THE two transport giants vying to run the lucrative West Coast Main Line have traded blows, with Virgin Rail accusing FirstGroup of making a "preposterous bid" for the Scotland to London franchise.
Virgin chief Sir Richard Branson's rivals for the route accused his firm of making ignorant claims based on "bad guesses".
The UK Coalition Government was just hours away from signing a £5.5billion contract with Aberdeen-based FirstGroup, when it was stopped in its tracks as Virgin Rail began legal action to have the deal reviewed by the courts.
Sir Richard told the House of Commons Transport Committee the Government's rail franchise system was "flawed" and the Department for Transport (DfT) had not followed its own rules.
He called for a review of the regulations, insisting that until this was completed, the award of a new 13-year franchise for the West Coast Main Line should be put on hold.
"The decision [to award the franchise to FirstGroup] is bad for the country, bad for passengers and bad for passengers on other franchises," declared Sir Richard, whose company has run the West Coast Main Line since 1997.
He said: "This bid by FirstGroup is absolutely preposterous. It is completely ridiculous. It is taking the system for a ride."
He insisted Virgin Rail had asked questions of the DfT about the bidding but replies "have not been forthcoming".
Conservative MP Kwasi Kwarteng suggested Sir Richard was "using your prestige and fame" to challenge the Coalition's decision.
The tycoon replied by pointing out that across various modes of transport he had "created a number of ventures with the principal aim of making a real difference to those sectors". He said: "The profit motive is not important to me. I am lucky enough to afford breakfast, lunch and dinner every day for the rest of my life."
The Virgin boss told the committee that FirstGroup had "some cash issues" to deal with. This allegation was later put to FirstGroup's chief executive Tim O'Toole, who denied it, saying: "No, we don't have a cash problem.
"We have steadily paid down debt. This year, we have pointed out that cash will be flat ... but we believe cash flows will return to what they were."
He was repeatedly pressed as to whether FirstGroup's bid was more risky than Virgin's, to which he replied: "Absolutely, there is a risk. There is a risk in any venture of this kind."
He did admit his firm's deal was riskier than Virgin Rail's but that was because it wanted to do more.
"Since we expect to grow the line throughout its life [until the end of 2028] we are taking on more than Virgin ... and that is more risk," said Mr O'Toole.
Asked if FirstGroup, which runs ScotRail, could follow other train companies by pulling out of their franchises early, Mr O'Toole replied: "I don't think there is any chance of our handing back the keys."
FirstGroup has promised more trains, lower fares and refurbished stations on the route, which serves 31 million passengers a year.
Mr O'Toole insisted Sir Richard's accusations against the company were "flat wrong", claiming Virgin Rail had been making "bad guesses about our bid because they have not seen our bid".
Asked about concerns that jobs would be lost on the West Coast Main Line if FirstGroup took over, Mr O'Toole said its bid assumed staffing levels would be the same, at least for the first five years. Asked what would happen after five years, Mr O'Toole said it was "very difficult" to predict.
On fares, he added: "We assume prices will increase by the rate of inflation."
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