This is a guest post by the Fat Bus Bloke. Omnibuses welcomes guest posts. More information here
Comments on recent blog posts raise the eternal question, “Should buses be a public service or a business?” The answer is that they are both. Tesco also provides a public service, making food available at competitive prices to any member of the public that chooses to go there. How does Tesco and a typical bus company compare?
Last month, Tesco added this Bournemouth store, just off The Square, in the former Borders Books premises. Tesco already has one at The Triangle
They are both in business to make money for their shareholders. We tend to accept that for Tesco yet we resent the concept for the bus operator.Tesco does not offer cheap prices for children and senior citizens yet we expect this from the bus company.
“Prophet in exchange for profit” as the Mail put it. A highly controversial Tesco store was this one at Westbourne, Bournemouth. It opened in November 2010 in a former Methodist chapel and retains therein its stained glass
Tesco has loads of “up-front” price offers, including bulk buy bargains. The bus industry is coy about advertising single journey prices. Indeed, this is probably the only industry where you have to buy first then know the price later—that is, after you have boarded the bus. Apart from season tickets and “rovers”, the industry rarely has special offers.The bus industry is expected to provide its product when few people want to buy it: every evening, on Sundays and in rural areas. Tesco would not dream of opening anywhere and at any time when there are only a few customers and we would not expect them to do so. True, larger Tesco’s open 24/7/364 but they may as well, as they would be open for self-stacking and for bagging up home deliveries.
The bus industry is castigated when one company “sees off” a competitor while Tesco has been doing it for years, and more aggressively. We complain about the denuding of our town centres but no politician would dare to “force” Tesco to tolerate a competitor on the same site. The market is king and, despite the protests, we all shop at Tesco.
Tesco has proliferated across the Bournemouth-Poole conurbation
Jolly Jack Cohen (the founder of Tesco) worked on the basis of “pile it high, sell it cheap” but we expect our buses to be both cheap & of high quality; and moan when they do not meet our aspirations. We praise Tesco for its “economy” brands, but we are uneasy about “Magic Bus”.Finally, in a more general way, we demand subsidy for unremunerative bus services and we also want “something to be done” to keep post offices, shops and pubs in our villages. But we are aghast at the concept of paying increased taxes to pay for these “public services”!
i The Fat Bus Bloke writes the occasional blog called Public Transport Experience
23 comments:
Not sure I agree with all your points. For instance:-
1. Tesco does offer discounts for various parts of society - though it does it by offering budget ranges anyone can buy. Like Magic Bus I suppose, though, as you say.
2. The reason we wouldn't expect "public service" opening hours from Tesco is that they're purely a private business. Bus services (tendered ones at least) to some extent receive subsidy. This gives us a political right to dictate how they operate based on what that subsidy is paying for. I think that point is missed.
Now, it so happens that supermarkets can offer prices affordable to most people on a pretty much purely commercial basis. This isn't true of all bus services. So subsidy is needed.
But this talk of Tesco makes a useful point. Might subsidising Tesco deliveries to some rural areas be more financially viable than subsidising a bus service?
I also am not too sure about your comment on Tesco and competitor on same site. Firstly is it up to them who is there neighbour? Planning comes in tothe mix. And if not on same site, supermarkets can be pretty damn close,say just one and the other side of a car park.
On child fares have there been any attempts to quantify what extrs profit would be gained allowing for demand elasticisity, or reduction in general fares that could result?
There is one difference that immediately springs to mind. If someone has a major gripe with a supermarket, they stop going there. They go to one of its competitors or they even use local retailers.
If someone has a major gripe with a bus service, usually they have to grin and bear it as often there is no competition on their route.
Child fares (certainly when younger children are travelling with parents) are like a "family size" product at a supermarket, though. You're getting a discount for more people travelling, essentially.
A different way to do this might be to allow one or two children to travel free with each adult, but if travelling alone full fare is payable.
