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The status of London Overground is contractually complex but similar in nature to that of Merseyrail.
The DfT have allowed a concession to be let in both cases to the local authority, ie Trasnport for London or Merseytravel, who then award an operating contract to a train operator, LOROL/Merseyrail.
In the case of TfL (and maybe for MR too but I wouldnt swear to it) the operating contract is purely a contract to operate trains and stations, there is no revenue risk bourne to the operator, so basically, if the railway carried not a single passenger, then LOROL would still get paid for their management of the service.
Similarly, TfL set fares, timetables and all commercial activity is managed through them.
It's interesting though in the Southeast, no one ever used the term "Overground" to refer to proper trains prior to 2007 and the start of LO, now its common parlance to refer to any Nataion Rail TOC within the travelcard zones!
_________________ First - Transforming Travel
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