THERE were fears that jobs could go and fares could go up after GNER won the right to run the East Coast Mainline.

The Evening Press reported yesterday how the York-based firm had seen off its rivals to win back the prestigious route, but at a huge cost. The company will have to pay the Government £1.3 billion over ten years.

In the wake of that, GNER chief executive Christopher Garnett indicated that job cuts could be on the cards, but said it would be fewer than 300 from its national workforce of 3,000. The company is set to meet trade unions to discuss the future.

Mr Garnett said: "It is about working together to work out how we can become more effective."

He revealed fares could go up to pay for the increased demands on the company.

GNER says thank you to backers

GNER's success in regaining its franchise has thrilled commuters in York and North Yorkshire, and the company knows who to thank, as STEVE CARROLL reports.

ITS message is succinct and simple. Thank you.

These are the two words York-based GNER is saying to each and every person who backed their bid to win a new ten-year franchise.

More than 30,000 people sent in cards, or logged onto the Station Rise-based company's website to pledge their support, as GNER pressed the Strategic Rail Authority for a new mandate. Now the firm's franchise dreams have come true, GNER says it will now work "doubly hard to repay the faith they have shown in us".

GNER chief executive Christopher Garnett said: "We are very grateful for the amazing support for us by people who took the time and trouble to make their views known.

"The support has been fantastic, but at the end of the day the Government chose GNER because we submitted the best bid by offering a safe, more reliable service of a consistently high quality and a value for money service to passengers and taxpayers, as well as being a secure, accountable and viable operator committed to delivering for our customers."

The impact of its victory has been immediate. GNER has been flooded with messages of support. And the share price of its parent company, Sea Containers, rose 2.5 per cent when trading opened on the New York Stock Exchange yesterday.

Still the tributes roll in. Selby MP John Grogan said: "With the success of GNER's bid, passengers can now look forward to a decade of certainty on Britain's premier railway line. The Evening Press's support was crucial in rallying support behind GNER."

Grand Central Rail, another York company awaiting its own track decision for services, said: "GNER had created a benchmark in terms of service quality and delivery, which it would be seeking to match with its own proposed services."

But now the challenge begins. GNER is gambling on increased passenger numbers to fund its massive Government premium payments. Its seven-year franchise, with a three-year extension bonus for meeting targets, relies on getting people on to its services, to meet the £1.3 billion it must pay to the Treasury over the next decade.

GNER will look for rapid growth in its Leeds-to-London market, as well as more passengers on its flagship services to meet the cost of winning the franchise for another decade.

It is a tough task, but GNER has pointed to its record, where passenger numbers shot 34 per cent up over the life of the contract.

Imelda Havers, chief executive of local inward investment board york-england.com, believes the gamble is a risk worth taking.

"Our initial reaction is that GNER's victory is very good news indeed. It is providing a very good service and we are very keen that this continues. It will have a positive affect across York and the wider economy," she said.

"It means we can continue to promote York as being very accessible to London for tourists and business travellers.

"I think the price probably is a bit of a gamble, but they must be confident because they have nailed their colours to the mast.

"I share their confidence. There is huge potential for more, but services have to link up together and be reliable."

Eminent rail industry expert Christian Wolmar said GNER had improved its service. But he cast doubt over whether the company can land its gamble.

He said: "It's a pretty ambitious target. GNER will need to have two-thirds of its seats full in the way bottom end airlines have. The trains would be pretty crowded.

"There aren't many extra trains in this deal at all and I can't see how this will work without some fairly hefty fare increases.

"I can't see how they are going to be able to do this. It seems fairly optimistic. This is okay news for the industry, but it's a very unexciting deal. There is no whizz-bang."

But GNER is full of confidence. Mr Garnett said: "GNER has made the East Coast a successful, growing and profitable business and that is why we are able to pay this premium to Government. It is worth remembering that many train companies receive an annual subsidy that is bigger than the premium we are paying, so we are contributing to the overall rail network.

"Furthermore, GNER will spend in excess of £125 million to make the East Coast a bigger, better and more reliable railway for our passengers.

"We are very confident that we can deliver for the passenger and taxpayer. In the last three years we have invested in rebuilt trains, paid nearly £100m to Government and introduced very popular, value for money fares.

"Our bid is realistic and was ultimately successful following a period of detailed scrutiny by the SRA and its consultants. GNER has proved over the past nine years that we know how to run a quality railway. Our bid will deliver excellent value for money for passengers and taxpayers."

Updated: 10:09 Wednesday, March 23, 2005