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Serco awarded interim Northern Rail franchise agreement

Published: 27 Mar 2014

Serco Group plc, the international service company, together with its 50:50 joint venture partner AbelIio, has signed a 22-month interim franchise agreement to continue operating the Northern Rail franchise on behalf of the UK Department for Transport (DfT) until February 2016.  Serco's share of total revenue from operating the service over the 22-month franchise is estimated at £520m.

The deal has been co-signed by all five North of England Passenger Transport Executives (PTEs) and will see Northern Rail Ltd continue to operate local and regional rail services across the north of England.  Northern Rail is also working with the DfT to secure the introduction of electric trains to the newly electrified rail routes in the north.

Serco and Abellio have achieved significant performance improvements since the franchise began in December 2004, as well as investing around £30m into the railway.  For example, punctuality has risen from 84% to 90% and fleet reliability has doubled, while annual passenger numbers have increased by 47% from 63 million to 94 million each year.  In the latest Public Performance Measure (moving annual average) for UK railways, Northern Rail scored 90.9%, above the national average.  The new interim franchise agreement, which is anticipated to be run at a lower profit margin than the existing franchise, includes a gain share agreement to incentivise driving continued performance improvements.

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David Stretch, Serco's Managing Director for Transport Services, said: "Serco has a strong track record of providing high quality rail services in the UK and internationally.  We are delighted that the strong performance of our partnership with Abellio, and focus on doing the right thing for our passengers, has been recognised with the award of this new contract.  This is down to the commitment of our team at Northern Rail who work tirelessly to provide an excellent standard of service across the north of England.  We look forward to continuing to work alongside Abellio, the PTEs and other regional stakeholders to help drive improvements and greater efficiencies - benefiting both our fare-paying passengers and the taxpayer."

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