YRP Spring Seminar: Richard Brown Eurostar Chairman on Franchising
Richard Brown Eurostar Chairman on Franchising. Richard Brown CBE FCILT FRSA DL is the Chairman of Eurostar and on the board of HS2. The event was held at Dentons, 1 Fleet Street on London on Thursday 25th April.
“In many respects the industry is doing better than generally appreciated”
Mr Brown was keen to illustrate that in many respects, the rail industry was doing better than generally appreciated. Passenger use has grown rapidly in the last decade and the UK runs the second safest railway in Europe. All graphs and data in this article have been kindly provided by Mr Brown.
Passenger Journeys
Above: Passenger journey per year have grown rapidly from 800m in 2000/01, to 1,100m in 2005/06 to 1,500m in 2010/11.
Passenger Kilometres – EU Comparison
Above: The graph shows that the UK leads Sweden, Belgium, France, Netherlands and Germany in passenger kilometres. (Source: OECD).
Europe’s Second Safest Railway
Above: The UK has 0.003 fatalities per million train kms. That is one fatality per 3 billion kilometres of trains travelled. This is second only to Luxembourg, which registers as 0.000 and more than five times less than France, at 0.016.
Safety of Rail Travel versus Car
Above: The last decade has seen the number of fatalities from passengers travelling on rail reduce to almost zero. The government and the car industry has also gone to considerable lengths to reduce the number of fatalities, from 10 fatalities per billion kilometres travelled in 1970, to less than 1.5 in 2010.
Investment in rail industry at record levels
• Thameslink – Infrastructure £4.5 bn
• Thameslink – Trains £1.5 bn
• CrossRail – Infrastructure £14.5 bn
• CrossRail – Trains £1.2 bn
• IEP – ECML and GWML £2.9 bn
• HLOS – Enhancements and capacity £9.4 bn
This totals £34bn, which is approx. £5bn per annum.
Plus, if HS2 gets the go-ahead, that’ll be a further £2-3 bn per annum for many years to come.
Four-part process on how rail franchises work
Part 1 Bidding: Numerous companies bid for a franchise whenever they come up (between 7 – 10 years).
Part 2 Winning: The highest bid has won in 38 of 39 of the rail franchises that have been made available since British Railways was privatised in 1993.
Part 3 Branding: The winning rail franchise company either apply a new brand or keep the existing brand name (eg: South West Trains, Southern etc.). They then lease the trains, infrastructure and IT systems for the duration of their franchise.
Part 4 Operating: The only way that you can make more money from your franchise is to get more bums on seats – so companies all focus on this. They use the brand to attract more customers to use the train. One effective way of doing this is by training the staff in customer services, as they are the main interface between customer and travel.
Is the current tender process the best thing for the rail industry?
Richard Brown referred to the current Crossrail project, where 40% of the evaluation is based on price, rather than nearly 100% for the rail franchises. With Crossrail, much more consideration was given to the companies who were most capable of completing the work to the required standard.
With rail franchises, once you have won with your highest bid, there are relatively few customer satisfaction requirements that you have to meet – which means that things like staff training, customer insights, marketing and PR, all have to take a hit later on.
“Virgin’s strength comes from their consumer insights”
Mr Brown’s presentation was followed by a Q&A session. During this, I asked, “Which was the strongest brand amongst the franchises?”
RB: “Virgin is best – which is noticeable because they are not a railway company – they are a lifestyle brand. Their strength is in their consumer insights, marketing and PR. Stagecoach has also shown noticeable progress and has grown year on year. Eurostar, well, we’re a bit different and we run more like an airline. We had high expectations to live up to at the start, which we’ll admit we didn’t meet, but we’ve grown into it.”
Promoting Success
Audience member, Stephen Head, Consultant – Advanced Rail Control Systems at Interfleet Technology asked: “Who should do more to promote the success of the rail industry?”
RB: “Some could say ATOC, others Network Rail – but if they did it then the rail franchises would potentially get jealous and think they were taking the credit for all their hard work, so that leaves the Government – who should certainly do more. The ministers in particular.”
