Virgin Trains has lodged an application to launch an hourly service between Liverpool and London to compete with the new franchise owner from 2021.

The operator says its ‘open access’ application to the Office of Rail and Road (ORR) would see it offer cheaper fares than competitors, with each ticket coming with a reserved seat – something the company proposed as part of a submission to the Williams Review back in April.

Virgin will lose the franchise in 2020 after its partner Stagecoach was banned from bidding by the Department for Transport.

The company claims it could offer tickets 10 per cent cheaper than the rival service, with customers offered free wifi and complimentary films and TV, as well as an “at-seat” catering service.

By switching to an airline-style model where all tickets come with reserved seats, Virgin says it can combat overcrowding on busy services. However, if there is any kind of disruption on the line and passengers don’t manage to get a seat on alternative trains, they will receive refunds rather than being allowed to stand during the journey, in addition to automatic delay repay.

Virgin aims to run 24 services per day between London Euston and Liverpool Lime Street, which could also call at Lichfield, Tamworth, Nuneaton and Liverpool South Parkway.

The company says it expects the operation to generate annual revenue of around £50 million, with Virgin partnering with Stagecoach, SNCF and Alstom on the route.

The news follows the announcement that Virgin Trains plans to launch an app by the end of the year that will offer an Oyster-style fares cap. It will work out the cheapest available fare combination and will also feature a split ticketing function that will calculate if a cheaper combination of fares for only one journey is available without having to change trains or purchase multiple paper tickets. The company says this could save passengers around £1 billion a year.

Managing director Phil Whittingham said: “Virgin Trains has led the UK rail industry for 22 years. We’ve delivered faster and more frequent services, pioneered digital ticketing and shaken up the industry with initiatives such as scrapping the Friday evening peak. That’s why we top the independent customer satisfaction charts for long-distance franchise.

“But we want to go further. These new services will allow us to take the customer experience on the UK’s railways to the next level and show the rest of the industry how it can be done.”

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