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National Express pulls out of Nürnberg S-Bahn bidding

25 Oct 2016

GERMANY: National Express Group announced on October 25 that it had withdrawn its winning bids for two parallel 12-year contracts to operate Nürnberg S-Bahn services from December 2018.

The UK-based transport group said it had informed Bayern railway agency BEG that ‘it is no longer in the interest of National Express and our shareholders to proceed’ with the contracts, and the authority ‘understands and respects our decision.’

When BEG named National Express as preferred bidder for the contracts in February 2015 it was the first time that a major S-Bahn contract in Germany had not been won by DB.

However, incumbent DB Regio initiated a series of legal challenges to the planned award, as a result of which a court required BEG to re-evaluate the bids using stricter guidelines relating to the allocation of financial guarantees between subsidiaries and parent companies. Having done so, BEG once again selected National Express as preferred bidder, and at the end of July a tribunal found there had been no faults with this stage in the award process.

National Express said the introduction of new rolling stock from the start of the operating period had been central to its bids. It has now decided that the delays to the contract award process mean that any new vehicles would be ‘substantially delayed’, which could lead to the operator incurring ‘prohibitive’ additional costs.

The company said it remained ‘fully committed’ to the German rail market, and was planning to submit a number of bids within the next year. It would take a ‘prudent and disciplined’ approach to bidding, and hoped to work with BEG in the future.

Matthias Stoffregen of German independent operators’ association Mofair told Railway Gazette that the announcement was 'terrible news' for competition in the rail industry. 'We can understand National Express' withdrawal, because for them the risk became too high’, he said. ‘As an enterprise responsible to their shareholders they are in a different position to that of the state-owned DB which can endure a legal dispute virtually indefinitely. It shows that the tendering of contracts in Germany is still not as deeply rooted as we think. There was strong political pressure to leave everything as it is. We are very sad and upset that DB's "legal dispute" business model was successful once again.'

BEG said it would now undertake a new evaluation of the other bids it had received for the Nürnberg contracts, with the aim of identifying a new preferred bidder by the end of the year. It stressed that the contact would not automatically be awarded to DB Regio.

The contracts cover five routes carrying 16 million passengers a year, 80% of which are commuters. They are expected to generate revenues in excess of €1·4bn.

In 2014 National Express was one of a number of potential operators which withdrew from the Berlin S-Bahn ‘Ring & Branches’ competition, leaving incumbent DB as the only candidate. Potential bidders were understood to have been concerned about the complexity of the process.

  • National Express is to submit a bid by the end of the year for a contract to operate the Casablanca tramway from December 2017.