Is it me or are the hopes of a painless passage through the recession diminishing? In spite of (or in some areas because of) the rise in free travel, and notwithstanding increases in ridership resulting from the unprecedented recent investment in quality and marketing, the bus operating industry seems poised for a downturn. We did wonder whether this would be so. The signs are present among us. The buoyancy has gone out of many markets. There’s the slow death of the high street. There’s a new unwillingness to invest till some sort of economic certainty returns. There’s also a sense that we could be on the cusp of new hybrid technology but, as operators consider whether or not to try older technology, they don’t wish to take a step of faith. Operators appear to be looking at margins and chipping away at PVRs with renewed vigour. There are examples of cuts on easy target routes where frequencies are highest as well as marginal services and journeys where passengers are lowest. It’s starting to sound a little like the 1970s.
Yet, operators have always said that the market can and always will provide. But at a time of phenomenally poor economic prospects, there is no less a need for the country’s bus operating industry, intact. The changes now in motion seem to play nicely into the hands of the integrated transport authorities, with their calls for quality contracts. Is now an opportunity for the ITAs and their PTEs to take a stabilising role, a lead? Is now the time to ask ourselves as a country what we want to see in and from our bus networks and how they should be financed? ITAs might forget that 85 per cent of the market is commercially provided. Or is the reality that they can’t afford to pay the QC price? Only in London do we see high public investment and how long will it be before we are forced to see cutback on TfL routes, too?
Friday, 27 February 2009
Is it Me?
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1 comments:
Isn't the problem that all the big bus groups are heavily exposed to the expected downturn in rail growth - and note I said growth rather than travel. Many franchises are won at relatively low margins, priced on expectations of high growth. You only need a slowing of that growth compared to bid targets, and the margin can disappear overnight. Rail represents a big slice of group revenues. Losses on rail franchises could be disaterous for some groups. What makes it worse is that no-one really knows when this recession will end - it's far more about the consumer confidence than prosperity now. Mortgages are at an all time low, many people have more cash in their pockets, yet they are terrified of spending in case they lose their jobs.
It looks like the big groups are doing the same - battening down the hatches, cutting the fat, and building as much of a buffer as they can to weather any fortchoming storm.
Cutting PVR is an interesting one. If your routes are running viably, thats the last thing you'd do. What is no doubt happening is that operating companies are less worried about upsetting local politicians, and are dumping loss making routes or frequencies, being far more concerned about their own survival in uncertain times. In all honesty, they are probably now making the right decisions that they have been putting off for a while!
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