The Department for Transport (DfT) did not follow its own rules over the West Coast main line franchise bidding process, Virgin boss Sir Richard Branson has told MPs.
The rail franchise system is "flawed", Sir Richard told the House of Commons Transport Committee.
He was giving evidence after Virgin Trains launched a judicial review of the DfT's decision to award a new 13-year West Coast franchise to rival transport company FirstGroup. Virgin has run the West Coast line since 1997.
Sir Richard told MPs: "The Virgin (West Coast franchise) bid is more deliverable and much more financially robust. The DfT did not follow their own rules. The franchise system is flawed. The decision is bad for the country, bad for passengers and bad for passengers on other franchises."
He said the Government should not be running a franchise process that was risky rather than one that aided passengers. He said the interests of passengers should be "at the heart" of the franchise bidding process and that there should be "no repeat of this fiasco".
Sir Richard said Virgin was recommending that the current rules and regulations for franchise should be completely reviewed and the award of a new West Coast franchise should be delayed until the review is complete.
Sir Richard said: "This bid by FirstGroup is absolutely preposterous. It's completely ridiculous. It's taking the system for a ride." He added that Virgin had asked questions of the DfT about the bidding but replies "have not been forthcoming".
Committee member Kwasi Kwarteng, Conservative MP for Spelthorne, said people might say that Virgin, in taking legal action, was "bringing in the heavy artillery" and that Sir Richard was using his "prestige and fame" to challenge the decision.
Sir Richard replied that across various modes of transport he had "created a number of ventures with the principle aim of making a real difference to those sectors". He went on: "The profit motive is not important to me. I am lucky enough to afford breakfast, lunch and dinner every day for the rest of my life."
The Virgin legal challenge has led to the Government delaying a final signing of the new West Coast franchise. The franchise, for 13 years and four months, had been due to start in December.