23 June 2010

The Three Fs

"Fortunate. Fantastic. Fabulous."

These are the 'three Fs' that National Express Group's new chief executive Dean Finch used to describe how he feels at not having to run a railway franchise from next year. He was in conversation with Nooo Transit's James Dark.

With a decade at First and even longer as a management consultant for KPMG, choosing the right words to describe a very sensitive issue is something with which Finch will be well acquainted. Yet despite this, the grey box on page 29 of Transit Nouveau (in which the comments were made) was so obviously a chief exec back-pedalling that it brought a very sly grin to my face.

The facts are indisputable - since defaulting on its East Coast franchise last year, NX made a strong enemy in former Transport Secretary Lord Adonis, who swiftly announced that the group's remaining rail franchises - NX East Anglia and NX c2c - would not be given discretionary extensions beyond their franchise renewal dates. The rumour mill did suggest that Finch would consider bidding for these two franchises again, especially now a new administration is at the helm.

And perhaps the Adonis red traffic light, which flickered to amber at the prospect of His Lordship no longer being in office, ought to become an outright green after the DfT recently announced that, by default at least, NX will continue to operate its duo rail franchises beyond their 2011 end dates.

The future of rail franchising policy is being reviewed and to reflect the possible changes likely to be made, the invitations to tender for NXEA and c2c (to be re-named Greater Anglia and Essex Thameside) are being extended well into 2011. Clearly, NX has been let-off-the-hook. And if the DfT is willing to allow them to continue their franchise obligations beyond their respective end dates, what else will they be willing to consider?

It was Finch himself who re-negotiated First's Great Western franchise renewal in 2005/6, offering £600 million more than its nearest rival, but was shrewd enough to have two additional agreements written in: that revenue support payments could be considered for implementation after only 2 years (not 4 or 5) and an additional £130 million subsidy for which First would invest more than was required of them.

However, to quote Finch: "I am in a fortunate position in that I am under no pressure from the board or investors saying you must have a railway.... As a chief executive that is a fantastic place to be and I suspect I am the only chief executive of the transport groups in that position. We may not have chosen where we are but for me personally - fabulous."

Expect NX to place tenders for Greater Anglia and Essex Thameside next year, then!

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