Normal franchise agreements are being temporarily suspended by the Department for Transport, due to the COVID-19 outbreak.
All revenue and cost risk is being transferred to Government for an initial six-month period. Operators will run services day-to-day for a small predetermined management fee, set at a maximum 2% of the franchise cost base before the outbreak. The maximum fee attainable will be far less than recent profits earned by operators.
Should an operator not wish to accept an Emergency Measures Agreement, then the Government’s Operator of Last Resort will take over.
“People deserve certainty that the services they need will run or that their job is not at risk in these unprecedented times,” said Secretary of State for Transport Grant Shapps.
“We are also helping passengers get refunds on Advance tickets to ensure no one is unfairly out of pocket for doing the right thing.
“These offers will give operators the confidence and certainty so they can play their part in the national interest.”
The DfT said that allowing operators to enter insolvency would cause significantly more disruption to passengers and higher costs to the taxpayer.
In a statement, it said its measures would ensure that trains necessary for key workers and essential travel could continue to run, and warned that no other passengers should travel. Already there has been a 70% drop in passenger number, while ticket sales are down two-thirds from the equivalent date in 2019.
From today (March 23), passenger services have been significantly reduced across the country. Advance tickets are being refunded free of charge, while all season ticket holders can claim a refund for time unused on their tickets.
“The rail industry is working together so that people and goods can keep making essential journeys during this unprecedented national challenge, getting key workers to hospitals, food to shops and fuel to power stations,” said Rail Delivery Group Chief Executive Paul Plummer.
“The industry strongly welcomes the Department for Transport’s offer of temporary support, and while we need to finalise the details this will ensure that train companies can focus all their efforts on delivering a vital service at a time of national need.”
Transport Focus Chief Executive Anthony Smith said: “Creating stability is important for passengers and for the wider economy - train operators must survive to keep services running in these challenging times and get back up and running again as soon as this is over.
“It is right that Government and train companies have recognised the exceptional circumstances posed by Coronavirus and allowed refunds on Advance tickets and unused time on Season tickets. This victory for common sense will be a welcome relief for passengers who feared that they had lost their money.”
- For the FULL story on how COVID-19 has already started affecting the railway, read RAIL 901, published on March 25, and available digitally now.
- For the FULL story regarding timetables and the railway's ongoing response to the COVID-19 situation, read RAIL 902, published on April 8, and available digitally from April 4.