spin!  Like they were giving the impression that they had planned the build and introduction of the new trains for the ECML! 

 

Edit: Stationmaster - you just beat me to it by about one second!

Edited May 21, 2018 by cravensdmufan

[009 micro modeller]

At York today I wasn't travelling with them but with TPE but I did notice the departures were still being announced as VTEC not LNER.

[cravensdmufan]

At York today I wasn't travelling with them but with TPE but I did notice the departures were still being announced as VTEC not LNER.

VTEC will still be operating until 24th June (unfortunately!).

[ColinK]

So when will the DfT throw in the towel?

[newbryford]

So when will the DfT throw in the towel?

 

When First Group takeover?

 

 

 

Cheers,

Mick

Edited May 21, 2018 by newbryford

[rockershovel]

I travelled to Southampton and back, last week. My current employer booked the tickets, whereupon my problems began...

 

Not having had a pre-booked rail ticket in a long while, I didn’t have confidence in the “collect from the machine” system. Just as well, really, because I couldn’t get correct prompts from the screen (tickets booked through an agent have the card setting set to “any” but the screen doesn’t tell you that). The “customer information” desk didn’t appear to know this rather important detail, and also told me that I couldn’t get a SW Rail ticket from a VTEC machine...

 

So, the following day, I went to the ticket counter where, with some discourtesy and reluctance they printed my tickets.

 

Train (0610 Peterborough to KX) was overcrowded, no seats.

 

SW Trains 0735 Waterloo to Southampton was unremarkable and not over-busy. Got off at Eastleigh, which was my actual destination. Return journey was 1335-ish from Southampton Parkway to Waterloo, again unremarkable.

 

Now I was at Kings X, two hours ahead of my booked return, so I opted to get on the first train - 1530 to Glasgow, stopping at Peterborough. Crowded, dirty train, no seats... which meant that no ticket inspection reached me before Peterborough, but it’s clear that it’s unwise to miss, or change your travel time with VTEC, which is a considerable problem for me on occasions. I did have a peak-time reservation for an off-peak train, but it seemed the sort of thing best not put to the test.

 

So, “pass marks” for SWT and a couple of raspberries for VTEC. From my limited experience of them, and the views offered by commuters I know, the Bearded One won’t be much missed..

[Ron Ron Ron]

Train (0610 Peterborough to KX) was overcrowded, no seats.

SW Trains 0735 Waterloo to Southampton was unremarkable and not over-busy.....

 

....Now I was at Kings X, two hours ahead of my booked return, so I opted to get on the first train - 1530 to Glasgow, stopping at Peterborough. Crowded, dirty train, no seats... which meant that no ticket inspection reached me before Peterborough.....

 

So, “pass marks” for SWT and a couple of raspberries for VTEC. From my limited experience of them, and the views offered by commuters I know, the Bearded One won’t be much missed..

If the trains are overcrowded with no seats available, how is it going to be any different with LNER?

Same service, same timetable, same trains.

[jjb1970]

The concept of peak and non-peak trains and incentivising use of off peak trains by offering discounted tickets is not unique to VTEC, nor is it unique to British railways. Regardless of who operates the trains they are limited by the number of train paths and platform lengths and if demand is higher than capacity at certain times of day you will get over crowding. The one railway I genuinely consider to be better than ours based on my own experience is that of Japan but I suspect Japanese commuters dream of having rush hour trains as lightly used as ours.

[rockershovel]

If the trains are overcrowded with no seats available, how is it going to be any different with LNER?

Same service, same timetable, same trains.

That much has never been any different, under any management.

 

Peak and off peak fares are nothing new, although (as I’ve previously remarked) the de-facto segregation of the HST services into a premium service has damaged goodwill irreparably among regular travellers.

 

But the whole “mandatory reservations” business is new, and highly unwelcome; the information desk and ticket business was no recommendation, and the cleaning needs improving.

Edited May 22, 2018 by rockershovel