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LONDON (Reuters) - The British government gave rail operator Go-Ahead Plc 'a firm yellow-card' over service failures at its London Midland franchise, forcing it to provide a 7 million pounds package of passenger benefits as punishment.
London Midland had cancelled or delayed "hundreds" of services in recent months due to driver shortages, the Department of Transport said.
In compensation, season ticket holders will be given five days worth of free travel passes, while a further 500,000 cheap advance tickets will be made available on the franchise's key routes into London, Birmingham and Liverpool over the next two years.
"Securing these benefits for passengers represents a firm yellow-card for London Midland and some financial benefit for those who have been hardest hit by their poor performance," said Transport Minister Norman Baker on Thursday.
However, Go-Ahead's deal to run the franchise was extended from November 2013 to September 2015 as Baker said he was confident that the problems had been resolved.
"We acknowledge the impact that this has had on our passengers and we have now put measures in place to ensure we have sufficient drivers to operate our services," Go-Ahead said in a separate statement.
Britain's privatised rail industry has been dogged by financial crises, accidents and political infighting since the programme was begun in the 1990s. The entire franchise award system is being re-examined after the government found major flaws in its own handling of one deal.
Go-Ahead, which also runs Southern and Southeastern trains, has been shortlisted to bid for the new Thameslink franchise, on hold while the review takes place.
The company, which also operates bus services, reported 94 million pounds profit for the year to June, on revenues of 2.4 billion.
Reporting by Rosalba O'Brien; editing by James Davey