TAS Transport Briefing

Comment and Analysis from the UK's leading passenger transport specialists

Mixed fortunes for East London bus group in 2008/09

There were mixed fortunes for the two subsidiaries of the East London bus group in the 2008/09 financial year, according to the companies' annual accounts.

The two businesses were formerly part of the Stagecoach group, but were sold to a consortium led by Australian bank Macquarie in 2006. Following the deal, the companies' accounting reference dates were changed in 2007, so that the 2007/08 figures were for a 48 week period only, making comparisons difficult.

North of the river, the group runs East London Bus & Coach. which operates some 830 vehicles from depots accross the east end. This business  improved its results sharply during the year to 29 March 2009, according to its annual accounts, with a much improved operating profit and a return to surplus at the pre-tax level. On an estimated annualised basis, turnover grew by around 4% to £173m, whilst operating costs were just over 1% at £168m. The resulting operating profit of £5.2m was achieved at a margin of 3%, up from a tiny 0.2% in 2008.

South of the river, the group owns the South East London and Kent Bus Company (known as SELKENT for short). This runs some 410 vehicles from three  depots in suburban south east London. Here, on an estimated annualised basis, turnover fell by 1.9% to £78.5m, whilst costs rose by just under 1% to £74.9m. The resulting £3.6m operating profit was achieved at a reduced margin of 4.6% (down from 7.2% in 2008) - though still well ahead of its fellow subsidiary. In addition, the fall was mitigated to some extent by a sharp reduction in net interest costs during the year.

For more information, see TAS Business Monitor.

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and tagged with bus profits, Buses, London buses, Public Transport, Macquarie


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Retail property vacancies spell bad news for buses

At first sight, today’s news about the number of vacant properties in town centres may seem to have little to do with transport or buses. In fact, the figures are very important indeed, because they tell us a great deal about the overall prosperity of our town and city centres – upon which the viability and success of our local transport networks depend.

For those who missed the story, it concerned the results of a survey undertaken by Local Data Company (LDC), and previewed at the British Property Federation (BPF) Retail Summit on 10 February.

LDC’s survey of over 700 town centres showed that overall shop vacancy has very nearly doubled in England and Wales since the end of 2008. All regions saw a jump in vacancy reflected in the 2009 mid-year figures, but these rates have moderated significantly in this survey.

The northern regions, whose centres dominate the vacancy data, show the highest vacancy rates, with the North East particularly badly hit at 14%. The South and East, including London, saw a 33% increase in vacancy rates in the second half of 2009, with average vacancy at just around 9%.

Amongst the places particularly badly hit are Wolverhampton, with 23.9% of its shops standing empty, closely followed by Bradford, Middlesbrough and Sheffield. In the medium sized centre category, Margate tops this depressing league table, with 27.2% of shops empty.

So why should this concern bus operators? And why should we take the figures as a point of concern about patronage and revenue trends?

Well, for a start, we know that 28.8% of all bus trips are for shopping purposes. Then there’s another 19.7% of trips undertaken for commuting, plus 10.6% on personal business and 1.5% on business*. The nature of our local transport networks, and of the pattern of land use development generally in recent years, means that overwhelmingly these trips will be to town and city centres. Thus, something approaching 60% of all bus trips will be dependent on the attractiveness, health and vibrancy of these areas.

The importance of town centres as trip generators for public transport operators was underlined a couple of years ago in work done for the Commission for Integrated Transport, which we highlight in our Bus Industry Monitor analysis of the bus market.

It will be seen that any movement away from traditional town centres has a disproportionate effect on the number of people who use public transport, especially the bus. Although not shown in the table, a there is a similar trend for other leisure activities.

