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Last Updated: Thursday, 8 July, 2004, 19:57 GMT 20:57 UK
Virgin boss loses rail line bid
Sir Richard Branson
Sir Richard loses consortium bid for east coast main line
Virgin boss Sir Richard Branson's bid to run Britain's premier east coast main line has collapsed.

The proposed joint venture - comprising Virgin, Stagecoach and Deutsche Bahn - collapsed when the German firm refused to share risks with the other firms.

The companies blamed issues "relating to the structure of the UK rail franchising system" for the pull-out.

The new franchise - to run from May 2005 - will last for seven-10 years, depending on time-keeping and service.

Confidence bypass

The Virgin consortium qualified as bidders for the East Coast franchise in May.

But it later admitted it had been "unable to conclude a satisfactory framework" for their joint venture.

In their decision, the parties cited "issues relating to the structure of UK rail franchising encountered by new entrants to the UK rail market when partnering with existing rail franchisees".

But the Strategic Rail Authority (SRA) said the requirements for all entrants were the same and it rejected " any suggestion that the structure of UK rail franchising prevented anyone from pre-qualifying for or completing a satisfactory joint venture framework".

The statement added: "We are particularly pleased when new entrants apply successfully, as has been the case in a number of recent franchise bids."

The SRA said the interest of taxpayers and passengers would be best served by strong competition within a clear and stable framework.

The Virgin consortium's withdrawal leaves three bidders still in the running - the current operator GNER and rivals FirstGroup and Danish Railways

The new franchise involves providing services between London, parts of East Anglia, the East Midlands, Yorkshire, Humberside, the North East and Scotland along the East Coast Main Line and other routes.

Virgin currently runs the other major London to Scotland route, known as the West Coast Main Line as well as the nationwide CrossCountry route.

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