In the May 1997 issue of The Railway Magazine, Editor Nick Pigott interviewed Richard Branson about Virgin Rail, the West Coast and CrossCountry franchises, proposed new trains and the challenges facing the newly privatised railway. Branson also discussed railway investment, Railtrack and his childhood interest in trains.
Original introduction
THE NEW RAILWAY BARONS:
Richard Branson
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Following his interview with Stagecoach boss Brian Souter in the November issue, Editor Nick Pigott continues his series on the new railway barons by talking exclusively to the billionaire head of Virgin Rail
The ‘anorak’ factor
FOR years, the railways of Britain have laboured under what is popularly known as the ‘anorak’ factor – a misguided belief among comedians and trendy media moguls that anyone associated with rail must automatically be a ‘trainspotter.’
So what happens when the trendiest and glossiest media mogul of them all becomes involved? Will his company’s glamorous jet-set image finally give trains a respectability they have not had since the heady days of the ’thirties . . . or will the anorak image instead rub off on Virgin and drag it down to its own level?
It was a question Richard Branson warmed to. Pausing only to congratulate The Railway Magazine on its centenary, he said: I see ridding the railways of their anorak image as simply another part of the challenge we have taken up – and I intend to rise above it.
“It is vital that we make our move into the railway market a success, not only because of the value to the entire nation of a successful rail privatisation programme, but because it is important to the Virgin name and to all the people who come into contact with the Virgin name.
“I don’t wish to sound immodest, but the public perception of the airline business was also in a pretty poor state before we came along 13 years ago and introduced attractive fares and new levels of customer service and entertainment.
“Gradually, other airlines brought their services into line with Virgin and I don’t see why it should be any different with the railways.”
In fact, Richard is so confident of success with train operation that he has gone on record as saying he believes the turnover of the Virgin Rail Group could overtake that of his airline business by 2003-4.
Four years of improvement
“Obviously, it’s going to take time,” he told me, “which is why we have chosen our words very carefully in the pledges we have made with regard to the West Coast franchise. We are deliberately telling our customers not to expect too much for four years, which is how long it will take ourselves to get the brand new trains up and running and for Railtrack to improve the infrastructure of the Euston-Glasgow route.
“Once those vast improvements are in place, I am confident this country will have in Virgin Rail one of the finest train services the world can offer. That in itself should prevent any association between ourselves and the bad old days of BR and anoraks.”
I put it to him that his choice of name for the first re-liveried Class 90 – Mission: Impossible – might suggest he doubted his own ability to deliver. He laughed: “Ah yes, but don’t forget that in the film of that name, the good guy won out in the end, even though everyone said he wouldn’t.
“I often travelled on the West Coast and CrossCountry routes in BR days,” recalls the 46-year-old entrepreneur. “It was obvious there was a serious lack of direction and commitment, particularly from the staff. I intend to give the staff something to be proud of, something to feel part of – and I think you will see an enormous transformation in attitudes.
Catering and customer service
“Take on-train catering, for instance. On the CrossCountry services, BR used to make a £2m a year loss on it. How on earth can you make a loss selling food and drink to a captive audience, for heaven’s sake?!
“There were so many opportunities BR just didn’t see, which we intend to exploit in the same way we have revolutionised air travel. There are now millions more people travelling across the Atlantic because of the attractive fares and many innovations we have introduced, such as seat-back videos – which we shall have on all our newly-built trains.”
Plans for new trains
At this point, Richard revealed that Virgin is to order a total of between ninety and ninety-five new trains to be shared between the West Coast and CrossCountry routes. His chief executive, Brian Barratt, explained that the company was currently in the process of deciding whether to opt for an all-tilting fleet or whether to go for 40 tilting trains for West Coast use and have conventional trains built for the other services.
“We have yet to carry out the feasibility study on whether tilt would be justified on CrossCountry as well, but we can say that the order will definitely be homogenised with a common-user element throughout, the only difference being that CrossCountry traction names will be based on themes of ‘Red’ while VWC’s will be named after movies with railway links.
