Watch Your Back Branson...

Britain’s Telegraph newspaper has an article on businessman Steven Howard’s latest venture: launching a low cost rail service to rival Britain’s giants. Specifically, Howard has taken issue with the prices and service of Virgin Trains’ Manchester to London line.

Although the article takes a slightly mocking tone (it uses Howard’s apparently self deprecating, humorous statement, “I am a serious threat to Sir Richard Branson. I'm going to run him right off the rails,” as its headline), I find its subject quite interesting.

Virgin Rail is Britain’s fourth largest passenger rail company (based on passenger revenue with a 12.8% market share in fy 02—anyone have more recent numbers). To compete with Virgin Rail, Howard’s strategy is simple no frills service with cheap tickets:

Tickets on the new, no-frills service, called Swift Line, will be considerably cheaper than Virgin's: a first-class return will be £70 compared with up to £280 with Virgin, while standard-class tickets are £60, as against up to £106 with Virgin.

He has rented a locomotive, 13 passenger cars, the driver and the guard from a freight rail service. Legal restrictions have hampered Howard’s goal to run the rush hour service he’d like to; “chartered passenger trains are barred from competing with the holders of rail franchises.” Virgin Rail holds the franchise for the London-Manchester line. However, Howard will run a weekend service.

I find myself reminded of the Chinatown to Chinatown bus services that are prevalent on the east and west coasts of the US. They offer a low cost alternative to traditional modes of transportation, such as Amtrak, Greyhound, or airlines, and have been successful outside of their original target demographic. They have even spawned similar private city-to-city bus companies that cater to the non-Chinese population. I know this isn’t the same as a private rail service, but it does share similarities.