GNER loses case against Grand Central
27 Jul 2006
The rail regulator’sdecision to grant Grand Central access to the East Coast main line is to stand.
In a statement GNER said it was extremely disappointed. The decision calls into question the company’s profitability. Owners Sea Containers will now be reviewing their involvementwith with the ECML franchise and are understood to be requesting urgent talks with the DfT.
Says Bob MacKenzie, President and CEO of Sea Containers, ‘Today’s decision is truly extraordinary. It has serious commercial consequences for GNER and for the Department for Transport. It undermines the profitability of GNER, which already operates to modest margins, and devalues a recently-awarded public contract agreed withGovernment and the East Coast franchise in perpetuity.’ Mr MacKenzie went on to say the decision would make bidders for other franchises more risk-averse. ‘We will be discussing the serious implications of today’s decision with the Department for Transport, as it is likely to jeopardise GNER’s ability to pay some of the premium payments agreed with the Government over the course of our franchise. This cannot be what the Government intended to happen to any of its newly-awarded rail franchises.’ More ominous still Sea Containers promises a further statement on the future of GNER in August. Chief executive Christopher Garnett announced he was leaving earlier this week.
GNER sought an order quashing the ORR’s decisionof 23 March 2006 and a declaration that the ORR’s charging regime is unlawful. Mr Justice Sullivan declined to grant the order or the declaration. GNERis taking legal advice in respect of the options now open to it, including the possibility of an application to the Court of Appeal and/or a complaint to the European Commission.