Stagecoach has been awarded operation of the new South Western rail franchise, the government announced today.
The Department for Transport (DfT) said that the bus and train operator would pay the government £1.19 billion over the course of the ten-year franchise after beating rival bids from Arriva, FirstGroup and a joint venture between the National Express group and the MTR corporation.
The franchise, which will run from February 7th 2007, combines the existing South West Trains and Island Line franchises already operated by Stagecoach.
The company, based in Perth-Scotland, said that it expected the franchise, which covers the provision of more than 1,600 daily train services between London Waterloo and locations in the south-west including Portsmouth, Exeter and Southampton, to generate annual profits of about £15 million to £20 million during the early years of its operation.
The franchise also covers trains operating on the Isle of Wight under the existing Island Line franchise.
Welcoming the announcement, Stagecoach group chief executive Brian Souter said: "We are delighted to be entrusted by the government with the contract to run the UK's most important rail franchise.
"We submitted a high-quality, innovative and value-for-money bid, and the new franchise is an excellent result for passengers, taxpayers and our shareholders.
"We look forward to building on the success we have achieved over the past decade by delivering a comprehensive package of train, station and security investment, further improved performance, increased capacity, state-of-the-art ticketing options and a range of other customer benefits," Mr Souter added.
Under the new franchise, Stagecoach has agreed to increase capacity on its trains by agreeing to boost the number of seats on its mainline peak services by 21 per cent and on peak suburban services by 20 per cent.
The company has also pledged to ensure a more visible staff presence at its stations to improve the security of passengers and to invest £19 million in Oyster smartcard technology to make it easier for rail travellers to purchase tickets.
Stagecoach also plans to invest about £40 million on "core station improvements", including major refurbishment at 14 large stations.
Commenting on today's development, Peter Hendy, commissioner for Transport for London (TfL), said: "Six million people already use Oyster every day in London. This means that from 2009, passengers on the South Western franchise will be able to use Oyster
ticketing, including pay as you go, integrated with transport modes across London, including the Tube, bus and Docklands Light Railway (DLR).
"It is vital we have an integrated ticketing system between mainline rail and TfL's tube, bus and DLR network in London, so that passengers can enjoy the full benefits and convenience of Oyster. This is a major step towards fully integrated ticketing in London."