27th Mar 2014 09:16
LONDON (Alliance News) - Serco Group PLC said Thursday it has won a 22-month interim franchise agreement to continue operating the Northern Rail franchise with its 50:50 joint venture partner AbelIio on behalf of the UK Department for Transport until February 2016.
The international service company said the deal has been co-signed by all five North of England Passenger Transport Executives, which ensures that the government can continue to work with Serco to deliver services tailored to needs of passengers in the region, and will see Northern Rail Ltd continue to operate local and regional rail services across the north of England.
Northern Rail is also working with the DfT to secure the introduction of electric trains to the newly electrified rail routes in the north.
The franchise deal began in December 2004, since then Serco and Abellio have invested around GBP30 million into the railway. During this time, the companies have also achieved performance improvements, such as a rise in punctuality to 90% from 84%, a doubling in fleet reliability, and a 47% increase in annual passenger numbers from 63 million to 94 million each year.
Serco said the new interim franchise agreement, which is anticipated to be run at a lower profit margin than the existing franchise, includes a gain share agreement to incentivise driving continued performance improvements.
The DfT said the deal marks the start of the transformation of rail services across the north, and will help support the government's GBP600 million of investment in the region. This investment will result in a significant amount of the network being electrified, in order to deliver cleaner, quicker and more reliable journeys for passengers travelling between cities including Leeds, Liverpool, Manchester, Newcastle and Sheffield.
Under the terms of the deal, Serco will also provide new passenger information screens at a further 100 train stations and will work to make buying tickets more convenient, said DfT in a statement.
"Serco has a strong track record of providing high quality rail services in the UK and internationally... This [contract win] is down to the commitment of our team at Northern Rail who work tirelessly to provide an excellent standard of service across the north of England. We look forward to continuing to work alongside Abellio, the PTEs and other regional stakeholders to help drive improvements and greater efficiencies - benefiting both our fare-paying passengers and the taxpayer," said David Stretch, Serco's Managing Director for Transport Services.
In the latest Public Performance Measure (moving annual average) for UK railways, Northern Rail scored 90.9%, above the national average.
Shares in Serco were trading 0.84% lower at 414.8 pence per share in early trading.
By Alice Attwood; [email protected]; @AliceAtAlliance
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