Another pertinent point is that the products supplied by Tesco, et al, are rather more important to life than the service provided by bus operators. We may not like to hear it, but people can survive without bus services, but not for long without food! And yet, as Fat Bus Bloke says, we are largely happy to allow market forces to determine the supply of food.
I don't really think you can liken the supermarkets' budget ranges to discounted fares for children and senior citizens - they are the equivalents of 'Magic Bus'. Customers, in practice, buy a mix of products from the budget and normal ranges. I would hazard a guess that passengers on routes served by 'Magic Bus' probably do the same.
I do agree with Neil where he says that subsidies from public funds give the public a right to a say in the way that bus services are run - 'dictate' seems rather too strong a word, but certainly the public has a financial interest in bus services, or at least, in the public funds that are used to support them. However, there is one particular caveat - and that is the issue of re-imbursement for senior citizens' concessionary travel, as this is public money (no doubt about that), but it is public funding that bus operators are forced to accept, and which, if reports are to be believed, does not always adequately recompense the suppliers of the service.
Neil suggests that some bus services have to be subsidised because they are not commercial (i.e. not profitable) - but why? If a business activity is not commercial, it usually simply comes to an end. Not enough people require it, therefore it has to be provided or obtained in a different manner, or not at all. If there is not enough work for a painter/decorator, we don't expect the government to subsidise them - which would amount to paying them to sit around doing nothing at times. From the potential customer's perspective, if there are no painter/decorators available in an area, they will paint their own houses, or get a friend/relation to do it. Much though I favour public transport, I cannot see any valid justification for subsidising it in a form that is effectively under-utilised.
The comparison with Tesco, et al, is relevant here - much though we might like to see the proliferation of small shops that have disappeared with the growth of the supermarkets, it is the customers (i.e. the real ones, who actually pay for the products) who determine which business will survive commercially and which will not. If Tesco provide better value for their customers, then one cannot be surprised if the competing businesses cannot survive.
Perhaps Tesco have been more responsive to their customers' requirements than the bus operators - over the last 50 or 60 years?
Anonymous said...
"I also am not too sure about your comment on Tesco and competitor on same site. Firstly is it up to them who is there neighbour?"
If they own the site, then 'yes'. Otherwise, as you say, planning does come into the mix, though that really concerns 'land use' rather than specifically 'who' their neighbour is.
Anonymous said...
"If someone has a major gripe with a supermarket, they stop going there. They go to one of its competitors or they even use local retailers."
True - where that is possible (it isn't always, just as with bus services). However, perhaps the supermarkets have been better at dealing with the gripes of their customers than the bus operators?
this whole blog is really just an attempt to justify bus operators greed .you cannot compare chalk with cheese.of course its a public service . who pays for the roads.,not the bus companies.Do i the taxpayer charge for letting the buses have the privilege of making a profit out of my roads??
Anonymous said...
"Do i the taxpayer charge for letting the buses have the privilege of making a profit out of my roads??"
Presumably, you have never heard of corporation tax and fuel tax?
As I understand it, even those evil, greedy bus operators don't get all of their fuel tax refunded via BSOG!
The use of the word subsidy is misleading. A better way is to regard tender money as the authority buying bus travel and redistributing it to those who could not afford it commercially. This DOES happen at Tesco, when, for example, a charity buys food to give to the needy.
The road tax / fuel tax thoughts are interesting. Never in recent history have either been "hypothecated" to spend on roads! They are just a means of raising money from Joseph Public. Would food be that much cheaper if Tesco didn't have to pay business rates, for example. Not much, if at all.
The main point of public transport is to reduce car dependence (apart form the UK where it is mostly a social service for people who don't have cars). So the alternative to no public transport is car use, whereas the alternative to Tesco is another shop.
Excellent and thought provoking blog post.
