Zoo Zoo Boom wrote:
The majority fail because they cant make sufficient return - that leads to reduction in investment in staff and trains - downward spiral. How many have had a go at the East Coast Mainline
The East Coast Main Line is a classic example of the foolishness of the privatised railways. GNER were gifted upon privatisation the Uk's most modern railway with a fleet of largely brand new, very high quality trains. And operating on a very lucrative route they made a lot of money. Now Jim Sherwood was a canny businessman and had already made hundreds of millions off the UK state by buying assets dirt cheap and selling them on for vast profits. But GNER didn't even need that side of it, they were gifted a brand new railway and enjoyed the rewards of what our tax money had built throughout the first franchise period. And, thanks mostly to the quality of the infrastructure they'd inherited and the nature of the route GNER became a supposed example of how privatisation was working.
Come the second franchise period and it was obvious there was going to be competition from other bidders who'd seen how much money GNER had made. And thus began the same scenario over and over - bidder wins franchise based on utterly implausible growth forecasts, signed off by idiot transport minister who sees the millions in franchise payments they're going to receive down the line. After a few years the franchise holder realises it can't make as much money as they've promised to pay and "hands the franchise back".
Now SeaCon went bust of their own volition but the others just walked away scot free. This isn't how a market should work. You overestimate your forecasts and enter into a contract that you can't pay for and you go bust. But the government simply can't allow the ECML to stop operating whilst that's sorted out because it would lead to chaos. So it always has to be there to step in.
As with so many of these idiotic schemes it's been a case of privatising the profit and the state keeping the risk. It's a grotesque parody of the free market and needed stopping long before Covid did for it.