The train drivers' union Aslef is bidding to take over the East Coast main line franchise and run it as a not-for-profit enterprise.

The union had earlier called on the Government to keep the franchise – now run directly by the Department for Transport following the failure of National Express – in public hands, but the Government has refused.

Aslef general secretary Keith Norman said: “The Government intends to sell the franchise at the end of this year. That will give us time to make a strong case for a not-for-profit public service serving the needs of its passengers rather than its shareholders.”

He added: “Aslef members have learnt how not to run a railway. We have seen mismanagement that has closed vital lines, produced ludicrous rosters, overcharged passengers, undermaintained track and undersold a national treasure and a vital service.

“We are going to take a more positive attitude. We are going to say how it should be done.”

The union has been examining the employee ownership methods of the John Lewis Partnership and employee-owned Arup.

Nigel Mason of the Employee Ownership Association said: “These businesses are not run as collectives or co-operatives. They hire professional managers and are run with the same discipline as all big businesses.

But ultimately those managers are accountable to the shareholders – the employees – who are more knowledgeable and care more than the faceless institutional investors who sell out at the first sign of difficulty.

“A rail franchise seems very well suited to employee ownership.”

The union has also considered the co-operative alternative which would mean that any profits made would be reinvested into providing better services for passengers and reward employees for their efforts.

“Run democratically, on a one-member-one-vote basis, it would give real power to users and workers,” said Michael Stephenson, general secretary of the Co-operative party.

Aslef believes the rail franchising system could be costing the industry over £25 million a year, following a House of Commons question by Liberal Democrat Norman Baker.

The DfT spent £33.8 million between 2005 and 2009 “to design and tender” rail franchises, made up of £15.3 million for departmental staff and £1.5 million in fees to “external advisers”.

In addition, each rail company spends between £1 million and £4 million in franchise bidding. The union says this could have amounted to £100 million over the four years, considering that each franchise attracted three or four bidders.

Mr Norman said: “Millions are lost by a foolish and inefficient system that benefits no one in the industry.”