LONDON - British transport firm FirstGroup has won the right to operate Britain's Inter City West Coast rail franchise, which runs from London to Scotland, after outbidding incumbent Virgin Rail.

Britain's Department for Transport (DfT) on Wednesday said FirstGroup had won the 13 year franchise with a bid of 5.5 billion pounds ($8.6 billion).

FirstGroup will start operating the new franchise on December 9, 2012 and expects the route, which currently has annual revenues of around 900 million pounds, to generate an operating margin of roughly 5 percent over the life of the contract.

“It (the route) has a considerable amount of unused capacity that will expand further with the addition of 106 new Pendolino coaches by the start of our new franchise,” FirstGroup chief executive Tim O'Toole said.

“This capacity exists on the key growth corridor for the UK economy, linking a number of the UK's largest and growing major urban areas including London, the West Midlands, Greater Manchester, Liverpool and Glasgow.”

The company also plans to add to that capacity through the introduction of 11 new six-car electric units to operate on Birmingham-Glasgow services.

The shortlist for the franchise included incumbent Virgin Trains with its joint venture partner Stagecoach, and two foreign, state-backed groups, Keolis of France and Holland's Abellio.

Britain's rail minister Theresa Villiers said the new franchise would “deliver big improvements for passengers, with more seats and plans for more services”.

She added that First West Coast would reduce some fares by an average of 15 percent over the first two years of the franchise. - Reuters