The eight-year franchise starts next spring and will see Stagecoach and Sir Richard Branson’s Virgin Group create a new company, Inter City Railways, to run the route. Despite the fact Stagecoach will own 90% of the business and Virgin Group just 10%, the company will be badged Virgin Trains with a new fleet of its trains running on the route.
The consortium has said it will invest £140m into the route to improve journey times, increase capacity and provide free Wi-Fi at stations and on trains. It will pay the Government £3.3bn for the eight-year contract.
The East Coast mainline route has proved difficult to manage over the past decade, with private sector operators forced to cede control after suffering financial difficulties. GNER, which was awarded the franchise in 1996, saw the franchise switch to National Express in 2006 after it ran into problems but its successor fared little better, forced to give up the route in 2009 after passenger growth was derailed by the recession.
Since then it has been under state ownership, run by Directly Operated Railways. It has been successful, returning £1bn to the government over the five years it operated the line and seeing improving passenger feedback as it improved performance.
However, questions were raised over passenger growth figures, which failed to keep up with the rest of the rail network. East Coast saw passenger journeys increase by 4.5% in the year to March 2014, below the 5.73% increase across the overall network in the 12 months to the end of August.
The Virgin brand
The consortium will hope the strength of the Virgin Trains brand can help boost those passenger numbers. According to YouGov BrandIndex Virgin Trains sits second in a list of 25 transport operators, behind just Eurostar, across a range of metrics including Impression, Quality and Buzz (a measure of the positive and negative things said about a brand).
Its overall Index score (a measure of metrics including Buzz, Reputation, Value and Recommendation) is also the second highest at 16.1. It recently launched an £8m marketing campaign, devised by Krow, Profero and TMW, that introduced the new strapline “Arrive Awesome” and focused on its service improvements and emotional engagement with passengers.
The strong brand and relationship with passengers may be why the consortium has opted for Virgin over Stagecoach for branding, despite Stagecoach owning the majority of the franchise. The combination of the strong Virgin brand and Stagecoach’s experience in running an operating the route could prove a winning combination.
Stagecoach, while praised by industry analysts, has a much lower standing among consumers, sitting at number 18 for its Index score on YouGov’s BrandIndex and falling down on metrics including Buzz and Impression.
Jessica Swinton, consultant at branding agency Brand Union, says the Virgin brand offers benefits due to its “notorious” anti-establishment nature, premium offering and “bold challenger nature”, adding that it is likely to shake up the route through new trains and better services.
However, she cautions that there are causes for concern over its reliability and value for money.
“The brand does present an exciting future for the line… but to provide a true public service that is accessible to all it will have to do more than offer broadband and bright colours. It’s imperative that it handles a seamless takeover and puts minds at ease in order to build trust with the millions of passengers it will be carrying every year.”
Virgin Trains declined to comment for this article.