Abellio UK is the country’s fourth largest rail passenger transport company with revenue (including joint ventures) of €1.9 billion in 2016.

Description of the UK rail market

The UK rail market has been privatised since 1994, and now operates under a franchise system. This involves companies undertaking a competitive process to win the right to operate individual networks of varying sizes, for a specified period. The majority of the UK’s 20 rail franchises are contracted by the Department for Transport, with a combined turnover of approximately £10.9 billion. This is moving to a more devolved model, however, with the constituent nations of the UK and its regions slowly beginning to take more responsibility for awarding franchises. The Department for Transport also renationalised Network Rail, the national infrastructure provider, in late 2015. More structural changes are expected to be made to Network Rail in 2017, including devolved responsibility and decision-making, and the potential for parts of Network Rail to be re-privatised. The UK rail market has a robust tender pipeline, with a number of contracts due to be re-tendered steadily over the coming years. Abellio is expecting to hear the outcome of the West Midlands bid in the course of 2017 and is competing for the Wales & Borders franchise (the decision is due in 2018).

2016 in a nutshell

Abellio UK is currently the fourth largest owning group in the UK, with an annual turnover of €1.9 billion in 2016 (including joint ventures). The company’s portfolio is on a stable footing for the medium term, with the first potential contract coming to an end in 2022, if ScotRail is not extended.
Abellio UK was delighted to win its bid to continue running the Greater Anglia franchise in October, but was sad to see the loss of its Northern franchise in April, which it had operated since 2004 as a joint venture with Serco. The Merseyrail franchise and Abellio London & Surrey’s bus operations continue to be run profitably over their respective contract periods.
ScotRail has been through a challenging year following an economic downturn, the UK vote to leave the EU and industrial action, as well as several major infrastructural improvements to prepare the network for the new electrified trains. Abellio UK is working to improve efficiency within the franchise, especially in preparation for the first set of new trains which will begin to be delivered in 2017. The full new fleet will be operational by the end of 2020. This will transform the network completely.
To help with servicing an expanded business portfolio, Abellio UK took over Serco’s Fort William Customer Service centre, creating a shared service centre and complementing the existing financial shared service centre in Glasgow. With this takeover, Abellio made sure that over 50 jobs were secured in an area which already has a low employment rate.
In a wider political context, the UK voted to leave the EU in a referendum in June 2016. The effect on the national economy is uncertain, and the UK government has yet to declare its plans for leaving the EU. The long-term effect of Brexit is unknown, although in the short term the effect will be limited and will mainly be reflected in a lower GBP exchange rate. Brexit is likely also to affect the cost of energy in the long term.

Outlook for 2017

Abellio UK will remain focused on improving operations across its portfolio and driving a step change in the customer experience. This includes continued support from the UK Leadership Team in delivering the ScotRail Improvement Plan and the transformational fleet programme in Greater Anglia.
Abellio UK continues to pursue opportunities to expand its business, and at the end of November 2016 the bid team submitted a bid to operate the West Midlands franchise in a joint venture with JR East and Mitsui. Abellio UK’s share of the bid is 70.1%.
Abellio UK has also been shortlisted for the Wales and Borders franchise in a consortium bid with Aecom and Carillion – required as construction partners for light rail scheme and construction projects. Abellio UK's share of the bid is 65%. The contract awards will be announced respectively in 2017 and 2018, and work has already begun on planning for any potential mobilisation associated with a West Midlands franchise win.
Aside from this, Abellio UK will continue to monitor developments in the rail industry and the wider economy, seeking to proactively shape government policy to its advantage and effectively communicate its work to stakeholders.

Organisation and staff

Abellio UK empowers its operating companies to manage their own businesses, with oversight and intervention as and when necessary. Abellio UK’s head office is based in Glasgow, with a subsidiary office in London, and consists of a number of subject-matter experts as well as a specialist bid team.

Social responsibility

Abellio UK believes it has a responsibility towards the communities in which it operates. It has strategic and local partnerships with communities, and sponsors numerous charitable organisations and events. In 2016, for example, Abellio UK helped the San Fairy Ann cycling club, sponsored a number of events for the Campaign for Better Transport, and was a lead sponsor for the London Transport Museum and the Railway Benefit Fund for railway staff.