U.S. Markets closed
  • S&P 500

    +58.48 (+1.44%)
  • Dow 30

    +415.12 (+1.26%)
  • Nasdaq

    +208.43 (+1.74%)
  • Russell 2000

    +34.10 (+1.93%)
  • Crude Oil

    +1.33 (+1.79%)
  • Gold

    -10.70 (-0.54%)
  • Silver

    +0.25 (+1.03%)

    -0.0062 (-0.5640%)
  • 10-Yr Bond

    -0.0570 (-1.61%)
  • Vix

    -0.32 (-1.68%)

    -0.0058 (-0.4686%)

    +0.1080 (+0.0814%)

    +399.97 (+1.42%)
  • CMC Crypto 200

    +7.58 (+1.23%)
  • FTSE 100

    +11.31 (+0.15%)
  • Nikkei 225

    +258.55 (+0.93%)

Avanti on track to receive seven-figure taxpayer bonus despite ‘disgraceful’ train services

Avanti receives multimillion-pound taxpayer bonus despite ‘disgraceful’ train services
Avanti receives multimillion-pound taxpayer bonus despite ‘disgraceful’ train services

Avanti, the under-fire intercity train operator, is entitled to a seven-figure performance fee from taxpayers despite repeatedly apologising for poor service.

The company, which operates trains between London, Manchester and Glasgow, ran just one in three services over the summer after becoming embroiled in a spat with unions.

Avanti has been branded “a disgrace” by Liberal Democrat leader Ed Davey and “useless” by Greater Manchester mayor Andy Burnham.

The operator has been given six months to “drastically improve services” or be stripped of its contract by the Government.

Train operators are paid a fixed fee by taxpayers to run services following the ending of franchising in May 2021. On top, they are contractually entitled to a bonus “performance fee” for going above and beyond minimum service standards.

But despite passengers on the line suffering from significant disruption, Avanti’s owners today disclosed they were entitled to a performance fee.

Avanti was one of four operators owned by FirstGroup that racked up £19.1m in fees during the six months to the end of September, it was announced on Wednesday.

Some £2m of this was received by Avanti - two-thirds of which was a performance fee, meaning the operator is on track to receive £1.3m in bonus payments since March

Although the split allocated to the four operators – Avanti, Transpennine Express, South Western and Great Western – is not broken down, FirstGroup confirmed that all operators “have recorded performance fees”.

FirstGroup owns 70pc of Avanti alongside Italian state firm Trenitalia, which owns the remaining 30pc. A spokesman for FirstGroup confirmed that under its calculations, Avanti has performed well enough to trigger a performance fee.

Despite putting in place plans to address service shortcomings, passengers on Britain’s most expensive railway Avanti continue to face criticism for poor service levels. A single ticket between London and Manchester can cost almost £200.

Mr Davey said over the weekend: “The performance of Avanti has been a disgrace, and frankly, people have acted far too slowly. They’ve just not delivered for people.

“It’s not just damaging the lives of people because they have these appalling delays, cancellations and poor journeys. It’s hampering the economy.”

Steve Montgomery, managing director of First Rail, apologised to customers and promised things would improve. He said last week that Avanti had “more than enough drivers”, but needed to catch up on their training after the pandemic. It takes 12 to 18 months for a driver to qualify.

Anne-Marie Trevelyan, Transport Secretary under Liz Truss, resisted calls to nationalise the line, on which some initial HS2 services will run in years to come.

Whitehall sources said that Downing Street was initially in favour of stripping Avanti of the line before a last-minute change of heart led to the operator being given a six-month extension to allow it to improve services.

Ms Trevelyan said in October: “We need train services which are reliable and resilient to modern day life. Services on Avanti have been unacceptable and while the company has taken positive steps to get more trains moving, it must do more to deliver certainty of service to its passengers.”

FirstGroup said today: “There are significant challenges at present in parts of our rail operations, particularly in Avanti West Coast and TransPennine Express, where our teams are completely focused on delivering their plans to tackle the issues that are causing disruption for passengers.”