Virgin Trains' West Coast franchise to end next year
Virgin Trains has been told its franchise to run express services in the West Midlands will end next year.
The company has been banned from bidding to renew its West Coast franchise following a row over its pension arrangements.
The franchise covers inter-city services serving Birmingham New Street, Sandwell & Dudley, Wolverhampton, Stafford, Telford, Wellington and Shrewsbury.
It also throws into doubt the future of the twice daily direct rail link from Shrewsbury, Wellington and Telford to London, launched in a blaze of publicity in 2014.
Public transport group Stagecoach, which owns 49 per cent of Virgin Trains, has been banned for submitting 'non compliant' bids, specifically relating to 'pension risk'.
Stagecoach has also been banned from bidding for the East Coast mainline and the South Eastern franchise.
The other 51 per cent of Virgin Trains, which has held the franchise since 1997, is owned by Sir Richard Branson's Virgin Group.
A Virgin Trains spokeswoman said: “We’re very disappointed by the Department for Transport's unexpected decision.
"We’ve led the industry for more than 20 years with our ground-breaking innovations, such as automatic delay repay, and award-winning customer service.
"We’re studying the decision carefully to understand why they’ve taken this action and would like to reassure all our customers that they can still book and travel as normal.”
In 2012 the Department for Transport announced it would not be renewing the Virgin Trains franchise along the route, instead awarding it to rival bidder FirstGroup.
But it later emerged that FirstGroup's bid contained a number of flaws, and the Virgin Trains franchise has been extended on numerous occasions for a new bidding place to take place.
The present agreement is due to expire in March next year.
A Department for Transport spokesman said: “Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions.
"It is regrettable that they submitted non-compliant bids for all current competitions which breached established rules and, in doing so, they are responsible for their own disqualification.
“Stagecoach chose to propose significant changes to the commercial terms for the East Midlands, West Coast Partnership and South Eastern contracts, leading to bids which proposed a significantly different deal to the ones on offer.
“We have total confidence in our process. We have awarded the East Midlands franchise to Abellio after they presented a strong, compliant bid.
“Stagecoach have played an important role in our railways and we hope they will continue to do so post the conclusions of the Rail Review.
"However, it is entirely for Stagecoach and their bidding partners to explain why they decided to repeatedly ignore established rules by rejecting the commercial terms on offer.”