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  "documentTitle": "Rail industry cost and revenue sharing (2011)",
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  "authorName": "L.E.K.",
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  "notes": "The slide uses a chronological timeline structure to explain policy shifts.",
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      "kind": "diagram",
      "text": "Privatisation to 2003, 2004 to 2010, 2011 onwards",
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      "kind": "disclaimer",
      "text": "ORR/ATOC/Network Rail. Rail industry cost and revenue sharing.",
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      "text": "The DfT announced the conclusions of its review of franchising policy in Dec 2010 and Jan 2011. Longer franchises of 15 to 22.5 years duration; Less detailed specifications; Residual value mechanism to encourage private sector investment; Single party responsible for stations management; Franchisee either takes all revenue risk or DfT shares risk through link to macroeconomic factors (e.g. GDP); Profit share mechanism; Consideration of a review mechanism to re-set important elements of longer franchises. Many of the details of the DfT's new approach are still unclear as they will be developed on a franchise-by-franchise basis.",
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      "text": "The SRA introduced a new franchising approach in 2004. Key features included: 7-10 year franchise terms with the final 2-3 years subject to achieving performance targets; Prescriptive train service specifications which left operators with relatively little flexibility over the timetable; Revenue share and support mechanism; Franchises awarded based on NPV of base case subsidy / premium provided that bidder meets deliverability threshold. The DfT continued with this approach when it took over responsibility for rail franchising.",
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      "text": "The initial franchises started on various dates in 1996/97 with franchise terms of 7 to 15 years. The longer durations were typically granted where the rolling stock fleet was to be replaced. The franchises included Passenger Service Obligations which specified the minimum service provision. This left scope for operators to run additional services. A number of franchises were re-let prior to 2004 based on a range of different franchising models.",
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      "text": "Analysis of current situation",
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