I would have thought all it will do is decrease the premium / increase the subsidy payable to or by the TOC. There might be some downwards pressure on TOC returns but they won't, I suspect, be required to run the business at a loss.
As it stands the TOCs rarely take full revenue risk and some of the franchises are basically a payment to the TOC to run the service.
It's not really a meaningfull comparison
I went into this in a previous thread. Basically, the rail industry is not a competitive market. For one thing, the government pumps vast subsidies into the industry - a couple of billion directly each year, and will be giving £37.5 billion of loan guarantees to Network Rail over five years.
Given those sums are being pumped into the industry, it seems sensible for the government to have some say over the fares and structure of the industry.
Despite what Virgin may say, the train operating companies (TOCs) do not invest massive amounts. Mostly (although not always) the locomotives and carriages are bought by Rolling Stock Owning Companies (ROSCOs) - usually banks and other large institutions - that lease them to the TOCs. This is a model copied from the 'dry lease' used by many airlines. It is also sensible, as no company would want to spend hundreds of millions buying new rolling stock when their franchise only lasts five years.
The energy market behaves much more like a market, if an imperfect one. Unlike the rail passenger industry, a customer can choose a supplier and switch easily. It's hard for me to choose to go between Cambridge and Edinburgh using Scotrail or FGW. The energy companies also invest large amounts of money - a new CCGT can easily cost above a billion to build.
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Given those sums are being pumped into the industry, it seems sensible for the government to have some say over the fares and structure of the industry.
Despite what Virgin may say, the train operating companies (TOCs) do not invest massive amounts. Mostly (although not always) the locomotives and carriages are bought by Rolling Stock Owning Companies (ROSCOs) - usually banks and other large institutions - that lease them to the TOCs. This is a model copied from the 'dry lease' used by many airlines. It is also sensible, as no company would want to spend hundreds of millions buying new rolling stock when their franchise only lasts five years.
The energy market behaves much more like a market, if an imperfect one. Unlike the rail passenger industry, a customer can choose a supplier and switch easily. It's hard for me to choose to go between Cambridge and Edinburgh using Scotrail or FGW. The energy companies also invest large amounts of money - a new CCGT can easily cost above a billion to build.
Different markets, different solutions.
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