A YORK firm's hopes of running cut-price rail journeys across the Pennines have been dashed after its plans were turned down.

A bid for track access by the Grand Central Railway Company has been denied by the Office of the Rail Regulator (ORR), because it has decided that enough frequent high-speed services already exist on its routes.

Grand Central wanted to introduce a discount cross-Pennine rail service with up to a dozen cheap services a day, with return journeys from York to Leeds for as little as £2 and Leeds to Manchester from just £8. The company was formed four years ago, and planned to run on a route from Newcastle to York, Leeds, Manchester and Preston. It would have been operated without any Government subsidy.

But the rail regulator, Tom Winsor, said he had "material doubts" about Grand Central's projected level of revenue generation, saying there was a lack of evidence that they would have made that much money.

He said that there would be a "considerable risk" to existing operators, with the new company adversely affecting their ability to plan ahead.

A standard off-peak day return between York and Leeds currently costs £8.30, and a similar ticket to and from Manchester costs £16.60.

In his report, Mr Winsor says: "Approving Grand Central's application in these circumstances would therefore involve a considerable risk with respect to the level of abstraction from existing franchised operators, with adverse consequences for their ability to plan their businesses and for the Strategic Rail Authority's overall budget."

In March, the Evening Press reported that the ORR had awarded the firm an operator's licence, described by Grand Central chiefs as a "key milestone", before holding a final hearing on March 31.

Its rail proposals have been welcomed by rail passenger groups, but, in previous meetings, they have come under fire from rival operators who claim the tracks are already congested enough.

Nobody at Grand Central was available for comment today.

Updated: 10:44 Monday, June 21, 2004