Virgin, one of four companies in a bidding battle for the franchise, was beaten by the Arriva Group who will take over on November 11.

To last until April 2016, the new Cross Country franchise will include the services currently operated by Virgin as well as the Nottingham-Cardiff and Birmingham-Stansted airport services run by Central Trains.

Covering 1,600 miles, the franchise has been run by Virgin since January 1997 and stretches from Aberdeen in the north to Penzance in south west England.

Arriva, which already runs rail services in Wales, will receive a £1.05 billion subsidy over the life of the franchise.

Announcing the winner of the new franchise on Tuesday, the Department for Transport (DfT) promised increased capacity, better performance and improved customer services.

The DfT also said that Arriva had indicated it may raise unregulated fares on the new franchise by an average of 3.4% above inflation each year.

Improvements will include:

40 extra train carriages for operation on long distance services, using High Speed Trains, refurbished to the standard of the existing Voyager Trains; this, together with internal changes to the current fleet of Voyager trains, will provide nearly 3,000 more seats each day on the busiest routes at the busiest times.

Increased staff visibility with the busiest long distance services having at least three members of staff passing through the train; a new web-based ticketing system which will be introduced from December 2009; refurbished trains on Birmingham-Stansted and Cardiff-Nottingham services including extra seats, and first class on all trains; help and advice for passengers who need to change trains.