Docklands Light Railway.

UK: On July 4 Transport for London named the Keolis Amey Docklands joint venture of Keolis (70%) and Amey Rail (30%) as the winner of the new franchise to operate and maintain the Docklands Light Railway automated light metro.

The contract runs from December 7 2014 until April 2021, with an option for an extension until 2023.

TfL will pay an index-linked fixed fee nominally worth ‘in excess of £700m’ over the life of the franchise, with adjustments based on performance against targets.

TfL said the focus would be on maintaining performance ‘in the context of delivering more services to meet growing demand’ on the 38 km network which recorded 101 million passenger-journeys in 2013-14.

The new franchisee will be required to improve asset management systems to enable better decision-making. Potential variations to the franchise have been ‘pre-priced’, and contract terms enable TfL to share the benefits of any infrastructure works which reduce operating costs.

Infrastructure maintenance on the DLR branch to Lewisham is undertaken under a separate PFI concession expiring in 2021 and is excluded from the franchise.

The current DLR franchise includes a small fee per passenger-journey intended to encourage the operator to increase ridership, but this has been removed from the new contract. In practice it has not incentivised growth, and TfL says that the DLR has a high level of inelastic base demand with factors affecting farebox revenue being largely outside the franchisee’s responsibility.

The prequalified bidders for the contract were a the Keolis (UK)/Amey Rail joint venture, a Go-Ahead Group/Colas Rail JV, Stagecoach Rail Projects and incumbent Serco which has operated the DLR since 1997. Go-Ahead/Colas subsequently withdrew. Interfleet, Steer Davies Gleave and Grant Thornton advised TfL on the procurement.

‘As the world’s largest operator of light rail networks, Keolis looks forward to using our global expertise to enhance one of the capital’s iconic public transport networks and we will work closely with all stakeholders to deliver a world-class service both during this franchise and beyond for London’, said Keolis UK CEO Alistair Gordon.

Serco said the DLR franchise brought it revenue of £90m in 2013, or 2% of the company’s overall revenues, ‘at a margin that was significantly below the average level the group achieves on its contracts.’

David Stretch, Managing Director of Serco's Transport business, said that while the company was ‘obviously disappointed’ not to win the new contract, ‘we remain excited by the opportunities we see to transform services for passengers in the transport market, as illustrated by the recent award of the 15-year contract to run the Caledonian Sleeper service.’