Although Stagecoach were quick to issue a statement after this week's news that their franchise was in trouble, we've not heard anything so far from Virgin. Although Virgin only own 10% of Virgin Trains East Coast they're always happy to take the credit when things are going well and also act as the face of the company when some publicity is needed. Seeing news articles referring to Stagecoach East Coast has probably confused a lot of regular passengers who thought they were customers of Virgin (of course most readers will know that there's many Virgin companies that have little Virgin ownership).
For those who've not seen it, here's the statement from Stagecoach Chief Executive Martin Griffiths
So this makes me wonder, will this bad publicity mean that Virgin no longer want to be associated with the East Coast or, assuming the franchise lasts long enough, will Branson be wheeled out again as soon as there's a bit of slightly positive news?
For the franchise the future looks to be one of the following outcomes:
- The government offer Stagecoach to run the franchise on a management contract until they can run a full franchise competition to find a replacement. This is what Chris Grayling called Stagecoach operating the franchise on a not-for-profit basis.
- As above but Stagecoach refuse to run the franchise on this basis meaning the government needs to explore other options.
- The government takes direct control of the franchise similar to what was done with East Coast through Directly Operated Railways.
- The government fast tracks a bidding process to find a short term franchisee to take over the service for a few years.
From a passenger and staff point of view the worst option would have to be finding a new franchisee at short notice. This would add more uncertainty for everyone, the government has to ensure there's some stability in the franchise as those who use or work on the ECML have been messed about more than any other franchise.
The odd thing about any of these options is none of them mean for certain whether the Virgin brand will stay or go from the East Coast.
- If Stagecoach continue running the franchise on a management contract there's a number of reasons it may not use the Virgin brand. One may be that Virgin might want to pull out of the contract as they see this damaging to their brand, another reason might be because the government will have more control over a management contract and want the route to have neutral branding, possibly in the hope that those not following too closely think the government has 'kicked Virgin out' even though it's really still Stagecoach behind the scenes.
- On the other hand if the government or another company start operating the franchise you'd expect the Virgin name to definitely go, but even that's uncertain. Virgin have licenced their brand to companies even where they don't own any share. So even if they lost the 10% stake in the company they may be happy still getting money for use of their brand. Virgin Media is an example of a 'Virgin' company that Virgin has no share in.
- I do think the situation where the East Coast keeps the Virgin brand but has no Stagecoach or Virgin involvement is highly unlikely. I think it's more likely that Virgin would no longer want to be associated with this service and would rather be finished with the East Coast.
So at the moment anything is possible. I think the government taking direct control is the safest option, but that does not automatically mean a return to the East Coast days, they need to ensure they have a decent management team in place. They could even keep some of the existing management team in place if they wanted to remain (David Horne was not part of the bidding process he just had to live with the result!)