Train passengers who are delayed by more than an hour will be given full refunds by the new company running the Wales and Borders service.
Arriva already runs a train service in the north of England
Arriva, which will take over on 7 December, will receive subsidies totalling £1.63bn over the 15 years it holds the contract.
The company, which will operate as Arriva Trains Wales/Trenau Arriva Cymru Ltd, has also promised safer and more punctual performance, a more "user-friendly" timetable, and greater integration of trains and buses.
The company, which will operate as Arriva Trains Wales/Trenau Arriva Cymru Ltd, will get subsidies of more than £100m for each year after signing a deal with the Strategic Rail Authority on Monday.
It means for the first time Wales will have a single rail service run by one management.
Arriva chief executive Bob Davies said: "We have established a team based in Cardiff who are working closely with the existing operator to ensure a smooth transition in December.
"Over the next couple of months there will be an extensive consultation process regarding our plans to improve the rail service in Wales and the border counties.
"This process will involve the Welsh Assembly Government, the Rail Passengers Council and committees, and other stakeholders.
"Our focus will be to ensure we deliver a safe railway with improved performance, reliability and punctuality for existing and new customers."
Arriva will hold the franchise until 2019. It will operate all stations in Wales, and those largely served by the new franchise in the border counties, including Chester, Shrewsbury and Hereford.
Arriva said its "key commitments" included:
Maintaining current service levels;
Developing a "simplified, user-friendly timetable, as well as better performance and connections, planned for December 2005 for the Valley Lines and inter-urban services";
Introducing seven new trains for "greater operational flexibility and resilience, to replace current, less suitable stock";
A better compensation scheme for passengers, including full refunds for anyone delayed by more than 60 minutes;
Thirty new integrated train-bus ticket schemes by November 2005, to create a fully integrated railway system. Among the areas to benefit will be Bangor, Llandudno, Aberystwyth, Shrewsbury, Chester and Hereford;
Improved bilingual access, including a Welsh language customer service phone line, passenger timetables and information, full bi-lingual signage and recorded station announcements at stations where there are existing suitable public address systems by May 2004;
Introduction of a new, "customer-focused station adopter" scheme;
£400,000 on improving station car parks at Cardiff Central, Chester, Hereford, Newport and Shrewsbury;
Abolition of the £1 reservation charge for bicycles on trains.
Richard Bowker, chairman of the Strategic Rail Authority, said there would be a "step change" in train services for Wales.
"This has all been achieved through partnership between the Welsh Assembly Government and the SRA, and Arriva Trains will now concentrate on what matters most to passengers - improved performance, reliability and punctuality," said Mr Bowker.
Welsh Economic Development and Transport Minister Andrew Davies said: "I am looking forward to working with Arriva to improve the existing service and to develop new passenger services on the Vale of Glamorgan and Ebbw Valley lines."