The train operators seem to be sinking into the mire rapidly. Recent reports suggest that Arriva CrossCountry is suffering from a drop in passenger growth and now Stagecoach is clearly trying to get its punches in first in its negotiations with the Department for Transport over its South West franchise. In a belligerent statement issued today, the company confirms that its rail operations could go into the red and that it is in dispute with the Department over when precisely the cap and collar arrangements kick in. It also reveals that there is a further row over whether car park income should be included in the franchise receipts for the purpose of calculating revenue, with the company arguing that it should not.
Clearly the company is used to seeing the Department roll over in the face of such disputes but Lord Adonis, who angered South West Trains by refusing to allow it to close the number of ticket offices is wanted to, may well be made of sterner stuff. A word of warning to Brian Souter and co: threatening to call in m’learned friends and the like may play well in the short term in the city, but the last thing Stagecoach needs is a protracted dispute with the Department which may lead to ministers asking the Wolmar question: ‘What is franchising for?’
Rescue may be at hand in the unlikely form of a virus. If swine flu reaches Britain in epidemic proportions, all the train operators will find themselves in deep financial trouble but the Department would then be able to get itself out of its ‘no negotiation’ position because the force majeure provisions would come into play.