Business Travel iQ
Last week, Patrick McLoughlin, the UK Secretary of State for Transport, announced that the Intercity East Coast franchise had been awarded to Inter City Railways Limited, a joint venture between Stagecoach and Virgin. The new franchise agreement will run for eight years, from 1 March 2015 to 31 March 2023, with the option of a further one-year extension.
The UK travel industry's interest focused on Stagecoach and Virgin beating the Keolis-Eurostar partnership and the bid from FirstGroup.
Despite rail in the UK having been de-nationalised more than 20 years ago, the wider UK media, however, were focused on whether rail should be in private hands.
Does it matter?
As anyone who has ever walked a Heathrow jetbridge festooned with HSBC's iconic Different Values campaign knows, there can be very different local interpretations to international phenomenon. It would be easy to crib the HSBC campaign and stamp the words "success" and "failure" on the same photo of a Virgin Trains or West Coast passenger carriage.
Many believe UK rail privatisation has been an unqualified success and point to the rising number of passengers and examples where rail has captured market share from airlines on routes such as Manchester-London and London-Paris. On the Continent the same is true on Madrid-Barcelona.
Continued below
But privatisation has not been without its critics. At the recent GTMC autumn conference in London Christian Wolmar, journalist, rail historian and candidate for London mayor, argued passionately that rail was a natural monopoly and thus best managed by the state who could ensure a consistent service.
Opponents would argue that consistency is not what has attracted passengers to rail but instead the inconsistency in fares which serious revenue management policies yield. These result in those who are willing to pay a premium for more space, flexible ticketing and at seat services such as food and beverage and free WiFi heavily subsidising those prepared to book far in advance and travel at unsocial times in more densely populated carriages.
Although rail is a natural monopoly — after all only one train can use the track at any one time while numerous airlines can fly simultaneously between two city pairs — there is very little pure state ownership left on the Continent. Most have hybrid solutions such as shared private and public ownership (Germany's Deutsche Bahn) or state ownership of infrastructure and private ownership of freight and different management for international and regional services (Netherlands).
The hybrid solutions recognise that ownership in itself is not as important as regulation and co-operation. They also acknowledge that local commuter lines have customers with different priorities than those on longer routes.
The incumbent UK Government is committed to privatisation. The Opposition party is committed to re-nationalisation.
Perhaps both would benefit by looking across the Channel at how rail companies have looked outward to the wants and needs of their different markets rather than inward to their own political ideology.