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Estimating the profitability of the British East Coast Main Line

Lookup NU author(s): Dr Nigel Harris

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Abstract

Successful railway franchising requires both bidders and tendering authority to have a good understanding of the underlying economics of that part of the railway. However, an earlier franchise contract for Britain’s East Coast Main Line franchise was terminated early by the Government in 2006, whilst a more recent franchisee has recently passed the franchise back to the Government, having suffered unduly during the recession of 2008-9. Both bidders made very significant (and, it would appear, unsustainable) promises to Government in terms of paying a premium to operate the services concerned, but such premia inevitably derive from the competitive situation of franchising. This paper sets out some indicative analysis of train operator profitability in Britain which provides some guidance as to the appropriate level of premium for this – and other – franchises, with some conclusions of greater generality.

Publication metadata

Author(s): Harris NG

Publication type: Article

Publication status: Published

Journal: Proceedings of the ICE - Transport

Year: 2013

Volume: 166

Issue: TR3

Pages: 168-173

Online publication date: 29/10/2012

Acceptance date: 04/08/2011

ISSN (print): 0965-092X

ISSN (electronic): 1751-7710

Publisher: ICE Publishing

URL: http://dx.doi.org/10.1680/tran.10.00058

DOI: 10.1680/tran.10.00058

Notes: Awarded the Webb prize for the best non-road transport paper published by the ICE in 2013

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