Memorandum submitted by Virgin Trains (CBPS 66)

Introduction

Virgin Trains is owned by Virgin Management (51%) and Stagecoach plc (49%).

We operate the West Coast rail service on a 15-year franchise which runs to March 2012. Serving London, the English midlands and north-west, north Wales and south west Scotland the West Coast line is the UK's most popular long-distance rail network, with 21 million passengers a year.

Our 3,000 staff and 246 trains provide travel from 44 stations, of which eight are in Wales.

We operate services to and from north Wales, covering Flint, Prestatyn, Rhyl, Colwyn Bay, Llandudno Junction, Llandudno, Bangor and Holyhead. We do not manage any of the stations from which we operate in Wales, though we do manage a number of stations in England.

Services currently run direct to London Euston, or to Euston with a change a Crewe. Crewe provides in interchange providing connections to many destinations.

There were 616,000 journeys made on our trains which started or finished in north Wales in the year to 1st March 2008, and we are experiencing very healthy growth - that figure is 8% up on the previous year.

Our activities

We aim for a culture of continuous innovation in the services we offer to our customers, and to deliver our services in the most environmentally sustainable way.

Our trains

Our tilting Voyager (diesel) trains were introduced in 2002, and our tilting Pendolino (electric) trains in 2004.

Both types of train compare favourably with car in terms of carbon emissions. We have conducted trials using bio-fuels in our Voyagers and are assimilating the lessons learned from that process.

Our tickets

We were the first train operator to enable customers to buy tickets by phone (1999) and over the internet (2000).

We have also led on fare simplification: our current structure is described in the table below.

The simplification of fare-types across the rail industry that will be taking place during 2008, largely follows the Virgin Trains model.

We are carrying out trials of two innovative methods of ticket purchase: tickets@home and mobitix.

Tickets@home allows customers to buy a ticket on-line and print it themselves, avoiding the need to receive it through the post or collect from a station.

Mobitix allows customers to buy tickets on-line and receive a ticket on their mobile phone, again avoiding the need for it to be posted or collected from a station.

Our services

The introduction of our Virgin High Frequency (VHF) timetable will see a major uplift in services to and from north Wales, with faster and more frequent trains and dramatic improvements to weekend services.

Taking Bangor as an example our broad plans include:

Weekdays

· More trains

· 50% more trains (rising from 8 to 12)

· Faster services

· Typical journey times reduced by around 25 minutes to and from Euston (3h11m, down from the current typical journey time of 3h34m)

Weekends

· New direct services

· Eight direct services on a Saturday (replacing eight services involving a change at Crewe)

· Seven direct services on a Sunday (up from four services involving a change at Crewe)

· Faster services

· The typical weekend journey time will be around 3h15m, compared with current journey times of around 5h30m

We also intend to introduce a daily direct 'business' train leaving Wrexham in the morning and returning in the evening, with a journey time of around 2h30m.

In addition to the major improvements in direct services to and from north Wales, we plan an hourly weekday service to and from Chester - again with direct weekend services - allowing many more opportunities for connections with stations in north Wales. We do not manage Chester station, but are working with colleagues at Arriva Trains Wales to develop a jointly-funded project for expanding car parking provision at the station.

VHF presents very real opportunities both for increasing the number of people using our services and for the north Wales economy to benefit from increased business and leisure traffic. We will be working with stakeholders over the coming months to maximise these benefits.

The final details of the new timetable are currently being considered by the Department for Transport to ensure they meet our franchise commitments. They will then be submitted to the Office of Rail Regulation which will then consult with, among others, the Welsh Assembly Government.

Delivery of the west coast upgrade

The introduction of improved services is dependent on the completion of the £8billion upgrade of the West Coast mainline; long been slated for completion by December 2008. The severe overruns of engineering works in early January led to the Office of Rail Regulation (ORR) to find Network Rail in breach of its licence. In addition to fining Network Rail £14million ORR required Network Rail to produce a report - in consultation with passenger and freight operators - detailing how it proposes to complete the West Coast upgrade. We have been in regular contact with Network Rail over work on its report.

In its draft report Network Rail makes clear its preference for delivery of the west coast upgrade by December. At Virgin Trains we have been anticipating this milestone with enthusiasm, and planning for the introduction of our VHF service. There are, however, a number of issues which lead us to the conclusion that Network Rail's proposal would casue unreasonable levels of disruption to passengers.

Clearing the backlog of engineering work would add significantly to the existing programme of closures. It would mean that in addition to the extensive Sunday closures already planned there would be closures every Saturday from the end of May to September. A continuous closure would also be put in place for two weeks straddling the August Bank Holiday. In addition to the proposed 'confirmed' closures, Network Rail also proposes five 'just in case' closures, which will be built into the programme but may be withdrawn at short notice.

The proposed compression of delayed engineering work into a short period of time means that we cannot train our drivers solely using their non-driving working hours. Independent advice has led us to the conclusion that will have to remove drivers from driving duty in order to meet the requirements on us to ensure that drivers are properly and safely trained. This will have serious effects on our services, which will include operating most north Wales service only to and from Crewe during the summer.

We do not believe that the severe inconvenience caused to passengers will be justified by what will actually be delivered in December. We would not in fact be able to deliver our VHF service from this date. 'Delivery' of the West Coast upgrade by early December would be followed by extensive closures between Christmas and New Year, and extensive weekend closures through to May 2009 mean that we could only introduce a partial VHF service.

For these reasons, we have reluctantly concluded that the option which Network Rail has rejected in its draft report - a delay in delivery of the west coast upgrade until May 2009 -

would be preferable. This would allow us to introduce a full VHF service in one go, and keep levels of disruption to levels which customers are more likely to find acceptable.

Network Rail was required to submit its report to ORR by 31 March. ORR will then take a view on whether its proposed course of action is reasonable. This is likely to take a couple of weeks.

2 April 2008