“The order will include nine-car and seven-car sets, and there will also be some four-car trains to give us extra flexibility and enable us to serve smaller areas more efficiently.
“Exactly how many will be electric and how many diesel we haven’t decided yet, but we’re committed to an electric railway on the West Coast. We’re not ruling out further use for the HSTs, though, even when the new trains are in use. They are, after all, an excellent product.”
Expansion and competition
With this in mind, Richard Branson moved onto the subject of expansion in response to my question on whether he was happy with the franchises he had won.
“It’s true we were unsuccessful bidders for Gatwick Express, Thames Trains, WAGN and Thameslink”, he says, but if I had been asked before the entire privatisation process began which three companies I would have wanted to end up with, I would have said: West Coast, CrossCountry and Eurostar – and that’s exactly what we’ve got, so I’m delighted!
“It’s tempting to say we had a grand plan all along to end up with those three, but I have to admit it was somewhat fortuitous.
“When considering which franchises to go for, we didn’t want to overbid so that we couldn’t deliver the product and I think we’ve got it just about right. Many of the other franchise operators seem to have gone for cutting costs, but we think we can make our service pay by going all out to get people off the roads. I want to see the M6 grassed over!”
Richard says that managing Eurostar trains before landing the two InterCity franchises taught his company a lot. “If you add the three networks together, I believe we’re the biggest train operator in Britain, perhaps not in terms of profit or density but certainly in terms of inter-city prestige.
“We’ve got a hell of a lot to achieve in the next four years and I think we’ve got enough on our plate for the moment, but once we’re up and running in the early part of the next century, I believe people will go out of their way to travel on a Virgin train rather than someone else’s.”
I put it to him that as passengers heading for destinations miles away from his routes don’t currently have the option of travelling on his trains even if they want to, this sounded as though he had a much grander vision.
“Yes. Once true ‘open access’ is allowed, we shall be looking for other opportunities – on tracks other than those we currently operate, if necessary. That, after all, is what competition is all about.”
Commenting on the fact that James Sherwood, of the rival GNER franchise, is now said to be ordering eight tilting trains of his own, even though the relatively straight East Coast route is not expected to bring the greatest benefits from tilt technology, Richard said: “Who’s to say Jim isn’t thinking the same way we are? The East Coast may not be the route on which he eventually intends running those trains . . .”
A possible Labour government
But first, Mr Branson has to contend with the possibility of doing business with a Labour government should the electorate decide to end 18 years of Conservative rule on May 1.
“It’s not something that worries me too much”, he told me. “I think the leaders of the Labour Party have begun to realise that whereas a year ago, privatisation was being viewed by the public and media as one step too far, it has – despite the present problems of South West Trains – turned into something far more acceptable.
“I don’t think for a minute that Labour would have privatised the railways themselves, but I believe that secretly, they are quite relieved it’s happened and I therefore don’t think they’ll do too much to rock the boat!
“I am confident we can work with them.”
Whichever way the Labour Party looks at the privatised railway scene it may inherit, it will not be able to ignore the fact that hundreds of millions of pounds worth of orders have been generated as a result of it, which could potentially go towards the British train-building industry.
Virgin is planning to spend several hundreds of those millions itself and there is no doubt that that sort of investment in the UK would do much to improve the image of privatisation, both inside and outside the industry.
British manufacturing and new technology
Richard is only too well aware of the importance of placing his order with a manufacturer who possesses a British-based works, but at the same time recognises that his company dare not afford to experiment with untried technology.
“If, when the bids come in, there are two similar prices, one based on a British plant and the other abroad, I would obviously opt for the former. But if the foreign tender is superior, it would be a case of having sleepless nights before making a decision.
“Having said that, though, the industry generally has come a long way since the untried APT technology of the 1970s and whichever manufacturer we go to is likely to be able to deliver a reliable product.”
