The competition to operate rail services between London, Kent and parts of East Sussex has been cancelled, the government has said.
The current incumbent, Southeastern, has been given a five-month extension to run the route until April 2020.
Go-Ahead runs Southeastern with Koelis through their joint venture Govia.
Go-Ahead chief executive David Brown said he was disappointed his firm’s bid was not going to be considered by the Department for Transport.
A Department for Transport spokesperson said: “We have taken the decision to cancel the South Eastern franchise competition.
“This follows significant concerns that continuing the competition process would lead to additional costs incurred to the taxpayer, with no certainty that this would deliver envisaged benefits for passengers in a timely fashion.”
The spokesperson said the department would “use this period to develop a solution that delivers the capacity and performance benefits that passengers are expecting”.
It will also allow the government to ensure that the recommendations of the review being conducted by the former boss of British Airways, Keith Williams, in to the railways, are taken into account.
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His Williams Review will be published in the autumn but he has previously told the BBC government involvement should be limited to overall policy and budget decisions, and the Department for Transport should not manage the system.
David Statham, Southeastern’s managing director, said: “Over this next extension period, our focus remains squarely on our passengers, delivering more improvements and continuing to improve the punctuality and reliability of our services.”
The process has frustrated other bidders for the franchise, which was put out to tender in November 2017 and again last year before being cancelled by new Transport Secretary Grant Shapps.
Abellio, which also operates Mersey Rail and Greater Anglia, said it had been working for “many months” with consumer groups, councils and businesses.
“This is a really disappointing outcome for customers across the Southeastern network,” a spokesperson for Abellio said.
Stagecoach was another bidder but was barred from bidding for this franchise and two others in a row over pensions.
Southeastern also runs the only high-speed network in the UK from London St Pancras International to destinations in Kent.
Dyan Crowther, chief executive of HS1, said: “Confusion about the future of these franchised services is frustrating for the very passengers who have driven the phenomenal growth in high-speed train travel.
“This pause does provide a real chance to re-think the specifications of the franchise and consider the benefits more high-speed trains between London and Kent can bring”.
In 2012, bidding on two other rail franchises – the West Coast Partnership and Great Western – was also cancelled.
Rachael Maskell, Shadow Rail Minister, said the decision to keep the franchise with Govia meant important investment decisions such as new trains “are kicked into the long grass”.
Labour has raised the prospect of nationalising the railways and she said: “It’s clear that the government does not believe franchising competition can deliver benefits for passengers – but they have no ideas for how to deliver better services.”