Management review

UK Trains

After absorbing significant bid costs from the concurrent tendering of three rail franchises, the UK Trains divisional operating profit reduced to £7.5 million (2006: £12.3 million). Revenue increased 27 per cent, to £322.4 million (2006: £253.9 million), following the inclusion of the new CrossCountry franchise from 11 November 2007. Excluding CrossCountry, revenue was down two per cent at £249.7 million. This reduction in revenue reflects the end, as expected, of an external maintenance contract, partially offset by rising passenger numbers.

CrossCountry

The CrossCountry franchise win has an estimated order book of almost £5 billion in real terms. Operational performance since starting the franchise has been good with 88.9 per cent of services arriving on time for the year to date, substantially better than the equivalent services for the same period last year. Year-on-year revenue was more than nine per cent up for the first two months of 2008, on the basis of our best like-for-like estimate for the remapped franchise.

Serving 131 stations over more than 1,650 route miles, CrossCountry is the most geographically extensive rail franchise in the UK, and adds 91 train sets and 1,650 people to our UK Trains division. Annual revenue of around £600 million is expected, with support payments to Arriva higher in the early years of the franchise, and reducing over time.

The CrossCountry franchise revenue is currently around 50 per cent derived from passengers, and 50 per cent from franchise support payments. The average passenger journey length on this franchise is 130 miles, reflecting its broad-based nature and the many hubs along the route.

We are making good progress with our plans for the franchise. The seating capacity of the fleet will be increased by 35 per cent on principal routes at peak times, by June 2009, through the introduction of five fully refurbished high speed trains and additional seats on the Voyager trains.

We are committed to improving the customer experience of rail by enhancing website ticket purchasing, interactive customer itinerary management, automated re-booking, flexible printing options and the ability to reserve a seat up to 10 minutes before departure.

Arriva Trains Wales

Arriva Trains Wales (ATW) continues to experience strong demand, reporting passenger growth of 9.3 per cent. In addition to growing customer numbers, customer satisfaction is also rising, up five per cent to 85 per cent, according to the latest Passenger Focus National Passenger Survey.

ATW achieved a record operational performance. In December 2007, the year to date Public Performance Measure (PPM), based on the percentage of franchised passenger trains arriving at their destination within five minutes of schedule, increased to 91.8 per cent, up from 87.1 per cent in 2006.

The ATW franchise revenue is currently around 30 per cent derived from passengers, and 70 per cent from non-passenger revenue, primarily from franchise support payments. The average journey length on this franchise is 17.4 miles, reflecting the mix of urban rail network in south Wales and business orientated travel in north Wales and north-west England. The introduction of new ticket machines to make it easier for passengers to purchase tickets, and ticket barriers at 12 key stations, have significantly reduced ticketless travel.

ATW continues to work closely with the Welsh Assembly Government. There has been significant government investment to provide longer platforms, which will enable ATW to run longer trains at some time in the future. Rail investment from the government is also playing a key role in regeneration, demonstrated by the opening of a new station at Llanharan in south Wales in December 2007, and the fact that in February 2008, ATW started running train services to Ebbw Valley for the first time in 40 years.