Govia Thameslink Railway (GTR), the operator of Southern rail franchise, has been warned it might not be able to bid for new franchises in the future unless it improves its performances.
Speaking to BBC Radio 4's Today programme on Monday (11 July), rail minister Claire Perry said it would not be allowed to submit bids for new franchises unless it improved what is currently ranked as the country's worst service for customer satisfaction.
"It's been quite clear to me that companies who cannot deliver a good service, particularly over the things they can control, should not be bidding for new franchises and we need to be absolutely clear about that," she said.
"We need to ask serious questions about their performance going forward."
Her intervention came as Southern Rail temporarily slashed 341 services as part of a revised timetable designed to reduce the impact on passengers and staff of unpredictable and late notice cancellations.
Citing "unprecedented levels" of train crew sickness and "unwillingness" among others to work overtime for the past disruptions, GTR said it was forced to introduce the month-long emergency timetable.
"We are introducing this temporary weekday revised timetable with reluctance, but it is the best thing we can do for our passengers who have been suffering daily cancellations ever since this dispute with the RMT began, and for which we are sincerely sorry," said Alex Foulds, Southern passenger services director.
However, RMT, which represents conductors on the service, warned that the new timetable could create "dangerous overcrowding" on the trains.
Mick Cash, the general secretary of the RMT said: "The axing of nearly 350 trains a day by GTR is a crisis measure designed to rig their appalling performance figures. The fewer trains you run, the fewer will be delayed and the better your headline performance statistics will look."
The decision to cancel over 300 services is also expected to attract more criticism from already disgruntled passengers, who are planning to hold a demonstration at London Victoria Station during Monday evening's rush hour.
"We aren't people who protest normally, but everyone's fed up with the service. Southern mismanagement is needlessly wrecking passengers' evenings, interfering with childcare and stressing out the workforce," said Alex Prosser-Snelling, one of the protest's organisers.
"Southern needs to get a grip – and if they can't or won't, the government shouldn't let them run a railway."