The Department for Transport (DfT) announced Virgin Trains would be disqualified from the bidding process following a row with Stagecoach over staff pensions risk.
Branson explained: “The pensions regulator has warned that more cash will be needed in the future, but no one knows how big that bill might eventually be and no responsible company could take that risk with pensions.
“This is an industry-wide issue and forcing rail companies to take these risks could lead to the failure of more rail franchises.”
Virgin has been working in partnership with Stagecoach since 1997 to operate a high-speed West Coast inter-city route that connects major UK cities including London, Birmingham, Manchester, Liverpool and Glasgow.
A new contract is due to be awarded in June, with the operator responsible for running West Coast mainline services from March next year.
The Virgin-Stagecoach partnership also operated the East Coast route between March 2015 and June 2018, investing over £75million and significantly increasing the number of trains running between London, Leeds and Edinburgh.
It lost its contract after the government decided to take back control of the line.
A Virgin Trains spokesperson says: “We’re very disappointed by the DfT’s unexpected decision. We’ve led the industry for more than twenty years with our ground-breaking innovations, such as automatic delay repay, and award-winning customer service.
“We’re studying the DfT’s decision carefully to understand why they’ve taken this action and would like to reassure all our customers that they can still book and travel as normal.”
Virgin says it is looking to appeal the DfT’s decision.