THE curtain came down on Arriva Trains Northern's domination of rail in the north of England today, after the York-based firm learned it had failed in its bid to regain its final regional franchise.

After losing its TransPennine services to First Group earlier this year, the Strategic Rail Authority (SRA) announced that Arriva (ATN) was not among the two shortlisted bidders for the new Northern Rail franchise.

First Group and Serco/Ned Railways will contest the competition to run services across the north-east, North Yorkshire and the north-west - with a preferred bidder expected to be announced in the spring.

Nicola Shaw, the SRA's managing director of operations, said the new franchise - a merger of the North and North West areas - would be the "first of a new generation of customer-focused operations, designed to deliver for passengers".

But for ATN, the snub brought to an end a turbulent couple of years, which had seen the company hit by driver shortages, a year-long strike, and timetable problems.

The company had responded to the difficulties and had become one of the country's most improved franchises.

Bob Davies, Arriva plc chief executive, said: "While disappointed with the outcome, we will work closely with the SRA and the company selected to operate the franchise to ensure a smooth transition."

Fran Critchley, of the York-based Rail Passengers' Committee, said: "We have some sympathy with ATN, given that they managed to turn around the performance of the franchise significantly."

First, which runs bus services in York and will run TransPennine services from early next year, now has the chance to win the full set of transport contracts in the region.

The Northern Franchise will run for up to eight and three-quarter years.

It is unlikely to mean job losses as rail staff would be transferred into the firm which takes on ATN's mantle. At the Rail, Maritime and Transport Union (RMT), which had been involved in a 12-month strike with ATN, York organiser Allen Heath said: "We will shed no tears. They have brought it on themselves."

Moir Lockhead, FirstGroup chief executive, said: "We will be working hard to provide a bid which gives improved services and excellent value."

Updated: 10:56 Thursday, December 18, 2003