The route will link cities in the North

Grand Central Railways hopes to start running the service - from Newcastle, York and Leeds to Manchester and Preston - in May 2004 if the rail regulator gives it the go-ahead.

It plans to use rebuilt intercity carriages, upgraded to a luxury specification, to link main business centres throughout the North.

It will be competing directly with the existing trans-Pennine train service but will not receive any public cash as a subsidy.

Refunds for overcrowding

A company spokesman admitted that it either had to sell enough tickets to cover its costs or go broke.

Grand Central is already promising cut-price tickets and a 50% on-the-spot refund to any passengers who are forced to stand.

News of the planned service comes just a day after commuter groups welcomed the findings of a House of Commons report on overcrowding on the UK's trains.

The report by the influential all-party transport committee found that people using public transport faced a "daily trauma" and were forced to travel in "intolerable conditions".