A consortium of Perth-based Stagecoach Group and Virgin has been awarded the East Coast Mailine rail franchise, which runs between Edinburgh and London.
Operating under the name Inter City Railways, the two companies have promised to reduce journey times between Edinburgh and London by 13 minutes and spend £140 million improving trains and stations.
The route has been in public hands since 2009 when previous operator National Express ran into financial difficults and the government was forced to assume control of the franchise.
Transport Secretary Patrick McLoughlin said: “This is a fantastic deal for passengers and for staff on this vital route. It gives passengers more seats, more services and new trains.
“We are putting passengers at the heart of the service. I believe Stagecoach and Virgin will not only deliver for customers but also for the British taxpayer.
“This government knows the importance of our railways. That is why they are a vital part of our long term economic plan, with over £38 billion being spent on the network over the next five years.”
Stagecoach Group chief executive Martin Griffiths said: “A passion for customers, employees and the community is at the heart of our plans for the franchise. We want to build on the quality and pride of the people who will be joining our team.
“We have some fantastic ideas to deliver a more personal travel experience for customers. Investing in the committed people who will make that happen is a big part of our plans, giving opportunities for them to develop and grow into more senior roles.
“At the same time, we have developed major programmes to help young people, communities and small businesses along what is one of Britain’s major rail routes.”
Inter City Railways will run the franchise for eight years, starting in March 2015.
RMT general secretary Mick Cash described the deal as “an act of utter betrayal”.
“The government has confirmed that it is bulldozing ahead with the re-privatisation of the East Coast Main Line despite all the figures showing that the current public sector operator is handing over a billion pounds back to the British people while delivering huge improvements in service and customer satisfaction,” he said.