A TRAIN operator's plans to create a new service linking York with major northern cities has met with opposition from rail bosses.

York-based Grand Central Railway hopes to run four daily train services between York, Leeds, Newcastle-upon-Tyne and Manchester. But its plans could be scuppered by the Strategic Rail Authority (SRA).

The authority has written to rail regulator Tom Winsor asking him to refuse permission for GCR to use the tracks as the company would be in direct competition with the Transpennine franchise.

A spokeswoman from the SRA said the final decision would be made by Mr Winsor, but the authority was concerned that the service could have negative implications for the heavily-subsidised Transpennine franchise to be operated by First Group.

"We feel that it would not be good for the railways if another company begins competing with a subsidised service, taking ticket sales off it."

Ian Yeowart, managing director of Grand Central, said he was disappointed with the SRA's attitude.

"Transpennine Express receives £0.75 billion subsidy. We will receive no subsidy," he said.

"Therefore, it is rather unfair to regard us as competition."

He said the SRA had known about the company's aspirations for more than four years.

Meanwhile, SRA claims the strongest bidders won through in the fight for the new Northern Rail franchise.

York-based Arriva Trains Northern (ATN) failed in its bid for the franchise yesterday. It had already lost the Transpennine Express franchise to First Group earlier this year.

Now, First Group and Serco/Ned Railways will battle it out to run services across the North, with the announcement of the preferred bidder expected in the spring.

A Strategic Rail Authority (SRA) spokeswoman said she could not explain why ATN's bid had been rejected, because the SRA could not discuss individual bids.

But she said: "In this case, it just comes down to the fact that the two bids that have gone through were the strongest bids and we evaluate each bid on its merits."

ATN has said it is disappointed with the outcome of its bid, but would not comment on the reasons it was not shortlisted.

Updated: 10:39 Friday, December 19, 2003