Emergency Recovery Management Agreements (Ermas)

Go-Ahead and keolis operator Govia Thameslink Railway will work under an ERMA until the end of their contract term in September 2021, with the potential for a further extension. Go-Ahead said the management contract means that GTR is not exposed to changes in passenger demand or ancillary revenues such as car parks and retail commission. Merriman said: „The Secretary of State told our committee in June that he wanted to move to TfL contracts. The government`s interim emergency contracts are somewhat similar to that, but what is missing is the independent contracting body that Keith Williams referred to. Without such a body, the DfT will not be able to encourage performance and change. Each ERMA requires that, by mid-December 2020, OCD agree with the DfT on whether and, if so, how many aid or other payments from the parent company would have been required to terminate existing franchise agreements had the pandemic not occurred. When the pandemic struck, we intervened to maintain rail traffic for key workers and important supplies. Today, we are renewing this support with new agreements, the so-called Emergency Aid Agreements (ERMAs), to support the recovery in the United Kingdom and to continue the fight against the pandemic. Both LNER and Northern are operated by operator DfT Last Resort and are therefore not subject to any emergency agreement. Merseyrail, which leased Merseytravel as a concession to a joint venture in Serco and Abellio, has not benefited from any contractual changes and continues to work under pre-co-cosy conditions. The London Overground and Crossrail concessions, leased respectively by Transport for London to Arriva and MTR, are more likely to face the revenue risk than the operator, and operators have therefore not been exposed to the sudden drop in demand caused by the pandemic in the same way as traditional franchises. Statement on the introduction of ERMA to support the UK`s recovery and the fight against the COVID 19 pandemic.

Operators have been forced to enter into much more ambitious management agreements, with stricter performance targets and reduced management costs. Administrative costs do not exceed 1.5% of the franchise cost base prior to the start of the pandemic. DfT continues to forego the revenue, costs and conditional capital risk of OCD and pays a fixed administrative fee with the potential for an additional results-related charge based on measures such as punctuality, passenger satisfaction and financial performance. The total royalty potential is 1.5% of the maximum cost base of each franchise prior to the pandemic.