Richard Branson could exit the railway business after Virgin Rail Group lost a long-held deal with the British government to run a major route linking London with Glasgow.
The Department for Transport has awarded a new 13-year west coast train franchise to transport firm FirstGroup, which will begin services between England and Scotland from December.
Virgin Rail - which is 51-percent owned by Virgin Group and 49-percent owned by transport firm Stagecoach - has been running the route since 1997, during which time it introduced tilting high-speed Pendolino trains. It is Virgin's only railway franchise.
FirstGroup will pay back £5.5-billion to the government in premiums over the life of the franchise. Branson revealed in a tweet that Virgin Rail had offered to pay £750-million less than this.
"Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise. The process is too costly and uncertain," the British tycoon added in a statement.
Branson described the decision to hand the network to FirstGroup as "extremely disappointing for Virgin, and for our staff that have worked so hard to transform this railway over the last 15 years".
He added that under Virgin, "the West Coast Mainline has been transformed from a public liability into a valuable asset for the UK, worth many billions of pounds."
The tycoon continued: "The service is a British success story and one to put up against rail companies around the world."
Scottish-based FirstGroup, which employs 124 000 staff, currently operates train and bus services across Britain and North America. Its rail routes in Britain include First Capital Connect, First Great Western and First ScotRail.
"We are delighted to be selected by government to operate this unique railway which connects communities across the country and plays a vital role in the UK's economic growth," added FirstGroup chief executive Tim O'Toole.
Britain's coalition government added that the new operator would deliver significant benefits for the travelling public.
"This new franchise will deliver big improvements for passengers, with more seats and plans for more services," Rail Minister Theresa Villiers said in a statement.