A new National Rail Contract has been awarded to Govia to run the Govia Thameslink Railway network for another three years.
The new contract is a stepping stone between the former franchise model and the forthcoming Passenger Services Contracts which will be awarded by Great British Railways in future.
Like the future Passenger Services Contracts, the arrangement is a management contract. GTR will earn a fixed management fee of £8.8 million a year, with an additional performance fee of up to £22.9 million annually. If performance targets are reached, the maximum fee would be £31.7 million a year, which the DfT said would be equivalent to a profit margin of around 1.85 per cent of turnover.
The contract also allows individual project fees to be earned by GTR. The DfT said the deal ‘has extremely limited exposure to changes in passenger demand and no substantial cost risk to GTR’.
GTR’s first contract, which began in 2014 and was officially considered to be a franchise, also incorporated fixed management fees, but then the costs risk was largely taken by Govia. This special form of franchise was awarded because the franchise-holder was responsible for managing major changes, including the introduction of the large Siemens Class 700 fleet. Since March 2020 GTR has been continuing under pandemic-related Emergency Measure Agreements.
The new contract starts on 1 April and will run until at least 1 April 2025, with up to a further three years at the discretion of the transport secretary.
Govia is a joint venture between the British Go-Ahead Group and French Keolis, and Go-Ahead is the majority shareholder, with 65 per cent. Go-Ahead CEO Christian Schreyer (pictured, left) said: ‘I’m delighted with today’s announcement. Under this new contract we will build on our achievements in enhancing performance in recent years. We will be working closely and collaboratively with DfT, NR and other partners to run the most reliable service possible, and we will be putting passengers’ interests first.’
Govia Thameslink CEO Patrick Verwer (above, right), added: ‘We welcome this positive news, which marks the start of a new era for GTR. I’m incredibly proud of how far we have come, including overcoming two challenging years dominated by Covid. All of this is thanks to the continued focus and passion that GTR colleagues bring to work every day.’