Destination Car Park & Ride Public Transport Walk & Cycle Taxi & Other
Nearest Town / City Centre 44% 2% 30% 23% 2%
Other Town / City Centre 66% 2% 20% 12% 1%
Local Centre 49% 0% 10% 40% 1%
Out of Town Retail 85% 0% 7% 6% 1%
Edge of Town Retail 82% 0% 8% 9% 0%
Local Convenience Store 42% 0% 2% 54% 1%
Large Supermarket 81% 0% 5% 12% 1%

The Department for Transport’s quarterly statistics for bus patronage for the summer quarter last year showed some worrying trends on bus patronage – particularly in the PTE areas. The LDC figures might start to explain why – and also suggest that we should not look for an upturn anytime soon.

More information on the report, including a downloadable copy, is available from the British Property Federation website.

For more on the CfIT report in 2006, see this release which contains links to the full document.

* - National Travel Survey 2008, Department for Transport.

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and tagged with Buses, National Travel Survey, Trip rates, Recession, Public Transport, Bus patronage


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Arriva's Welsh profits improve

Arriva Cymru, the North Wales bus operator, saw strong revenue growth and improved profits in the year to 31 December 2008, according to its annual accounts. The year saw a £1.1m deal to acquire the assets and bus routes of Llanberis independent operator KMP, a deal completed in June 2008.

Revenue and costs at the 274 vehicle company both grew by more than 9%, with revenue shading ahead of costs to produce the improved operating profit. This was further assisted by reduced net interest costs.

Further information is available in the TAS Business Monitor.

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and tagged with bus profits, Buses, Public Transport, Arriva, Wales, Cymru, Arriva Cymru


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Kent Fastrack operator gets profits boost

Arriva Kent Thameside, the Dartford-based bus operator, built on strong recent performances and beat the onset of the recession to record a 35% increase in operating profits in the year to 31 December 2008, according to its annual accounts.

The 169-vehicle company operates the award-winning Fastrack bus rapid transit system that links Dartford, Gravesend, Bluewater and Ebbsfleet, as well as a network of other services in the area including contracts for Transport for London.

Revenue growth was very strong at over 16%, taking the total to just under £25m. Costs also rose sharply - partly as a result of a 10.5% increase in the workforce - but the growth was restricted to under 14%. As a result, operating profit reached £3.8m, more than 35% above the previous year's level, and at a margin of over 15%.

This looks like yet another example of local authority and bus company working in partnership to deliver benefits all round.

More information from TAS Business Monitor

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and tagged with bus profits, Buses, bus priorities, Add new tag, Public Transport, Arriva, Kent


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Hinckley disposal sees Arriva's Leciestershire profits improve

Arriva's Leciestershire operations saw a 10% increase in operating profits during the year to 31 December 2008, according to its annual accounts.

The 254 vehicle business, smaller since the sale of its Hinckley depot and network to Centrebus, achieved a very small increase in revenue despite the shrinkage, but acheived a small saving in operating costs following the disposal. As a result, operating profits were 9.9% higher at £2.6m, and were achieved at a margin of 7.6%.

The improvement was further assisted by increased net interest earnings, so that pre-tax profits were 17% higher at £2.8m, at a margin of 8.2%.

For more information, see TAS Business Monitor.

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and tagged with bus profits, Buses, Public Transport, Arriva, Leciestershire


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Arriva NW slips into the red

Arriva's North West subsidiary, which runs 286 buses on services in Cheshire and West and South Lancashire, slipped into the red in the year to 31 December 2008, according to its annual accounts, recording a loss of £0.49m on turnover of £47m.

Revenue fell in both cash and real terms, whilst operating costs continued to rise, albeit at a slightly lower pace than the prevailing rate of inflation. Reduced net interest costs helped to mitigate the deterioration, but the company still recorded a pre-tax loss of £0.84m.

More information on the TAS Business Monitor web site.

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Quality Contracts: a licensed form of larceny for the 21st century

Just over 21 years ago, in October 1988, the then West Yorkshire Passenger Transport Authority took a ground-breaking decision, and became the first of the seven UK urban transport authorities to sell its bus company to the private sector.

