Sir Richard Branson said the government was risking “bankruptcy” of the west coast main line as he threatened to walk away from the railway industry after Virgin Rail lost its franchise to rival company FirstGroup.
Sir Richard said he was “extremely disappointed” that the Department for Transport (DfT) had preferred FirstGroup to Virgin which had run the London-to-Scotland west coast line since 1997.
He added: “Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise.”
Sir Richard said bankruptcy had hit former east coast main line operators GNER and National Express which had “overbid” for the east coast franchise. He added: “Sadly, the government has chosen to take that risk with FirstGroup and we only hope they will continue to drive dramatic improvements on this line for years to come without letting everybody down.”
He added that this was the fourth time Virgin had been outbid in a franchise tender process.
He went on: “The east coast line is still in government ownership and its service is outdated and underinvested, costing passengers and the country dearly as a result.
“Insanity is doing the same thing over and over again and expecting different results. When will the Department for Transport learn?”
FirstGroup will take over the west coast line on 9 December, with the franchise running for 13 years and four months.The DfT said the franchise deal was worth £5.5 billion. The Virgin Rail bid was thought to have been £4.8 billion.
FirstGroup, which already runs several franchises including Great Western and ScotRail, promised cheaper fares, more services and improved stations. The DfT said benefits of the new franchise would include 12,000 extra seats a day when 11 new six-car electric trains come into service, in addition to the 106 extra Pendolino carriages currently being introduced which will deliver more than 28,000 extra seats a day.
Initially First West Coast will operate the timetable it will inherit from Virgin but it is seeking to introduce new services, including a London Euston to Blackpool service from 2013 and, from 2016, services from London to Telford Central, Shrewsbury and Bolton.
Journey time improvements between London and Glasgow are planned, as well as additional services from London to Preston. First West Coast is taking over responsibility for maintenance at 17 stations and will spend at least £22 million on a station investment programme.
The RMT transport union warned of “massive cuts to jobs and passenger services and huge increases in fares”. General secretary Bob Crow said: “FirstGroup and the government should be left in no doubt that we will mount a massive industrial, political and public campaign to stop any attacks on our members' jobs and the services that they provide to the travelling public as a result of this franchise award.
“We are already preparing a ballot for industrial action in light of the threatened job cuts.”
He added that the franchise was being let “with a gold-plated, extended contract linked to massive cuts to jobs and passenger services and huge increases in fares as the winning FirstGroup looks to extract every penny that they can in profit”.
Crow went on: “The new First West Coast deal is an exercise in casino franchising that lays bare the whole sordid enterprise which is rail privatisation. Companies promise the earth, jack up fares and slash jobs and services in a drive for profits and if the numbers don't stack up they throw back the keys and expect the public sector to pick up the pieces.
“FirstGroup pulled the pin on the Great Western route to dodge £800 million in payments due to the British taxpayer and here they are just months later in control of the west coast route. The highly political award of this contract turns the rail industry into a global laughing stock and the British taxpayer will be rightly outraged.
“We should take a leaf out of Europe's book and run a not-for-profit, publicly owned railway which benefits the passenger and not private shareholders.”