The South Western rail franchise will be put out to tender, it has been announced by the Department for Transport.
The franchise is currently run by a subsidiary of transport operator Stagecoach Group - Stagecoach South Western Trains. It had previously been given the franchise by Direct Award negotiations - granted by the government instead of won via tender.
The company confirmed that discussions about Direct Award have ended with the department, and the South Western franchise will be now opened to competition in 2017.
A Department for Transport spokesperson said:
In order to ensure the best deal for passengers and taxpayers, we are proceeding to a full competition for the South Western franchise, and negotiations for the Direct Award have been brought to an end.
Shares in Stagecoach closed down 2.28 per cent at 394.2p on the back of the news.
Stagecoach has run the South Western rail franchise since 1996, and the department is likely to keep it running the franchise until August 2017.
The firm said in a statement put out today:
We believe we are in a strong position to submit a powerful and attractive bid for a new South West Trains franchise.
The firm also said that is “positive about opportunities in the UK rail market”. It is continuing to negotiate Direct Award of the East Midlands Trains, and is also shortlisted for both the Transpenine Express and East Anglia Franchises.