Disclaimer: the posts in the blog section are the views of the individual contributor and may not reflect the views of the Save East Coast Rewards campaign
Hi, I'm Ed and I used to post on Twitter as ^EM, I've been away for a bit, moved to Scotland and so became less active with this campaign. I've been asked to help out for a few days so you'll see me on Twitter. I've also been VTEC free for six months, if I need to get to London I just fly. If I need speed I can fly in to London City Airport and be in Central London quickly. Otherwise flying to Gatwick is normally cheaper than the train and still quicker (just avoid the overpriced Gatwick Express).
So what's changed since I was last here? First of all the number of nasty trolls has increased on Twitter and now the fact that Virgin Trains East Coast have massively overbid for their franchise has become apparent.
I shook my head when the government awarded National Express the franchise after GNER failed because they bid even more than GNER did for a shorter franchise. You knew they were either going to fail or make massive cutbacks on-board and try to increase fares to make up the difference. In the end all of this happened. They cut back on the on-board product, increased fares where they thought they could get away with it, reduced non-essential maintenance and reduced staffing numbers both on-board and in places like the first class lounges. Despite all this cutting they still failed.
- GNER bid £1.3 billion for a 10 year franchise
- National Express East Coast (NXEC) bid £1.4 billion for the remainder of that franchise (just over 7 years) after GNER failed
- The government run East Coast managed to return over £1 billion in profit over to the government over 5 years
- Virgin Trains East Coast (VTEC) have bid £3.3 billion for an 8 year franchise
At the time I thought this bid was a recipe for disaster but in their first year of operation when I was a regular user they seemed to be doing fine, building on the success of their previous franchise but the only mistake being the abolition of the loyalty scheme. The on-board service remained as good as it had always been, staff morale was also very high, all was good. If I hadn't moved to Scotland I would likely still be using them, but the timings, cost, convenience and loyalty scheme tip the balance to British Airways. VTEC seemed to be operating on a principle of invest to grow: new interiors, refurbished lounges and more interesting menus.
Then in March (2017) an article in The Times (Stagecoach's east coast escape) showed things were not as rosy as it appeared behind the red paint. A quote from the article:
The operator is significantly behind on its passenger growth projections on the London to Edinburgh mainline on which it has promised to pay more than £3 billion in excess profits to the Treasury through to 2023.
How could it improve growth? Offer incentives to travel. East Coast didn't offer a loyalty scheme out of the goodness of its heart, it was there to increase sales and it was effective in doing so. British Airways are certainly not a charity but they see their frequent flyer scheme as a key way of driving custom, VTEC needs to be attractive over the airlines by every possible measure particularly on the key Edinburgh to London route.
Analysts at HSBC say they believe that Stagecoach is close to a deal with the department to end its ambitious programme of payments. Virgin East Coast was meant to generate enough profits to cover a £278 million payment to the Treasury this year rising to £346 million next year and to £600 million by 2023.
So there we have it. If this article is accurate there's a good chance that the government will let them reduce their promised payments. It would look bad for the government if a third operator collapsed on the East Coast Mainline so Stagecoach are in a good position to negotiate their payments down. On top of this we're starting to see cutbacks on board. Recently changes have been made to crewing arrangements to have fewer staff on board most trains. According to the press releases the changes in crewing are supposed to be improving on-board service but since returning to Twitter I've noticed an increase in complaints about things like the Foodbar being closed, no hot food in first class and supply shortages. If people can't rely on the catering facilities being available they're more likely to bring their own food and therefore make the catering operation less viable in the future. Of course this may be what they want so then they can reduce the catering provision to the bare minimum.
As East Coast was nationalised they didn't have a fixed amount they needed to pay back the government, the government got whatever profit EC made. This meant East Coast could concentrate on offering a quality service without needing to worry about a shortfall in premium payments. They've shown that in five years they could return over £1 billion to the government, this might be less than VTEC promised but as we can see promises mean nothing if they can't afford the repayments.
The new trains in the pipeline (class 800 - christened Azuma by Virgin) were ordered by the government and would be used by whoever was operating the franchise. The new trains mean more seats available on the route and a wider range of destinations to be served. It's quite possible that East Coast could have beat the £1 billion profit in their first five years once these newer, more efficient trains are rolled out.
If the government had left something that was working alone we would still have a 'strong and stable' operator on the East Coast that had no need for on-board cutbacks if there was a temporary drop in demand. Unfortunately as NXEC showed too many cuts can be damaging.
Feel free to Tweet me @SaveECRewards while I cover for the week.