To answer the query on tendered bus services, I do not believe a tendered service should be seen as a subsidy because it is a contractual arrangement between the operator and the local authority. The local authority is buying something that is considered socially necessary for its residents but cannot be provided by any other means (i.e. commercial bus operations). For instance if the daytime route is commercially provided but the evening route is tendered then any operator could bid to run the evening route under contract - if the successful tenderer isn't the daytime operator then this isn't subsidising the operator?
The comment by Anon@09:57 is bonkers, without roads you wouldn't have a bus service, without roads you also wouldn't have supermarkets or home deliveries - Tesco rely on roads to run their business as much as bus companies do. Move to charging for roads depending on usage instead of taxing fuel and vehicles and contributions through council tax would be a much fairer way of paying for our road network and would undoubtedly offer a fairer playing field in comparing the cost of the car vs. bus possibly leading to more people on buses. More people on buses = stronger commercial bus networks and less need to tender the weaker elements of the network.
RC169 "I cannot see any valid justification for subsidising it in a form that is effectively under-utilised." Agreed somewhat, but there is a wide gap between public travel opportunities in the urban environment and the rural, and the same applies to shopping. The difference is akin to the chicken's offfering and the pig's sacrifice at breakfast.
I guess that "harsh" views on rural bus subsidies often come from those in an urban environment, where any cuts are offerings; not sacrifices.
@fatbusbloke:
I agree with you about the word 'subsidy', although I would suggest that BSOG is a true subsidy. Certainly, tendered services are, as you say, basically purchased by the local authority - who can, of course, specify what they buy.
I agree about hypothecation insofar as the use of the revenue from those taxes is concerned; but those taxes are clearly levied as a means of ensuring that people who use the roads make a contribution towards the cost of providing the roads. Those who use a car twice a week for shopping will pay much less fuel tax than a lorry operator running his vehicle 2000 miles a week, and the amount of 'wear and tear' on the roads will be proportionate.
I'm not sure that comparing a grocery shop to a public transport company stands up. Its like comparing a barber shop to a mechanic. I can walk into a barber shop more or less anytime of the day and get a hair cut but if i want my car repaired i'd be lucky to get it in on the same day.
Theyre two completely different sectors with two completely different organisational structures, comparing them is futile.
Everybody has to buy food to live, however not everybody has to use the bus to live. I appreciate the authors concern and however vaild his point is I dont feel it is comparable.
What really worries me is that since the coming of bus passes and subsidised rural buses there are hundreds of thousands of OAP,s who have given up their cars only to see their buses under threat the prospect of being isolated no longer now being able to re-buy the car due to the present economic situation created by just the people that are now denying them their due.regards
Anonymous said...
"I guess that "harsh" views on rural bus subsidies often come from those in an urban environment, where any cuts are offerings; not sacrifices."
A bus is a big vehicle, capable of carrying a relatively large number of people - if there are 15 or 20 people on a bus then it is without doubt the most efficient use of fuel and road space possible. Unfortunately, when there are only 2 or 3 people wanting to travel together, then the bus is not efficient. Indeed, a taxi doing, say, 20 mpg will have a lower carbon footprint than a bus doing 10 mpg.
Owing to the lower density of population, this will inevitably occur more often in rural areas, but quite simply, in such situations, a bus is not the appropriate tool for the job - as was discussed on this blog a couple of weeks ago. Rural areas are different to urban ones, and those differences are some of the reasons that some people choose to live in such areas. Wherever one lives, there will be some advantages over other types of area, and some disadvantages.
" ...there are hundreds of thousands of OAP,s who have given up their cars.."
I'm sure that the bus operators would be very happy if this really was the case - do you have any documentary evidence that the numbers involved are so high?
RC169 "A bus is a big vehicle, capable of carrying a relatively large number of people - if there are 15 or 20 people on a bus then it is without doubt the most efficient use of fuel and road space possible. Unfortunately, when there are only 2 or 3 people wanting to travel together, then the bus is not efficient. Indeed, a taxi doing, say, 20 mpg will have a lower carbon footprint than a bus doing 10 mpg."
