The Office of Rail and Road has approved applications for services on East Coast Main Line between London and Edinburgh
Applications from Virgin Trains East Coast and FirstGroup for new train services on the East Coast Main Line (ECML) between London and Edinburgh have been approved by the Office of Rail and Road (ORR).
The watchdog said that the new services will benefit passengers travelling to a host of destinations including Newcastle and York.
The news means FirstGroup will go up against Virgin Trains and Stagecoach to offer services on London to Scotland lines. Virgin Trains East Group is a joint company between Stagecoach and Virgin Trains.
FirstGroup will be able to operate five budget rail services a day each way from 2021 under the 10-year deal.
ORR's decision means FirstGroup will operate "open access" rail services in competition against Virgin Trains. Open access lets rival rail operators to go into competition against franchise holders if their plans are approved by the regulator and Network Rail.
FirstGroup's chief executive Tim O'Tooles said: "I’m pleased that the ORR has granted track access rights for our unique low-cost service between London, the North East of England and Edinburgh. This is great news for passengers, as our new service will widen the choice of travel options between these cities and offer an attractive alternative to those available today."
But the decision was less welcomed by Stagecoach, which said it will assess the regulator's decision. Stagecoach chief executive Martin Griffiths said that open access competition with an established franchise was not in the interests of passengers or taxpayers.
However, Virgin Trains East Coast has been given the nod to increase its services on the line effective from may 2019.
In 2014 and 2015 ORR received applications from three train operators seeking to introduce new train services on the ECML.
ORR carried out "extensive consultation and analysis of the competing applications, looking at the benefits they would bring to passengers, the effect on public funds, the benefits of competition, and whether they would make best use of the capacity on the route".
After the consultation, ORR did not approve the application from the Great North Eastern Railway Company Limited, did approve those from Virgin and FirstGroup.
John Larkinson, ORR’s Director of Railway Markets and Economics said: "These new train services will give passengers more choice on services to Edinburgh and London and provide more frequent trains to towns and cities which are not so well served by rail today.
"Our decision has been informed by extensive analysis, formal industry hearings and detailed engagement with all parties. We have carefully weighed up the potential passenger benefits and the financial impacts on existing operators and the government, as we are required to do by law."