Two of Britain's largest train operators are attempting to renegotiate their franchises to finance deals for new carriages which they insist are needed to head off the threat of overcrowding (link below.)
http://www.rmtbristol.org.uk/2007/09/train_firms_seek_new_agreement.html#more

Virgin Trains has held talks with the government about reducing franchise payments in order to finance a £200m expansion programme for its west coast contract. FirstGroup is expected to meet officials this week to discuss an extension to its First TransPennine franchise.

Virgin Trains wants to renegotiate the contract terms after the Department for Transport turned down its request for a two-year franchise extension to finance the acquisition of 100 new Pendolino carriages at a cost of around £200m. The train operator is seeking changes to its payment profile to compensate for the disruption caused by the introduction of new carriages , which would arrive in the final year of the London-to-Glasgow franchise in 2011.

FirstGroup needs around 50 more carriages to add a fourth carriage to its three-carriage fleet of Pennine Class 185 trains. It wants to finance the deal by activating a five-year extension in its contract , which would extend the franchise to 2017.

Virgin Trains declined to comment on the attempt to reduce payments on a franchise that receives a government subsidy of £1.4bn. A spokesman said: "We believe there are great opportunities for passengers and the industry in adding capacity. We are working constructively with the government on how best to take that forward."

Virgin Trains and FirstGroup are making their pitches for changes to the franchise terms when , according to industry consultants, there is little room for error in the government's financial calculations.

In an interview with the Guardian last month , Chris Cheek , editor of the annual Rail Industry Monitor, said: "What everybody is concerned about is what happens if, after the financial turmoil of the past fortnight, the demand stops. It is all very tight in terms of meeting the targets set out in the white paper."

Industry insiders said the Virgin Trains request would almost certainly be turned down by the DfT , which has a policy of not renegotiating franchises.

Virgin Trains and FirstGroup are seeking more carriages ahead of a government procurement programme that will see 1,300 new vehicles put on the rail network by 2014.