Stagecoach, FirstGroup dash hopes of early start to new London Overground

Londoners' hopes for an early start to the new Overground operation were dashed by the Department for Transport on Thursday, with the announcement two private operators had been pre-qualified to run the next South Western franchise.

Incumbent operator of South West Trains, Stagecoach, and FirstGroup - both FTSE 250 firms - had been confirmed by the DfT that they would receive an invitation to tender for the new franchise.

The current tenure for the London Waterloo-based network was due to expire in December 2017. It extended to parts of Berkshire, Devon, Dorset, Hampshire, Surrey, Wiltshire and the Isle of Wight.

"We are proud to have been trusted to run the South Western network for the past 20 years", said Stagecoach Group chief executive Martin Griffiths.

"The continuity of one operator understanding and serving passengers and local communities has been key, helping transform the network and attract millions of new customers to rail travel", he added.

Stagecoach also operated East Midlands Trains, had a 49% stake in Virgin Trains West Coast and a 90% shareholding in Virgin Trains East Coast. FirstGroup was responsible for the TransPennine Express and Great Western Railway franchises, held 80% of Hull Trains and operated the Heathrow Connect service in a joint venture with Heathrow Airport.

"We have extensive experience of running commuter, inter-urban, regional and long distance services - such as those that make up the South Western franchise - and a strong track record in delivering passenger growth, as well as capacity and infrastructure upgrades, on our Great Western Railway and First TransPennine Express networks", said First Rail managing director Steve Montgomery.

"The South Western franchise plays a crucial role in keeping people moving and communities prospering across the region", he continued.

On 21 January, the Department for Transport and the Greater London Authority announced that Transport for London would take over the operation of all of the capital's suburban rail network, incorporating it into its existing London Overground network.

At the time, it was confirmed the Integrated Kent franchise, currently operated by Southeastern, would be the first to come under TfL control as it expired in 2019.

However, there was some discussion that the South Western franchise could also come under the Mayor's control sooner given the timing of the franchise discussions.

Thursday's announcement that the two pre-qualified operators were listed companies appeared to nullify those chances, though the DfT did not make that immediately clear.