Awarding franchise contracts for passenger transport services aims at increasing the performance of delivering efficient transport services. The policies launched in Great Britain are aimed at encouraging operators to invest in improving services and the facilities available to passengers. “Our commitment towards long-run franchises that offer an optimized programme of railway operators’ investments will facilitate these investments”, shows the “Railway Reform Book” published in March 2012 by the British authorities.
The document encourages measures aimed at reforming the franchise system. It includes measures aimed at launching more flexible franchise specifications to enable the operators to answer to new requirements, while still protecting the interests of taxpayers. Among other fiscal measures, mechanisms and facilities, the reform encourages longer franchises giving train operators stronger incentives to invest, more flexibility about how ser-vices are configured, but with the Government continuing to specify a core level of services, outcome-based requirements, for instance on customer satisfaction and performance to ensure that train operators’ interests are better aligned with those of passengers.
For this purpose, at the beginning of the year, Transport for London (TfL) extended by 18 months the contract with Serco Docklands for the operation of Docklands Light Railway (DLR). The value of the extension of the contract in force until September 2014 is of GBP 100 Million (EUR 119 Million), the company being responsible for delivering services, infrastructure and rolling stock maintenance. In fact, the extension of the contract awarded by TfL is the outcome of Serco Docklands’ success during the Olympic Games when it carried 7.2 million passengers (an increase of over 100% in the number of passengers).
DLR is one of the first light rail systems in Great Britain being equipped with the most modern automatic train control systems in the world. It is 27km long and has 34 stations with 70 light rail vehicles running and, according to Serco, the company’s development strategy includes more projects for the extension of the system.
Nevertheless, in April 2013, TfL nominated four bidders for a franchise on the operation of Docklands Light Railway (DLR) in London starting with September 2014. The selected bidders are Stagecoach Rail Projects, a JV of Keolis (UK) and Amey Rail and another JV including Go Ahead, Colas Rail and Serco. Thus, TfL issues an invitation to bid to shortlisted companies and then it will select the winner.
TfL wants to make sure that within the new franchise the reliability of the new service will continue to improve and that maintenance works will be carried out on the long term on rolling stock, stations and lines. The new franchise will start operation on 14 September 2014. Although the short list of bidders was published this year, companies will have little time to complete legal procedures and to draft the projects necessary to the development of services and of the transport system. To find out more about the advantages that franchises have for operators, authorities and passengers and about the importance of this concept in the development of public transport, Sir Michael Robson, Managing Director of Robson’s International Rail Consultancy has answered a few questions for us.
Railway PRO: At the end of April, Transport for London (TfL) has nominated four offers for a franchise on the operation of Docklands Light Railway (DLR) in London. Although the contract will be signed this year, the franchise will become effective starting with September 2014. How does the principle according to which the franchise enters operation one year after the conclusion of the contract operate?
Michael Robson: In order to ensure a smooth transfer of the franchise it is necessary to have a period of between 6 months and a year to complete the legal formalities. These formalities would include but not limited to the following: ensuring that a large enough performance bond was in place to cover any default by the new franchisee; recruiting and training new senior staff, as it is usual that when a franchise changes the senior staff leave; organising for the transfer of the remaining staff to the new company including bank details etc; preparing and printing new publicity with a different company logo; organising new premises for the HQ of the new company; creating a new lease for the rolling stock to the new franchisee if required; setting up new contracts for the supply of goods and services; dealing with station/train depot access issues; obtaining a safety certificate for the new operator.
Railway PRO: What is the goal of this practice keeping in mind that the beginning of the activity occurs one year after the conclusion of the contract?
Michael Robson: To ensure that there is a seamless handover from the old to the new franchise operator and that the passenger is not inconvenienced. This pro-cess has operated on many changeovers on the main line network with no problems at all and is proven way to ensure a smooth handover. It also ensures that there is
adequate time to ensure that there are no surprises the day before the new operator takes over.
Railway PRO: Is this period of time favourable to the operator or to the authorities?
Michael Robson: It is favourable to both parties and most importantly the passengers as it allows time for all the ne-cessary documentation and staff to be in place for the start of services by the new franchisee so that the passenger is not inconvenienced in any way.eg season tickets for monthly/annual travel are valid on the new operators services.
Railway PRO: Is this type of contract an example for the other European countries in delivering an efficient transport service?
Michael Robson: I would be strongly in favour of tendering all public rail ser-vices as I believe that by doing so the qua-lity of the service offered to the customer improves through the provision of new/refurbished rolling stock along with improved marketing providing new fares to attract people to use the train at off peak periods. Tendering can also drive down costs with reductions of up to 20% in terms of providing the service being achieved. In the UK, where all public rail services are franchised, passenger journeys last year were 1.44 billion which is the highest since the 1920’s with commuter traffic doubling into Birmingham. The tender for the new services may be via a franchise or concession agreement, both of which will drive down costs and improve productivity. The correct tendering of services also allows the tendering authority to see exactly how much the service provision will cost and allows them to take informed decisions on the future provision of services.
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