Management contracts for franchises as coronavirus crisis hits

Emergency Measures Agreements are being implemented for rail franchises following a major fall in passenger demand due to the coronavirus crisis. The news comes as operators across the network introduced reduced timetables from 23 March.

The agreements, if taken up by operators, will suspend the normal financial mechanisms of franchise agreements, transferring all revenue and cost to the Government. Operators will continue to run services for a pre-determined management fee, which will be set at a maximum of 2% of the cost base of the franchise before the coronavirus pandemic began. If an operator does not wish to accept an Emergency Measures Agreement, the Government says the Operator of Last Resort stands ready to step in; OLR is already operating LNER and Northern.

Several franchises have reported financial difficulties in recent months and have been operating under onerous contract provisions, including South Western Railway and TransPennine Express. Two franchises, Great Western Railway and Southeastern, have been operating under short-term direct award agreements ending on 31 March, with no new agreement for either franchise yet confirmed. GWR has confirmed it is transitioning onto an Emergency Measures Agreement, with discussions continuing with Government about next steps once that agreement ends. Go-Ahead, the 65% majority owner of Southeastern, said in a statement on 23 March that a decision is expected by the end of March on a potential direct award contract for Southeastern.

Some operations are not let as franchises by the Department for Transport, including the London Overground and Crossrail concessions, Merseyrail, and the Welsh and Scottish franchises.

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