Originally Posted by
BerksFlyer
Firstly, although East Coast is profitable it's nowhere near as profitable as the new company will need to be to pay the premiums it has promised to the government. East coast returned £202.8m in 2012/13 and £216.8m in 2013/14. Just look at how much Stagecoach/Virgin have offered and you'll soon realised that something needs to change dramatically. The vast majority of costs are fixed so the only realistic two ways to get more money are increase fares or get more bums on seats. The existing pricing strategy will definitely not deliver what's needed.
Secondly, how do you get more revenue from finding timetabling efficiencies?
Exactly - the current revenue model has been perfected very well over the years and I doubt there could be any more significant efficiencies.
People said the same when National Express took over, but it's obvious that they can't pay more to the government, while improving the quality of service delivered to the passengers and not increasing fares above inflation.
The only way I can see them meeting targets is if the new trains are significantly more efficient than the old ones but the extra amount they pay the government is likely to be more than any efficiencies bring in.
That said since posting I've read the Stagecoach press release and interested in the fact they intend to staff more of the first class lounges. Newcastle used to be staffed in the GNER days but National Express enhanced that away.
They also mention free WiFi, which is currently only free in First Class. This was attempted by National Express and only meant that the increased demand meant that the wifi was even more unusable than ever.
My conclusion: the government hasn't learned the mistakes of previous franchises. To allow National Express to repeat the same mistakes as GNER was foolish, to do it again is totally negligent!