One of the reasons Richard is planning to buy so many trains is that he sees great value in frequency as well as speed. “The faster and more reliable they are, the more services we can fit onto the same track and the more we will attract passengers to us”, he said.
Childhood railway memories
Attracting passengers back to lost railway services is something a lot closer to Richard Branson’s heart than many people perhaps realise. For as an eight and nine-year-old back in the late ’fifties, he spent many happy hours by the lineside of the Guildford-Cranleigh line with his schoolpals. “I wasn’t a trainspotter in a fanatical sort of way, but my friends and I used to hang around on the bridge near our homes and watch the trains go by. I didn’t ever own a proper locospotters book, but I seem to remember we had a notebook and we used to jot down the odd fact or two. That was all before that man Beeching closed the line down and did so much other damage to our railway system!
“I also had a Hornby-Dublo trainset when I was a kid and got a lot of pleasure from that. We do, of course, now have a chairman of London & Continental Railways called Hornby, which seems appropriate.”
There’s a third reason why the pop, airline and media mogul has a soft spot for trains: His wife Joan comes from a railway family. “Her father was a guard in Glasgow and her grandfather an engine driver, also in Scotland, so in a way I’m helping to keep the tradition alive”, he smiled.
Branson’s background
So what about the background of Britain’s new railway baron? Richard Charles Nicholas Branson was born on July 18, 1950, the son of magistrate and barrister Edward Branson and grandson of Sir George and Lady Mona Branson. He was educated at Stowe School and in 1969 founded the Virgin Mail Order Co, selling cut-price LP records.
From that sprang a veritable empire of rock and pop music-related companies, all bearing the name Virgin, until in 1984 he diversified by forming Virgin Atlantic Airways. In 1993, he founded Virgin Radio and has also hit international headlines for his ballooning and speedboat exploits, winning the Blue Riband in 1986 for the fastest crossing of the Atlantic by a ship and establishing world records in hot air ballooning, including crossings of both the Atlantic and the Pacific oceans.
For a man unafraid to repeatedly risk his life in such Boy’s Own feats of derring-do, the fact that GNER chief Jim Sherwood has described the West Coast franchise as a “risky business” must be viewed as somewhat relative by the new arrival on the Anglo-Scottish rail scene.
Branson’s entrepreneurial zeal has seen him rise to become one of the ten richest men in Britain with a personal fortune reputed to be close to £1.7billion.
He reportedly owns two mansions in West London, a country home in Oxfordshire, a holiday home in Minorca and a private island in the Caribbean, yet harbours an ambition to reside with Joan and children, Holly and Sam, in a houseboat, just as he did in his student days.
Relations with Railtrack
Returning to grasp the nettle of the West Coast renewal theme, the tycoon revealed: “I have read much about the difficulties other train operators are having in their relations with Railtrack. Our dealings with them have been excellent and there is an enormous willingness to work with us as partners to make this the best railway in the world!
“They have got as much to achieve and to prove as we have and I am delighted to say that their people and our people are now working as a team to make this happen.
“I am obviously nervous at the prospect of taking on this particular franchise because it is so daunting – and I would be deluding myself if I said there weren’t going to be headaches and PR nightmares ahead of us, but as long as we are honest with the public, I think they will put up with the short-term hardship when they see what we’re trying to achieve, and in the knowledge that it will be worth it in the end.
“These things can’t be done overnight. For what seems ages, two neighbours of mine have been rebuilding their houses and to be honest, it’s been a pain in the backside. But now that they’re finished, there are two beautiful homes to be proud of.
“It will be the same with the railway. There are bound to be teething problems – but despite all that, I still feel confident that we can deliver a West Coast service over the next four years which will be as good as, and probably even better, than that delivered over the past ten years!
“It has been a nightmare for BR, but the Virgin Group’s own track record over the years proves we can deliver in the public transportation business.”
The new railway baron left the interview with a message for all his customers and railway industry watchers: “I just hope I am able to deliver on all the things I’ve promised. If we conduct ourselves with panache and style – and everything works for us – we should be able to.”
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