The East Coast Main Line franchise was recently won by City Railways, a joint project of Stagecoach and Virgin Group. The business case that won the contract was supported by advices to City Railways from L.E.K. Consulting. The franchise will start running the service as of March 2015.
The East Coast Main Line is a 393-mile long high-speed railway-link between London and Edinburgh that plays an important role for the economic health of several areas of England and Scotland. The franchise to run the line was re-nationalised on 14 November 2009. In March 2013 the Secretary of State for Transport announced that commercial bids would be accepted on the future running of the line until 2023, with an expected start date in early 2015.
The franchise was won in November 2014 by City Railways, a joint venture from international public transport group Stagecoach* and international investment group Virgin**, with analytic support from global management consulting firm L.E.K Consulting. The commercial services are planned to start as of March this year.
L.E.K. Consulting provided commercial bid support to Stagecoach and Virgin as part of their winning bid for the InterCity East Coast rail franchise. The firm led the passenger demand and revenue forecasting and modelling that underpinned Stagecoach and Virgin’s commercial proposition. Over six months, L.E.K.’s team conducted a detailed study of the factors likely to affect passenger demand, paying particular attention to passenger segmentation, capacity and competition with air and road travel. InterCity East Coast is a high revenue franchise that pays premiums to UK Government, so developing a sophisticated revenue forecast had a critical impact on the competitiveness of the bid.
Andrew Allum, the L.E.K. Consulting partner who led the project, comments: “Stagecoach and Virgin bring the right combination of commercial skills and customer service expertise to enable East Coast to fulfil its potential as a premier rail line. We are delighted for the team at Stagecoach and Virgin, whose commitment has been rewarded with this franchise win. We look forward to seeing the exciting improvements planned for the next East Coast franchise and are proud to have been part of the bid team.”
* Stagecoach has a 90% stake in the City Rail venture and a 49% shareholding in Virgin Rail Group, which operates the West Coast rail franchise. The company also runs the South West Trains, Island Line and East Midlands Trains networks.
** Virgin has the other 10% stake in City Rail and 51% shareholding in Virgin Rail Group.