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New East Midlands direct award franchise agreed

16 Sep 2015

UK: The Department for Transport and incumbent operator Stagecoach Group announced the agreement of a new directly-awarded East Midlands franchise on September 16.

The current franchise covering inter-city services on the Midland Main Line and regional services across the East Midlands has been operated by Stagecoach subsidiary East Midlands Trains since November 2007. The new franchise will run from October 18 2015 until March 4 2018, with the operator forecast to make £150m of premium payments to the government. DfT has the option to extend the franchise by up to one year on terms which have already been agreed.

The franchise agreement includes £13m of spending, of which £8m is to be directly funded by EMT.  There will be upgraded 4G connectivity and 15 min of free wi-fi on London trains; more ticket machines and help-points; improvements to the online delay compensation system and on-train catering; extra cleaning staff; an in-house disability expert, improved passenger assistance and  £1m of accessibility works; an extra £0·25m for community rail; and continued investment in apprenticeships and graduate schemes.

Stagecoach said the package was ‘ultimately a government investment in the East Midlands Trains franchise’, which would ‘deliver significant premium payments to the Department for Transport and an overall increase in franchise value over the medium and longer term’. 

Stagecoach said the award of the new contract ‘does not materially affect’ its expectation of overall group profitability. Stagecoach is to provide inter-company loan facilities of up to £41m to EMT and arrange a performance bond of £15m and a season ticket bond of £8m. These will replace all loan facilities and bonds relating to the current franchise.

‘This is a significant package of investment for customers travelling on East Midlands Trains, Britain's most punctual long-distance train operator’, said Stagecoach Group CEO Martin Griffiths,. ‘It will build on what our team has achieved over the past eight years and deliver further valuable improvements for the millions of passengers and many communities who rely on the East Midlands Trains network.

  • Stagecoach has been shortlisted for the new TransPennine Express franchise which is expected to be announced in December 2015 and start in April 2016, and through a joint venture with Abellio is shortlisted for the new East Anglia franchise which is also expected to be announced in June 2016 and commence in October 2016.