Taxi-share then? Possobly, but they have disadvantages. They have to be booked and if the link I give is an indicattion of what is on offer, one has to be infirm to get it anywhwre near many onetime nus stops en route. Prebooking is haxxle. I'd also think that publicity might be another. For we who take interest they are not listed in the likes of Traveline. Any new comer would be hard pressed to find their existence.
http://www3.hants.gov.uk/burley_taxishare_leaflet-2.pdf
Anonymous said...
"Taxi-share then?"
Effectively, yes - that is certainly one possibility. If you look at the postings on this blog for 1st and 4th Feb, and the subsequent discussion, you should get the gist of the idea.
The example you quote is of interest, given that I lived in Bransgore until I was 4! I agree entirely that publicity needs to be good - in the comments on the earlier discussions I cited a couple of examples from Germany where the timetables, publicity and fares are fully 'integrated' with the regular public transport services. (Let me know if you cannot find them.)
Granted, pre-booking is a slight hassle, but I don't see any way around that if the tendering authority wants to obtain the cost savings that arise from only operating the service when there is a demand. I think most people have some form of telephone connection these days!
The Burley scheme seems like a first step, but it needs further development and promotion.
You can't compare buses to supermarkets because buses do not operate in a competitive marketplace.
Like most people, I live in an area with no bus competition. There are three companies operating in Newcastle-upon-Tyne, but all three of them operate in their own little patches. It's effectively three monopolies- you won't see a Stagecoach bus in a Go-Ahead area and you won't see an Arriva bus in a Stagecoach area. My part of the city is a Stagecoach area, apart from the occasional long-distance Arriva bus.
If I'm unhappy with Tesco, I can go to Asda, or Waitrose, or Morrisons, or Aldi, or I can get an allotment, or I can go to the corner shop, or I can do all of the above.
If I'm unhappy with Stagecoach, I can, er, walk instead. And Stagecoach know it. So the Stagecoach Newcastle division has a profit margin of about 22%, yet fares have gone up AGAIN recently due to the cost of blahblahblah.
Buses are a distress purchase so people will never be overjoyed about the expense, I quite agree. But whilst bus operators exist to make money, lets not pretend that they operate in a competitive marketplace, because they don't. All that we have in Newcastle is the old PTE and Corporation operators running the same old routes they did in 1986, but with fares that are 22% higher than they should be because of profit.
RC169 "The Burley scheme seems like a first step, but it needs further development and promotion."
Remind me to laugh next time! IMO it is half baked, tooheavily tilted to travellers in to Ringwood and back, pretty useless the other way to Lyndhurst where council offices are situate. Moreover publicity has to be utd. The X5 connections cesed at end of 2010
I agree in some respects about operators being coy regarding fares as timetables are out there on the websites, why not faretables? In my local area the two major operators are very different. NCT have a good reputation, even displaying fares at stops. They have an informative web page suggesting the best ticket or travelcard depending on the the travel patterns of the passenger, but the only way of taking advantage of their genuine good money saving offers is by being "friends" on facebook with their "facebook Fridays". Trentbarton are very different, no single fares feature on their website so any kind of fare advice must be made by phone or taking up a drivers time when boarding, so if traveling from Nottingham to say Bakewell is it a similar price for 2 singles as a return or should I buy a days travel ticket as it could be cheaper? Who knows, trust the driver will know the cheapest option?
In my opinion all operators should have faretables viewable online, even perhaps with drop down menus (from to) to see exactly at a glance prices for single & returns, travelcard prices ect ect.
Slightly off on a tangent, stores such as Tesco fund 'free' bus services to bring customers to their stores. I wonder if they are obliged to do this, and if the spend of the passengers justifies the expense of operating them.I'm told they like to know passenger numbers, but that is about it.
Seem to recall the EC were going to look into all the free buses to stores a while back as they were deemed anti-competitive or something like that. Did that ever happen ?
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