The company, Yorkshire Rider, was purchased by a management and employee buyout team led by managing director Bill Cotham. The company expanded subsequently, acquiring the Leeds and Bradford operations of the West Yorkshire Road Car company in July 1989, and bus operations in nearby York in July 1990.

Four years later, the management and employee team sold the company on to one of the emerging major players in the sector, Badgerline Holdings. A year later Badgerline merged with the Aberdeen-based GRT Bus Group to form FirstBus, which has since evolved into FirstGroup, one of the largest public transport operators in the world.

PTA members freely entered into the decision to sell Yorkshire Rider 21 years ago, and received a substantial sum of money in return. There were other bus operators in the county, too, such as West Riding and Yorkshire Woollen (now Arriva Yorkshire) and Keighley & District and Harrogate & District. All four of these companies had also been sold by the taxpayer (in the form of the National Bus Company) to their managers and other entrepreneurs.

Implicit in the sale contracts for the assets involved was a right to trade as a bus operator in the county, under the prevailing legislation and provided the companies continued to meet the quality licensing requirements of the Traffic Commissioners.

Under regulations put into effect by the current Government in the last few days, that very same organisation, now called West Yorkshire Integrated Transport Authority, is seeking to withdraw the rights of all these companies to run buses in West Yorkshire.

Instead, it proposes, services would be determined by the authority and its executive (Metro), and then put out to tender. Therefore the county’s existing bus operations would effectively be sequestered. And the amount of compensation the operators will receive?  Zero.

In many ways, this is an astonishing proposition – which, in the old days, would be called “nationalisation without compensation”: something which was not proposed even in the heyday of Labour’s nationalisation policies in the 1940s. And yet not only has this 21st century form of licensed larceny been tabled by Metro, it was also voted for by the Conservative members of the authority.

This raises a number of questions.  Firstly, will it all actually happen? Probably not. Secondly, why does the authority want to do this? One word, ultimately: power. And thirdly, what difference would it make? Answer: none whatever, except increase the cost to the taxpayer through more administration and transfer of risks currently borne by the private sector.

If there is a change of Government at the General Election, the process will be stopped, as the Conservative Party nationally is committed to repealing the legislation. Even if Labour hangs on to power, though, there are a considerable number of hoops that Metro has to go through in order get its proposals through.

The first stage is that they have to submit the proposals to an independent panel for assessment, showing that their scheme would:

  • have a positive impact on the use of bus services
  • will be of benefit to users of bus services by improving quality
  • will contribute to the implementation of the local transport policies
  • achieve all the above in an economic, efficient and effective manner.

There are of course huge amounts of room for argument on all those points. After that, affected operators have a right of appeal to the Transport Tribunal, as well as (on points of law) to the Court of Appeal. Because of the “nationalisation without compensation” argument, there is also the distinct possibility that the legality of the whole process could also be challenged in the courts, all the way to the European Court of Human Rights.

In such circumstances, the local taxpayers may well feel entitled to ask why the authority is spending scarce resources and (even scarcer) public funds proceeding with the proposal at all, let alone within weeks of a General Election.

The core of the answer lies in the opposition of all the PTEs to the implementation of bus deregulation in the late 1980s, and their oft declared determination to reverse the process, which they have pursued relentlessly for the last 25 years.

This is dressed up in weasel words about strategies and so forth. Such as “ensuring consistently high levels of customer services, securing better value for money and achieving transport integration.”

Consider this quotation from paper proposing Quality Contracts to the recent West Yorkshire ITA meeting in November:
“Whilst recent market research satisfaction scores are generally positive, other consultations reveal a number of concerns.”  So the customer is happy but the bureaucrats are not, so everything has to be thrown up in the air at huge expense to the taxpayer.

