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Serco loses DLR franchise Serco loses DLR franchise
(about 3 hours later)
A French firm has won the new franchise to operate London's Dockland's Light Railway (DLR), a further blow for the embattled outsourcing group Serco, which has held the franchise since 1997. French firm Keolis is to take over the running of London's Docklands Light Railway from December.
Transport for London (TfL) has chosen Keolis to run the DLR until 2021, with an option for this to be extended until 2023. The driverless train service serving east London's inner suburbs and the financial centre of Canary Wharf has been run by Serco since 1997 over two consecutive franchises but it was beaten to the next contract by the SNCF-owned Keolis.
The French company is already involved, as a minority partner, in a number of other UK mainline rail franchises. Keolis will take over the running of the service until 2021 as the majority partner in a joint venture with Amey, with responsibility for maintaining the stations, track and trains.
The new DLR contract will start in December 2014. Alistair Gordon, chief executive of Keolis UK, said: "This win is a major achievement for Keolis. As the world's largest operator of light rail networks Keolis looks forward to using our global expertise to enhance one of the capital's iconic public transport networks and we will work closely with all stakeholders to deliver a world-class service both during this franchise and beyond for London."
TfL's managing director of London Underground and Rail, Mike Brown, said: "The DLR is a rail network that continues to support regeneration across a huge area of London and the economic growth of the city as a whole." Around 100m passengers a year travel on the DLR.
He added: "The decision to appoint Keolis Amey Docklands was reached after a thorough and competitive procurement process, which will ensure the DLR continues to deliver an ever-improving high-quality, value-for-money service for Londoners well into the future." Keolis could strengthen its grip on London transport as one of five shortlisted bidders (in a joint venture with Go-Ahead) to run Crossrail trains from 2015, when services partially open overground in east London. It currently runs a swath of the capital's commuter train services with Go-Ahead, as part of four rail franchises under their Govia partnership: Southern, Southeastern, London Midand, and Transpennine Express. In partnership with Eurostar, Keolis is also one of three firms shortlisted to take over East Coast main line trains.
Serco had operated the DLR network since 1997. In 2013 it is thought to have generated £90m for the firm. Serco's loss of the DLR franchise is the latest blow for the embattled outsourcing group, which has become mired in a series of scandals and recently disclosed that 10 of its staff had been fired amid allegations of improper sexual contact with female detainees at the Yarl's Wood immigration detention centre.
Brown said the DLR's connectivity with the rest of London's transport network, and "its potential to connect jobs and unlock opportunities" will rise further when Crossrail services interchange in a few years' time. On Thursday, Serco warned that it would have to write down the value of several big contracts relating to asylum seekers' accommodation centres and clinical healthcare, after its new boss, Rupert Soames, embarked on a review of the business. The move could dent annual profits, although for the time being the firm is sticking with previous guidance.
Crossrail services between central London, Shenfield and Abbey Wood will begin to interchange with DLR at several stations by late 2018 - Canary Wharf/West India Quay, Stratford and Custom House, where new platforms, a new ticket hall and entrance are being built. Serco said it was disappointed by the loss of the DLR, although profit margins on the rail service were significantly below the average it earns on contracts. In 2013, the DLR franchise generated for Serco around £90m, around 2% of its overall revenues.
The DLR is part of a large and growing TfL network of rail services, which also includes London Overground routes across the capital and the West Anglia service from Liverpool Street station to Enfield Town, Cheshunt (via Seven Sisters) and Chingford and between Romford and Upminster, which will come under TfL control in May 2015. David Stretch, managing director of Serco's transport business, said: "We remain excited by the opportunities we see to transform services for passengers in the transport market, as illustrated by the recent award of the 15-year contract to run the Caledonian Sleepers service for Transport Scotland. We will continue to provide DLR passengers with the best possible service until the new operator starts later this year and we will work closely with them to ensure a seamless handover."
Serco's transport business managing director, David Stretch, said: "We are obviously disappointed … [but] we are very proud of what we have all achieved for the citizens of London over the past 17 years." Unions expressed fears over the upheaval ahead and said they were seeking an urgent meeting with Keolis to secure assurances. The RMT acting general secretary, Mick Cash, said: "RMT members on DLR are deeply concerned that we will be facing a major period of upheaval in the run up to December when Keolis takes over from Serco. RMT will fight to defend the jobs and working conditions of our members on DLR."
Keolis will run DLR in a joint venture partnership with the UK public services company Amey.
Keolis UK's chief executive, Alistair Gordon, said the franchise was "a major achievement for Keolis", while Amey chief executive, Mel Ewell, promised that the two companies would "deliver a specialist service that provides value and ensures London's travelling public experiences a reliable and high-quality service".
The DLR began operating in 1987, with 11 trains serving 15 stations and in its first year of operation it carried 6.7 million passengers. Today the railway has 45 stations, 23 milies of track and 149 carriages and during the 2013/14 year, it carried a record-breaking 101m passengers.