Virgin Rail Group (VRG) announced on 13 December that it has agreed formal terms for a reinstated contract with the Department for Transport (DfT) for its West Coast rail franchise as it continues a period of massive increases in customer numbers.

The franchise deal starts immediately and will run until March 2012, replacing the Management Agreement (Letter Agreement 2002) which has been in place since July 2002 following the collapse of Railtrack plc.

Under the deal, VRG plans to increase the number of passenger journeys from 20m a year in 2006/07 to more than 30m a year in 2011/12 on the West Coast routes between London Euston and the West Midlands, the North West, Cumbria and Scotland. Under separate proposals, VRG is discussing with the DfT the feasibility of adding two extra cars to each of its 53 nine-car Pendolino trains, which would provide a further 10m seats to meet expected demand.

Already the West Coast is showing some of the biggest rises in customer numbers on the rail network, and there are plans for even greater growth when thousands more train services a month are added from December 2008, once Network Rail has completed the last stage of the West Coast Main Line modernisation project.

In 2005/6, customer numbers grew by 21 percent, the biggest increase in the rail industry, and similar growth figures are continuing on much of the West Coast. From December 2008 the number of daily train services will increase by 32 percent, and there will be around 10m extra seats available a year compared to now. Three trains an hour will operate from London to Birmingham and London to Manchester (currently two per hour). A new hourly service will operate from London to Chester with more - and faster - trains from London to Scotland and Birmingham to Scotland.

In addition, from December 2008, weekend services will change massively, with almost double the number of trains operating on Sundays subject to final agreement with Network Rail.

VRG Chief Executive Officer, Tony Collins said: "This is great news for Virgin and for the rail industry. We can now focus on further improving rail services on the West Coast Main Line and providing long-distance inter city train services that build on the successes to date. "With rail providing a real environmental benefit over other transport modes, coupled with the further increases in services and reductions in journey time from 2008, we expect to see even more customers vote with their feet and desert domestic airlines, as they do their bit to reduce their personal carbon footprint."

West Coast Mainline will receive an average of £259m in payments each year until 31 March 2012. The support payment is mainly to contribute to Network Rail track access charges, which have risen steeply to more than £400million each year as a result of the £8.6billion cost of the West Coast Mainline modernisation project.

The Management Agreement was set up in 2002 following the financial collapse of Railtrack and changes to the West Coast Main Line modernisation project which prevented VRG operating a frequent 140mph train service as originally proposed.