FirstGroup signs new deals for TPE and SWR franchises

New National Rail Contracts have been agreed between FirstGroup and the Department for Transport for the South Western Railway and TransPennine Express franchises.

They are the first new contracts to be announced under the replacement system for franchising unveiled on May 20 as part of the Williams-Shapps Plan for Rail (see pages 6-11). 

The new contracts were due to commence on May 30 (after this issue of RAIL went to press), when the current Emergency Recovery Measures Agreements (ERMAs) expire. They will have a two-year term to May 2023, with the option to extend them by up to two further years. 

FirstGroup will bear no revenue risk and only limited cost risk under the new arrangements. Its annual fee will consist of a fixed management fee plus performance fees based on delivery of customer-focused performance metrics which include punctuality, customer satisfaction, finance and business management. 

This means that for FirstGroup’s 70% share of the First MTR joint venture for SWR, it will receive some £3.3 million per annum with an opportunity to earn an additional £9.9m.

Read more in RAIL 932

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