Stagecoach Group will hand back operation of the East Coast Main Line to the government, the train operator has said.
The organisation, which has run the franchise with Virgin Trains since 2015, said it had been advised an “operator of last resort” would be appointed to run the London to Edinburgh service.
The company’s subsidiary, East Coast Mainline (trading as Virgin Trains East Coast), is the current operator of the InterCity East Coast rail franchise under an agreement with the department for transport.
ECML has been negotiating a new direct award franchise with the department but now understands that the secretary of state for transport is “no longer considering entering into a new franchise” with East Coast Mainline, Stagecoach said in a statement.
It is the third time in a decade that the government has called a halt to the East Coast franchise.
Stagecoach Group chief executive, Martin Griffiths, said: “We are surprised and disappointed that the department for transport has chosen not to proceed with our proposals.
“We believe our plans offered a positive, value-for-money way forward for passengers, taxpayers and local communities, ensuring the continuation of the exciting transformation already underway on East Coast and a smooth transition to the government’s new East Coast Partnership.”
He added: “However, we respect the government’s decision.
“We will work constructively with the department of transport and the operator of last resort in the weeks ahead to ensure a professional transfer to the new arrangements, supporting our employees and maintaining the same clear focus on our customers as we have over the past three years.
“Today’s decision should not detract from the hard work and dedication of our people at Virgin Trains East Coast, who have been central to the transformation we have been delivering for our customers over the past three years.
“During that time, we have attracted more passengers, greatly increased investment, achieved industry leading customer satisfaction and made significant payments to the taxpayer to reinvest in public services.”
Stagecoach Group said its understanding was that the announcement does not directly affect other franchises and bids for franchises in which the company has an involvement.