Hacker News Reader

> Profits are also capped so these are not potential cash cows people suspect. British tickets are expensive because the government doesn't subsidise the ticket price, which is a separate debate.

The system is capped and collared meaning their profits are guaranteed by the government as well as limited. This system incentivised them to underperform on their contract, buy assets, claim losses. When the franchise completes they liquidise and pay out big bucks to shareholders. They very much are the cash cows that people think they are.

Yes, the comment you've replied to is spouting a pretty important mis-truth by trying to make out they aren't profitable for the franchisee.

Some of the franchises did make decent profits, westcost/virgin etc. This generally happens at the end of the franchise once most of the up front investment happened. A lot of other franchises make a loss so it isn't quite so black and white.

With the previous model a lot of the risk was on the private company, if times were good profits were there, in bad times they made losses. Now with the new model the risk has gone over to the UK government, for better or worse.

The new setup should guarantee a low level of profitability for private companies, with a theoretical lower max, what will be interesting is to see how many companies actually bid.

The private companies actually own very little when running a franchise, most things are leased, such as rolling stock which is largely owned by German funds if memory serves. Investments into stations/parking/ticketing etc is left in place for the next person to take the keys.

Appreciate that, but vast swathes of the North and rural areas will never be profitable. As a result, entire areas of the country have rolling stock that was supposed to be dropped in the 80s, a couple of services a day, or aren't even electrified.

The one that always stands out to me is the fact that the last train from Liverpool to Sheffield (two major cities) is at 9:30pm because it wasn't profitable to continue services after that time. As a result, flight delays from Liverpool Airport (again, a major airport) can leave you stranded in that city – or facing an eye watering taxi bill.

I completely agree, Northern trains are a disgrace.

I don't think it was a failure of private companies though, rather Network Rail failing to deliver. The government has speced electrification for decades like you say. The cost of eletricifcation has gone through the roof, mainly due to health and safety (good thing). We have also lost a lot of expertise in electrification, much like how we lost the skill to tunnel.

>The train companies are also often making a loss on these routes, commonly subsidised by foreign Europeans governments looking to expand their rail business, Dutch or Italian tax payers should be annoyed at how their taxes are being wasted.

Last i checked one or 2 examples they ran a profit. Surely they can run a loss/be funded initially but if you get that money back out it's not really what you describe it as no?