The paper goes on, “Local Transport Plan targets have not been achieved as there has been a general decline in bus patronage despite investment by operators, Metro and District Councils and a wide range of partnership initiatives. Whilst operators cite the recession as the cause of the recent decline in fare paying passengers, patronage also declined whilst the economy was growing. This decline is in stark contrast to the significant growth in local rail travel.”

The paper offers no analysis whatever as to why bus patronage was declining during the years of economic boom, and even ignores the fairly obvious point that some of the decline could have resulted from the boom in rail patronage engendered by Metro's huge subsidies.

In fact, we know from other statistics that one of the reasons that bus patronage declines stems from the results of increased prosperity: the growth in car ownership. According to the latest figures published by the Department for Transport in 2008, car ownership per 1,000 population in West Yorkshire reached 424, over 66% higher than in the mid 1980s. Even in the last 10 years, the number of cars in the area has grown by over 21%.

We know from other Department for Transport statistics that when a household buys a car, all people in the household use the bus far less often: the average drops from 184 trips per person per year to 39.

Other factors that affect bus use are speed and reliability – factors which are in many instances beyond the control of bus operators, since they are determined by the volume of other traffic on the road, and the overall level of congestion. Fares play a part too, and these are determined largely by the costs and efficiencies of the operations.

TAS monitoring of bus timetables and other statistics shows that bus speeds have tended to fall over recent years – by as much as 20% in some cases, as traffic congestion worsened before the recession. DfT statistics show that traffic grew by more than 10% on the roads of Yorkshire in the ten years between 1998 and 2008.

Of course, speed and reliability affect more than the passenger perception – slower speeds mean that more buses and more drivers are needed to provide the same levels of service. Again, TAS monitoring of the bus industry shows that productivity, as measured by miles run per crew member, has fallen nationally by over 20% in the last decade.

At the same time, rising wage costs and increases in the price of other items such as pensions and fuel have meant that bus industry costs have risen by more than 19% above inflation in the last five years alone. This is the reason why fares and prices for tendered services have risen so rapidly.

Thus, even before the recession, the industry faced rising costs and falling productivity, and – in some parts of the country – still falling passenger numbers. The result has inevitably been an impact on profit levels – which have halved in the last ten years.

Profits are needed to pay interest on borrowings, to fund future investment, to put aside reserves, to make up for pension shortfalls and to deliver a fair return on assets to shareholders: our analysis shows that current profit levels nationally are now about half the levels required to deliver all those elements.

These are the realities of bus operation in the 21st century. It is tough out there, and getting tougher with the impact of the recession. Everybody expects public expenditure cuts to fall on transport budgets, which will make things even worse still.

Sadly, all these challenges are part of the economic facts of life these days. And the even sadder fact is that Metro’s proposals for a Quality Contract will not change any of these prevailing conditions by one jot or tittle. They are, at best, completely irrelevant, and at worst a total waste of  scarce public resources.

For more information, please see The Economics of Bus Operation and Bus Industry Performance 2009, published by TAS Publications. Or visit the new online TAS Business Monitor service.

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and tagged with bus profits, Demand, Bus speeds, metro, Public Transport, Bus Deregulation, Quality Contracts, West Yorkshire Passenger Transport Executive, West Yorkshire Integrated Transport Authority (ITA)


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Metroline sees profits slashed by 45% in 2008

Metroline, the London bus operator, saw profits fall by over 45% in the year to 31 December 2008, according to its annual accounts. The company, which also has a share in the Scottish express business Scottish Citylink, is owned by the Singapore-based bus and taxi group Comfort Delgro.

Anlaysis shows that revenue growth failed to keep pace with rising costs: revenue growth was restricted to roughly the prevailing level of inflation, but costs increased at more than double this rate, so driving operating profits down by 45% and margins to record lows.

