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Virgin Trains was chosen to run the London-Edinburgh rail route, fending off rival bids from FirstGroup Plc and Channel Tunnel express operator Eurostar International Ltd. and delivering a boost for Richard Branson a month after the fatal crash involving his space venture.
Virgin and partner Stagecoach Group Plc will take over the East Coast Main Line linking London’s Kings Cross station with Edinburgh via Leeds for eight years starting in March, the Department for Transport said today.
The award, which followed reports that Eurostar was favorite to scoop the contract, gives Virgin control of Britain’s two busiest long-distance routes between London and Scotland. The East Coast franchise will use a 2.7 billion pound ($4.3 billion) fleet of 65 new high-speed trains from Japan’s Hitachi Ltd. that are due to enter traffic in 2018.
“This is a fantastic deal for passengers and for staff on this vital route,” Transport Secretary Patrick McLoughlin said in a statement. “It gives passengers more seats, more services and new trains.”
Virgin secured the East Coast award at its third attempt, adding Britain’s second-busiest trunk route to its West Coast line that links London with Birmingham, Manchester, Liverpool and Glasgow and is Europe’s top mixed-traffic line.
For U.K. billionaire Branson, the victory rounds off a year that’s seen his Virgin Galactic space venture rocked by October’s crash in the Mojave Desert and premier brand Virgin Atlantic Airways Ltd. rein in its ambitions to focus on U.S. routes after a deal with Delta Air Lines Inc.
For FirstGroup, the loss comes as a further blow after its failure this year to win the Thameslink and Essex Thameside franchises and the loss of existing Scotrail and Caledonian Sleeper contracts, It retains only the Great Western route, the U.K.’s third long-distance service, and the TransPennine line.
Shares of Aberdeen, Scotland-based FirstGroup closed 9.7 percent lower on Nov. 24 after the Sunday Express newspaper reported that the East Coast deal would be awarded to Eurostar and partner Keolis, both of which are controlled by French state rail company SNCF.
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