FIRST Group and Go-Ahead Group were yesterday awarded new contracts to run the Great Western and Southeastern rail franchises respectively with just a day to go before the existing deals run out.

The new contracts will run concurrently with the emergency measures the government put in place last week to protect the rail industry against the coronavirus pandemic.

After the six-month emergency period ends, Go-Ahead Group will continue to run the Southeastern line under the management contract model introduced by the government, which will see the firm paid a set fee to operate the service.

The new contract will last for a year, with the option of extending it for a further 12 months if the Department for Transport is happy with Go-Ahead's performance.

First Group, whose new contract will run for three years, with the option of an additional one year extension, will revert to a Forecast Revenue Mechanism (FRM) after the emergency measures period ends.

Under this type of contract, First Group share the contract risk with the government, meaning that its revenue will be protected if it is higher or lower than forecast.

(c) 2020 City A.M., source Newspaper