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Plaid Cymru are proposing a new not-for-profit company to run train services in Wales.

Arriva Trains Wales currently receive a subsidy of around £165m a year to run services in Wales, under a franchise agreement which ends in 2018.

Plaid propose a not-for-profit company to take over with the money that now goes to shareholders re-invested in services.

Ieuan Wyn Jones called it a "modern, efficient Welsh transport system".

Arriva Trains Wales run almost every train service in Wales, apart from around five services which include the Cardiff - Birmingham, Swansea to London services and the Holyhead to London train.

The proposal is one of the ideas being considered for the party's May 2011 assembly election manifesto.

Plaid leader Ieuan Wyn Jones said the proposal would be similar to Glas Cymru, the not for profit company that owns Welsh Water.

Glas Cymru has no shareholders and re-invests all its profit for the benefit of customers.

Speaking on ´óÏó´«Ã½ Radio Wales, Mr Jones said: "The idea is to meet the challenge we have in meeting the increasing demand for rail travel in Wales.

"The Public Accounts Committee in London recently published a report which said the current level of investment is not going to meet the demand for increased travel.

"Therefore we have got to release funds some way to make sure people have more train services, more carriages and a comfortable journey.

"What you find is overcrowding on many services and people can't get a comfortable ride and they feel they paying over the odds when they have to stand for long part of the journey.

"We believe a not-for-profit system would meet the growing demand for rail travel because the money would be invested in the business and not paid to shareholders every year."

Mr Jones said the staff of Arriva Trains Wales would transfer to the new not-for-profit company and a management team would be set up to fun the new company. The new company would agree with the assembly government the new train services needed to meet the growing demand for rail travel.

He denied this was a move back into nationalisation of the railways.

"This isn't a privatisation, it's a not for profit company. It's not run by the government but by a management scheme who would be independent of government.

"The government would set the franchise and have an agreement with the new company about the train services needed in Wales - very much like current agreement."

But he added that unlike the current system, where the asssembly government has to pay for additional rail services, the new not-for-profit compnay would pick up the cost of this in future because of the extra money it has as a result of not paying shareholders.

Arriva Trains Wales won a 15-year franchise in 2003, and in 2008 and 2009 made net profits of more than £10m.

Plaid said the money could be invested directly to create more frequent services in the South Wales valleys, more frequent journeys to West Wales and on the Cambrian line, as well as additional services between north and south Wales.