The position was worsened by increased net interest costs, so that pre-tax profits were down by over 54% during the year.
For more details, visit the TAS Business Monitor website

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Wellglade profits rise by 26% in 2008

Wellglade, the holding company for the Trent and Barton bus companies, recorded another excellent set of results in the year to 31 December 2008, according to their annual accounts. The business achieved a rise of more than a quarter in operating profits, on the back of continuing strong revenue growth.

At 12%, the growth in turnover was at more than four times the prevailing rate of inflation. Whilst costs also increased sharply, the growth was contained at 9%, resulting in the improved operating profit and operating margin. However, a fall in net interest earnings meant that the pre-tax improvement was much smaller.

For more details, visit TAS Business Monitor

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Competition Commission referral: missing the point?

There are many things wrong with the bus industry in the UK at the moment.

Services are too slow - because they sit in traffic jams. Fares keep rising because costs go up; and demand falls for a whole variety of reasons: increasing car ownership, services that are less attractive becuase they're slow and held up in traffic, and of course the recession.

And the other problem is profit: quite simply, it's too low. The companies who run Britain's bus services do not earn sufficient revenue to enable them to meet their financial obligations, invest for the future and maintain or grow networks. In fact, our research shows that profit levels in the industry have halved in the last decade, and are now at levels that are not sustainable in the long term.

On top of all this lot, there's the delights of a free concessionary fares scheme that is a copybook example of how not to make public policy; where both local authorities and bus companies feel hard done by a government that simply will not listen, and as a result of which bus companies are withdrawing services and local authorities cutting expenditure.

We even have a situation in Blackpool where the transport company has to compete with its own tram services to cater for visiting pensioners who, for some bizarre reason, can't use their passes on the tram. Then the local authority runs out of money, cuts the reimbursement levels and forces the operator to cut other services and make people redundant. And I thought free concessions were designed to help the industry!

And then we have a Minister who wants to micromanage everything  (as if he and his colleagues haven't got enough to do micromanaging the railways), by fiddling about with the grant system to provide pointless incentives to operators to do things that they would do anyway if only they could be allowed to earn the money to pay for them.

And into this delightful mix comes the Office of Fair Trading, which has spent the best part of the last 20 years proving that it doesn't understand the bus industry (and even gets indignant when passengers don't behave according to its expectations by getting on the first bus that comes along rather than waiting for the cheaper one: tell that to passengers waiting in freezing temperatures!).

Not enough competition, is the cry, so we have a referral to the Competition Commission. Another completely pointless waste of public money and scarce management resources whilst everybody spends 18-24 months arguing about the wrong issues.

What bus services need is to be able to become more efficient, through bus lanes and traffic light priorities, through new ticketing systems like Oyster, and co-ordinated policies to ensure that sparsely populated and rural areas get access to public transport networks.

Above all, we need a rational understanding of the economics of the industry: its costs, its market position and the sort of regulatory regime that it needs in order to serve its customers really well. This can, and is, being done in all sorts of places round the country - Brighton, Oxford, Cambridge and York to name but four - and there are many other examples too, witness the achievements of the winners and finalists at the annual UK Bus Awards.

At TAS, we aim to provide this in our research abnd analysis of the financial and market performance of the bus industry - work we've been doing for some 20 years now. Let's hope that the Competition Commission enquiry gets to grips with the real issues about bus operation - which are about efficiency, speed, productivity and competition with the private car. But I beg leave to doubt it.

Want to know more?

  • Our detailed analysis of many of these issues, including a proper rational survey of the fares people pay, was published in our report The Economics of Bus Operation last November. We followed this up with a seminar in London at the beginning of December.
  • You can see more about the report on our publications website and download a free summary report.
  • Alternatively, you can purchase the full report from our online shop.
  • We've also now uploaded the slides from the sessions at the seminar, which can be seen on the main TAS Gateway site.
  • If you want to understand more about what drives demand for bus services, you can also watch a short 6-minute video by clicking HERE.

