The UK Secretary of State for Transport Grant Shapps has stated that railway operators have the option to temporarily transition to Emergency Measures Agreements.
To ensure that the rail services continue during the coronavirus (Covid-19) pandemic, railway operators can use the option to let the UK Department of Transport take over the franchise.
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Under the Emergency Measures Agreements, normal financial operations will be suspended and all the revenue and cost risk will be transferred to the government.
The rail operators will run the daily services and will incur a small, pre-determined management fee.
For those rail companies that opt for the agreements, the current franchise agreement’s financial mechanisms will initially be suspended for six months.
It can later be further extended or cancelled earlier, based on the agreements.
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By GlobalDataThis move will make sure that the rail services continue to operate to provide means of transport for essential workers and to make sure that the service starts running after the crisis normalises in the future.
In a statement, Shapps said: “In the longer term, these agreements will also minimise disruption to the rail sector. The railways have already seen up to a 70% drop in passenger numbers, with rail fares revenue reducing as people increasingly work from home and adopt social distancing, and total ticket sales down by two-thirds from the equivalent date in 2019.
“Suspending the usual financial mechanisms will not only guarantee that services can be sustained over this difficult period, but it will also provide certainty for staff working on the railways, many of whom are working hard every day in difficult conditions to make sure we keep the railway running.”
Shapps added that the fees will be up to 2% of the cost base before the beginning of the Covid-19 pandemic.
This is expected to incentivise operators to meet their reliability, punctuality and other targets.
If an operator does not opt for Emergency Measures Agreement, the Operator of Last Resort of the Government can step in.
Passengers who have pre-booked their ticket and do not wish to travel can also refund the ticket with no additional charge.
