FirstGroup Agrees Termination Fee with DfT for TransPennine Express

FirstGroup has reached an agreement with the Department for Transport (DfT) regarding the termination fee for the TransPennine Express train operating company, with operates the TransPennine Express (TPE) franchise.

One of the conditions of the Emergency Recovery Measures Agreements (ERMAs) created by the DfT in response to the coronavirus pandemic was that train operating companies and the DfT would decide on whether any fees were payable in order to terminate pre-existing franchise agreements. Any fee would be based on a pre-COVID financial trajectory.

The DfT and FirstGroup have now agreed a termination fee of around 6 million GBP payable by FirstGroup over and above the 42.5 million GBP already paid. The DfT has extended the TransPennine Express ERMA until 19 September 2021. However, the two parties are working towards entering into a National Rail Contract earlier than that.

The TPE agreement is the last termination agreement for FirstGroup’s TOCs, following a fee of 33.2 million GBP payable for South Western Railway and 0 GBP for West Coast Partnership agreed in December 2020.

FirstGroup now wants to establish concessions for all three, which would come into effect once the respective ERMAs run out. The SWR ERMA terminates in May 2021, and the West Coast Partnership ERMA in March 2022. Both of these could be extended by a further six months by the DfT.

The EMRA for GWR has been extended to June 2021. The underlying GWR direct award will run until 1 April 2021 with an option to extend by up to one year. There is no termination fee on GWR because this contract was entered into after the transition into the Emergency Measures Agreements.

FirstGroup Chief Executive Matthew Gregory said:

“We welcome this agreement with the DfT, and are continuing to discuss a long-term National Rail Contract for TPE which will focus on passengers and operational performance, with a more appropriate balance of risk and reward. We are working closely with the Government and our other partners to ensure that TPE continues to provide the safe and vital services that are essential to communities across the North of England and Scotland.”

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