Virgin Rail has lost its bid to continue running the West Coast Mainline route to the UK’s largest train operator FirstGroup.
FirstGroup, which already operates Great Western and Scotrail, said it would "offer substantial improvements in the quality and frequency of services".
The government says FirstGroup’s new trains should add further 12,000 seats a day on West Coast routes from 2016.
But Virgin is believed to have been ‘outbid’ on the franchise leading unions and rail campaigners to argue jobs will be cut, fares will rise and catering services will be cut back.
Sir Richard Branson, whose Virgin Rail has operated the franchise since 1997, said the loss of the franchise was "very disappointing news".
First Group will take over the franchise from 9 December and operate the service until 2026.
FirstGroup’s chief executive Tim O’Toole told the BBC it was a good deal for the company and the public.
"Our bid also delivers value for taxpayers by returning premiums to the government underpinned by sustainable growth in passenger numbers and revenues from the utilisation of significant available capacity," he said.
The route is the first of several big franchises to be up for grabs in the next few years.
