You really know that the world has changed when you hear that First is prepared to do a rare thing and sell part of its business to a local competitor. In this case, announced yesterday was the divestment of local services in and around King’s Lynn. The beneficiary is the award winning Norfolk Green.
Time was when First clung limpet-like to its floundering & drifting operations. You sensed that First was more interested in territory than turning a profit. Rather than release a troubled operation, you felt that First preferred retrenchment from within. The result in Cornwall, for example, is a withering and weakening to the point where the operational base becomes so eroded that there are few services left to support the overhead. It seemed it was a matter of high principle that operations bought & brought into the fold should never be allowed to leave. It was a little like Hotel California without the thriving, high-living American hedonism.
There are plenty of stronger First subsidiaries around that can pass muster. There are also some problems. First blames free travel reimbursement rates, BSOG and subsidy levels rates for its Norfolk decision. This is as true for Norfolk Green as it is for First. The casual reader glancing at the joint press release might wonder why such problems are exclusive to First and not Norfolk Green. How can Norfolk Green make this work if its larger neighbour cannot? Norfolk Green is probably prepared accept lower margins, is free of the corporate straight jacket and will concentrate more of a resource on business growth.
First will retain a presence in the town to help service and develop its successful Excel X1 Peterborough to Lowestoft regional express.
It will be interesting to see how Norfolk Green begins to re-develop the languished bus market left by First. I suspect that if we were to come back to this in two years hence we’d see something very different. If that’s the case, there will definitely be lessons for other struggling operations throughout First’s patch. Post-Lockhead First should be commended for going for the Green option.
18 comments:
Norfolk Green looks like a trading name. Who or what company actually owns it?
@Anon 0741
Norfolk Green is the trading name of Go West Travel Ltd.
Not a part of the big groups and imaginatively run by Ben Colson.
Norfolk Green is an independent company started in 1996 and run by Ben Colson (ex Stagecoach senior manager). It runs high quality services, most notably being the north Norfolk coastal route.
The Concessionary bus passes are a serious problem and they will also affect Norfolk Green but they probably have a lower cost base
The touchy subject of Concessionary bus passes will ultimately have to be addressed. The scheme has just become far too expensive and councils do not reimberse them the full costs leaving between 10% and 20% to be recovered by the bus companies
Companies in Rural & hoilday areas tend to be hit hardest as they have a higher percentage using passes
With budget cut backs local councils are holding down the amount they reimberse the bus companies and councils also have less money for contracted services so they are cuts there as well
Bus companies try to pass the shortfull on fare paying passengers but their numbers in most cases is are falling
Something will have to give soon.
The wind of change eh ?
Rare,but not unique. First sold their Orpington network to Metrobus a while ago.
Thanks for the info. I think some of you must have sussed my thoughts. ;).
The concessionary problem seems a hairy one. Earlier this week someone wrote of Hertfordshire, that concessionary trips were 34% of the whole whilst revenue was only 23%.
OK, though concessionary fares are claimed to be not enough, would a 23% drop in revenue be sustainable, if in a worst case all the pass holders ceased to use the bus? Would 59% of the 34% still travel, were the scheme withdrawn?
In short, with all the negativity may be matters could be worse. Costs too are unlikely to reduce as fast as revenue.
savaging awaited!
Norfolk Green is indeed a private company owned by 12 individual shareholders.
It does not have a lower cost base - it cannot do so because fuel and other materials cost a lot more than for larger plc operators.
It does not accept lower margins because without them it could not operate a fleet which is generally more modern than most rural fleets.
It succeeds simply by concentrating on growing its customer base. A decade ago it started operating the 505 King's Lynn to Spalding route which then ran hourly and has gradually built it up to run generally every 20 minutes. Then there is the spectacular growth in customers it has achieved on its Coasthopper bus service along the North Norfolk coast road.
By targeting full fare payer growth it is better able to cope with the 12.5% fall in reimbursement for free travel that all Norfolk operators have experienced.
Who knows what will happen with more funding cuts to come in April 2012.
Its a fair bet, then, that it believes it can turn the corner on some of the routes it will take over from First by applying the same techniques that has brought it success on other routes.
re anon 12.13.as i have pointed out before 23 percent of a lot is a lot .zero percent of near zero is nothing.the large operators should be careful what they wish for.at the moment its still a cash cow that they benefit from at the taxpayers expense.nobody believes that oaps are taking seats from fare paying passengers.grin and bear it .there are add ons ,grannies grandchildren etc.
How long before Northampton finally goes?
A very interesting development. The first question that comes to mind is "where next?". There are other places where First may well be best to cut their losses and leave.
Stagecoach will move into Cornwall in the next year
I foresee go ahead buying ipswich buses thus hastening first exit from there and bury st eds
Anon @ 1308 clearly isn't an operator. The concessionary travel scheme is fundamentally flawed, the founding principle is operators should be no better no worse off so why is there such a disparity of reimbursement rates between local authorities in England? Reimbursement rates vary from 70%+ to less than 20% in some cases and sometimes these are neighbouring local authorities with a cross-boundary operator with the same operating costs in both authority areas.
Of course Scotland and Wales don't suffer from this nonsense with a properly funded and truly national scheme.
if anon 1308 is not an operator, I, Anon 1213, certainly am not. OK so the scheme is flawed, but that does not invalidate suggestions that losing the concessionary scheme and its pax might be a more worse option than the current remuneration,
Didn't the calculations take in to consideration forecast uplift in ridership? That being so, surely as each forecast would differ, there is bound to be variation in rates. How valid those calcs were is possibly part of the problem too.
Only other two place where FIRST should just CUT AND RUN are:
* Cornwall
* Northampton
The rest there can build upon and provide an improve network. Stagecoach will not move in to Cornwall, especial as there have a working partnership with western greyhound
I'm sure there's going to be obvious synergies to be gained from the merger of the two networks. The Fairstead One and 42/42A shadow one another for example. So savings can be made there.
Stagecoach moving into Cornwall would be a bad move given the nearest their Exeter based company's track record of continually losing tendered work in their most recently acquired operation.
You would then see, in Cornwall the WG network being dismantled and the tenders lost to local independents, possibly by new operators set up by ex WG staff.
Anon @0752 hits the nail on the head regarding this particular divestment by First - Norfolk Green has slowly but surely whittled away at First's services in the town with competitive services launched against them one by one. The fact the CoastHopper means that even between Kings Lynn and Hunstanton Norfolk Green can now provide a credible alternative to First must have been the deciding factor in the sale IMO.
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