FirstGroup is to take over the running of the West Coast mainline train route, connecting London Euston to Glasgow Central, from December.
Along with Italian firm Trenitalia, FirstGroup said the route would pave the way for an era of high-speed rail.
First Trenitalia replaces Virgin Trains, which was barred from bidding to keep the route.
Transport Secretary Grant Shapps said the bid was part of a shift to a new model for rail.
Mr Shapps said the partnership was supported by Keith Williams, who has been commissioned to look at changes to the rail franchising system and who told the BBC that government involvement should be limited to overall policy and budget decisions.
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“This award is positive news for passengers with more services, more direct connections and ambitious plans for a cleaner, greener railway and also represents a decisive shift towards a new model for rail,” Mr Shapps said.
The new partnership will operate in two phases. The first will run from 8 December to March 2026, when First Trenitalia will operate the existing InterCity West Coast services. The second phase will run from March 2026 to March 2031, when it will operate the HS2 high-speed rail service.
It says its 56 Pendolino trains will be completely refurbished, with more reliable free Wi-Fi and better catering. By 2022, it says, it will offer more than 260 extra services each week, increasing seat miles by more than 10% compared with 2017-18. This will cost £117m, the Department for Transport said.
FirstGroup, based in Aberdeen, has been overhauling its business. It is seeking a buyer for its Greyhound buses in the US and is looking at spinning off its UK bus division, First Bus.
Its First Rail business also operates the South Western Railway and TransPennine Express.
Its chief executive, Matthew Gregory, had also indicated the group’s train franchises could be reviewed, depending on the terms offered by the government.
However, Mr Gregory’s concerns about the profitability of train franchises appear to have been addressed by the Department for Transport.
Mr Gregory said: “The differences between this contract and more traditional rail franchises were reflected in the terms set out by the [Department for Transport], which has resulted in a more appropriate balance of risks and rewards for us as operators.
“The West Coast Partnership’s first phase allows us to earn returns on the significant investments in services and facilities for passengers, but protected by a much improved revenue risk-sharing mechanism.
“This will transition to a management contract in the second phase, ensuring we can really focus on using the respective skills and experience within our joint venture to deliver the desired benefits of the HS2 project for passengers and the country.”
The RMT’s general secretary Mick Cash said this was “another political fix by a government whose privatised franchise model is collapsing around their ears”.
“Instead of following the popular public sector route, the Tories are taking yet another gamble on the crucial West Coast lines, with one of the dwindling number of private operator consortia left in the game, in a move that RMT believes is doomed to failure and sure to result in yet more rail chaos.
“RMT will take whatever action is required to protect our members’ pay, jobs, working conditions and pensions on these vital inter-city routes.”
The Department for Transport said it was a “significant move away from the previous flawed franchising system” and would use a forecast revenue mechanism (FRM) – which offers protection against shortfalls in estimated revenues – to avoid a repeat of the issues that affected the previous East Coast Main Line franchise.
Last year, services on the East Coast Main Line were brought back under government control.
FirstGroup said that if such a system had been in use on its South Western Railway and TransPennine Express, the route would have remained profitable.
A spokesperson for Virgin Trains – which has operated train services for 22 years – said it would work with First Trenitalia to “ensure a seamless handover for customers, who should still book and travel as normal”.
The Department for Transport said that by December 2022, there would be 263 extra train services every week, with Motherwell set to become a major calling point for most West Coast Partnership services. Direct services from London to destinations including Llandudno and Gobowen will now be introduced, while Walsall will get its first direct InterCity services.
Subject to approval from the Office of Rail and Road, First Trenitalia will operate two trains an hour between Liverpool and London – a route that Virgin Trains had said it also hopes to run by launching a new hourly train service between the two cities from May 2021.