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and tagged with Supported Services, Concessionary Fares, Economics, Public Transport, Bus fares, Bus Deregulation


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Margins slip again at Travel West Midlands

Bus operator West Midlands Travel, Britain's largest regional bus company, saw a further reduction in its operating and pre-tax margins during the year ended 31 December 2008, according to its annual accounts. The National Express Group subsidiary did though improve its cash profits by 4.2%.

Income grew at a rate above inflation, but was outstripped by a slightly higher increase in operating costs, with the result that though there was a small increase in cash profits, operating profit margin fell again to 10.8%.

Net interest costs were virtually unchanged. Exceptional items incurred included redundancy costs of £2.02m and provision against an amount owed by a group undertaking.

More information from TAS Business Monitor

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and tagged with bus profits, Buses, Bus Deregulation


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Plymouth improves profits in last year before sale

Plymouth Citybus, the former Council-owned bus company sold to Go-Ahead Group in December 2009, recorded a small increase in operating profit, but a reduction in pretax profit during the year to 31 March 2009, according to its annual accounts.

The last full trading period under public ownership before the council's decision to divest saw revenue growth slightly below the prevailing rate of inflation. Meanwhile, the company also managed to contain operating costs were at below inflation growth. As a consequence, margins improved from 6.4% to 6.7%.

However, a sharp reduction in pension income wiped out the gain and resulted in a fall in pre-tax and net profit levels.

For more information, see the TAS Business Monitor

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Recession wipes out post-concessions bus patronage growth in PTE areas

The latest quarterly patronage statistics for bus and light rail services in Great Britain, published by the Department for Transport, show that the onset of the economic recession has driven bus patronage in the major English conurbations down to record lows.

As a result, services in these areas have lost all the gains in passenger numbers that resulted from the introduction of free concessionary fares in 2006.

The DfT statistics show that bus patronage fell during the summer (June-October) quarter compared with the previous quarter in all areas of the country. The seasonally adjusted index shows a fall of 0.1% in London, 0.4% in the English Shire areas and 0.9% in Wales and Scotland. However, the fall was a much larger 3.25% in the six English conurbations covered by Passenger Transport Executives. These are Greater Manchester, Merseyside, South Yorkshire, Tyne & Wear, West Midlands and West Yorkshire.

When the summer’s figures are compared with the same quarter last year, the picture is also bleak, again with falls in all areas: 0.4% in London, 3.1% in the English shire areas and 2.6% in Scotland and Wales. But the fall recorded in the PTE areas is double this level at 6.2%.

When comparing the figures with those of summer 2008, before the financial crisis hit home, bus patronage is still 3.2% higher in London, but 4.7% down in the PTE areas, 1.1% down in the shires and flat in the shires.

The patronage index for the PTE areas was 89.4 in the summer 2009 quarter, compared with a previous low of 90.7 in the winter of 2005/06, immediately before the introduction of free concessionary travel in England. The base of 100 is taken as the 2000/01.

Transport Statistics Bulletin: Bus and Light Rail Statistics GB, Q3 2009 www.dft.gov.uk. For a more detailed analysis, see the TAS Business Monitor subscription web site.

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and tagged with Concessionary Fares, Demand, Recession, Public Transport, Bus patronage


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Bus industry suffers "double whammy"

Industry suffers rising costs and falling productivity

A combination of rising real-term costs and falling productivity is depressing bus industry profits, according to new research TAS has just published. As a consequence, the level of returns being achieved by bus companies are much too low to be sustainable in the long term.

The 2009 edition of the TAS Bus Industry Performance report shows that profit levels across the industry as a whole improved slightly in 2007/08, but remained lower than at any time since the end of the last recession in the early 1990s.

Whilst the industry remained viable, it is clear that the returns being made are not sufficient to enable operators to meet their financial obligations, invest for the future and deal with cost pressures such as rising fuel, wages and pension costs.

