GNER is bidding for a new East Coast franchise

James Sherwood, president of Sea Containers, which owns East Coast Main Line operator GNER, said subsidies for under-used routes should be scrapped.

He said poorly-used lines, many in the North East, could bring the industry to its knees.

But Arriva Trains Northern and Tyne and Wear Metro operator Nexus, have rejected Mr Sherwood's claims.

At an industry forum, Mr Sherwood told business leaders: "We need to get the government focused on trimming off the unnecessary bits that very few people use.

"The railways could probably be profitable if you could get rid of a lot of services.

"We have to get commuters and long-distance travellers to their destinations on time.

'Highly subsidised'

"But to hell with freight and regional railways which are running around virtually empty."

A spokeswoman for Arriva Trains Northern, which was the fourth most heavily subsidised operator in the country in 2002-03, said: "We deliver services and levels of subsidy set out by the Strategic Rail Authority (SRA) and have nothing to do with rail policy."

A spokesman for Nexus said: "GNER is one of the very few profit-making rail operators in the country and rail is very, very important for the whole of the country's economy.

"We have a fairly intensively used railway, but it's not very highly subsidised compared to other European countries.

"We need to dramatically increase links from Teesside to Tyneside, and also the main commuter corridors into Newcastle."

GNER is currently bidding for a new East Coast franchise, due to run from April 2005.