Japanese private firm gets the nod to run British rail franchise

Written By: David Hencke
Published: April 17, 2016 Last modified: October 25, 2016

A Japanese private rail company has been given approval by the British Government to bid for rail franchises in an attempt to increase foreign ­competitors seeking to run the UK’s railways.

The Department for Transport announced the move during the recent parliamentary recess when it released the short list of companies bidding for the West Midlands franchise by London Midland from Euston and Birmingham.

East Japan Railways has teamed up with the Dutch state run company Abellio to bid for West Midlands. But ministers also took the opportunity to allow East Japan Railways special status to bid for any franchise available up to 2020.

A statement from the DoT read: “The Department for Transport also announced today the joint consortium of East Japan Railway Company and Mitsui & Co Ltd has been awarded a new Pre-Qualification Questionnaire (PQQ) Passport. The ­consortium joins the department’s list of ‘passport holders’ who are eligible

to express an interest in all upcoming rail franchise competitions for the next four years.”

The decision means the company, which operates Tokyo’s commuter services and some bullet trains across Japan, will have access to the British train market.

It will be the first Japanese rail company to do this.

The decision will be very opportune for the Japanese company according to its latest annual report.

This reveals that the company is currently facing a downturn in its commuter services serving Tokyo partly caused by a declining population and is looking to expand abroad. It currently provides no services outside Asia – where it is helping develop a mass transit rail system for Bangkok and improve train services in Indonesia.

The annual report says: “Generally, Japan’s declining population is seen as unfavourable for the transportation industry. However, our performance in fiscal 2015 proved that, even in an era of population decline, we can grow revenues by steadily implementing various measures.”

With lower fares in Japan than the UK, the move could give the operator access to the lucrative London commuter market and it could also offer its services to maintain and build new trains for the British market.

The company’s management policy is summed up in the annual report as an “Eternal Mission” and “Pursuing Unlimited Potential”, with overseas growth seen as a major goal.

The Conservative Government ­announced a short list of three groups to run London Midland. They are: a consortium run by London and West Midlands Railway Ltd, a subsidiary of Govia Ltd (a joint venture between Keolis and Go-Ahead Group)’ West Midlands Trains Ltd, currently a wholly owned subsidiary of Abellio Transport Group Ltd with East Japan Railway Company and Mitsui & Co Ltd as minority partners; and MTR Corporation (West Midlands) Ltd, a wholly owned subsidiary of MTR Corporation (UK) Ltd which runs the Hong Kong rail system.

The new London Midland operator will take over in October this year.

About David Hencke

David Hencke is Tribune's Westminster Correspondent