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Covid-19: UK govt suspends rail franchises to stop firms collapsing

By Frank Prenesti

Date: Monday 23 Mar 2020

(Sharecast News) - The UK government effectively renationalised the railways on a temporary basis as it suspended all franchise agreements to help train companies avoid collapse due to the coronavirus pandemic.
The Department for Transport (DfT) said operators would be paid a small management fee to run services under emergency measures, with all revenue and cost risk transferred to the government for an initial period of six months.

It said on Monday that passenger numbers had fallen by up to 70%, while ticket sales were down by two-thirds.

The move would "llow us to ensure that trains necessary for key workers and essential travel continue to operate. No other passengers should travel. As we have already announced, services will be reduced from today (23 March 2020)".

"Anyone holding an advance ticket will be able to refund it free of charge. All season ticket holders can claim a refund for time unused on their tickets free of administrative charges. Ticket holders should contact their retailer for details."

"Allowing operators to enter insolvency would cause significantly more disruption to passengers and higher costs to the taxpayer. The management fee will allow operators to act in the national interest in tackling Covid-19."

The DfT said fees would be be set at a maximum of 2% of the cost base of the franchise before the pandemic began, intended to incentivise operators to meet reliability, punctuality and other targets.

The maximum fee will be far less than recent profits earned by train operators, the DfT added and said that it was prepared to stand in as an operator of last resort if any company did not wish to accept an Emergency Measures Agreement.

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