Risky Future

Some operators responded that things were rosier since last year but a few more felt that they were not. Two thirds of operators reported that the recession had an impact on their businesses. One operator felt that bargain basement holidays were holding up but expensive, top flight programmes and completely slowed. Understandably, operators seemed to do better where recession was having less of an impact.

This is a 65 word précis of the routeONE industry survey, published yesterday. Companies & firms large and small took part, but mainly from the coaching sector. So much for the past. What about future concerns, in order of importance?

1. Cost of fuel

Over the past two years, we’ve seen fuel costs rise sharply, fall and rise again. At 8 mpg or less, this has a big impact on anyone’s business, even those smaller operators whose bread and butter is school work, where fuel tends to be a smaller proportion of costs. Hedging on the wrong side hasn’t helped some bigger operators. Where operators are locked into work that sees little opportunity of compensatory increases, fuel costs are a huge risk.

2. Councils spending cuts

These will affect those small operators who’ve developed a niche in subsidised local service provision. The extent is still very much unknown. Those who content themselves with school work might feel that they are OK but expect local authorities to look at polices to reduce discretionary elements. Another huge risk.

3. Length of recession

There are obvious concerns that businesses in the doldrums can only recover when there’s sufficient growth. And it’s difficult to plan in the current climate. Those operators who have an undiversified base relying on local transport authorities’ contracts may feel a “double dip”, even if the wider economy does not. Look back to the early-mid 1970s and early 1980s and recessions are very uncertainty times.

4. Unfair competition

This is an interesting one, coming in fourth, ahead of such things as ease of getting finance, cost of vehicle replacements, LEZ, the competition commission inquiry, driver recruitment & retention, Euro VI, VOSA standards, free travel, labour costs and insurance costs. It’s a combination of others seemingly using the recession to under-price for work and the usual small coaching chestnut of unlicensed vehicles pinching trade.

How many of these concerns can an operator control? Very few, if any. In reading what operators view as the future, there’s a sense of the downcast. All that operators can do is review expenditure, price correctly, try to serve as many diverse markets as possible… and hold on tight.