The report analyses the performance of 118 bus companies around Great Britain. It shows that turnover across the companies analysed increased by 8.5% in 2007/08, reaching £4,784m. Operating costs rose by 7.9% to £4,458m. Operating profit was £326.4m, 17.3% up on last year. Operating margins rose to 6.8% (2006/07: 6.3%).

Outside London, companies saw a smaller 8.3% increase in turnover, to £3,111.6m, whilst operating costs rose by 6.8% to £2,892.5m. Operating profit was 32.8% higher at £219.1m, and operating margins improved to 7.0% (2006/07: 5.7%).

The small rise in profit levels in the deregulated sector of the industry is the first to be seen for more than a decade: profit margins reached a peak of 12.8% in 1999/2000, but were more than halved in the subsequent ten years, reaching a low point of 5.7% in 2006/07. Margins varied widely across the country, with operators in the PTE areas achieving 8.7%, English shires 6.2%, Scotland 7.5% and Wales just 1.8%.

The TAS analysis of costs and trends in employment suggest that the industry’s productivity, in terms of miles per crew member, has fallen by over 20% in the last ten years. Thus, it is now lower than it was before deregulation and privatisation – even allowing for the withdrawal of conductors in London and elsewhere. This is attributed to slower speeds resulting from more congestion, and building in more recovery time to improve reliability and allow for fluctuations in traffic conditions.

At the same time, rises in wages, fuel and pensions costs have meant that operating costs have risen by over 19% above inflation in five years.

The report shows that the industry has suffered from a ‘double whammy’ of rising costs and falling productivity over last decade – most of it completely outside operators’ control. There must be concern that, without help to speed journeys up and make services more attractive, the industry could face a bleak future.

A prolonged economic downturn is bound to suppress demand and restrict growth opportunities - as shown by the latest DfT statistics on demand for services.

If costs keep on rising and productivity falling then operators have only two options: increase fares or reduce services.  Subsidy levels have doubled in real terms since 1997 and the prospects of extra help from public funds in the current situation were close to zero.

As a country, we need to act fast – both to reduce carbon emissions and help mitigate climate change, and to ensure that buses continue to offer an attractive and viable alternative to the private car. Tinkering with regulation or with the bus operators' service grant is just rearraging the deckchairs on the Titanic.

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More on the OFT Report

The following are some detailed comments on the recent OFT report on the bus industry with specific paragraph references:

The fundamental issue is that the report completely ignores the fact the price is set to cover costs.

1.11 - Bus users do not appear to 'shop around' for local bus services. Bus users are most likely to get on the first bus that appears at the bus stop going to the destination they want. This may encourage exclusionary behaviour by making 'over-bussing' a particularly effective strategy to deter potential entrants. We consider that consumer behaviour may have facilitated some exclusionary practices by bus operators and as such is a feature of local bus markets that prevents, restricts or distorts competition.

It's the passengers fault then. I must admit I cannot fathom what point they are making here. Passengers wait for bus, bus arrives, passenger gets on. How can this be exclusionary? The assumption appears to be that 'over bussing' is what is happening rather than building market share. Surely if two bus operators want to run on the same corridor within minutes of each other that is in the customer's interest and not over bussing. Indeed it's illegal for them to do anything else in collusion. Or are the OFT saying that operators are running artificially high frequencies as a barrier to entry. If so are they seriously suggesting that is not in the customer's interest? Bonkers.

3.2.8 etc about the lack of constraint of cars. "the constraint from the car is not sufficiently strong to prevent a local monopoly bus operator from raising prices above the competitive level"

Their point here is that putting prices up doesn't make people switch to cars. Seems flawed.

3.3.7 Accordingly, we conclude that for the purposes of this study the relevant markets are the markets for local bus services in Great Britain (excluding London) and that the markets do not include car travel, inter-urban rail services or other mass passenger transport systems, taxis, cycling or walking.

A convenient finding that is not entirely supported by the evidence.

4.4 One concern is that where the large national operators are in contact or reasonable proximity across a large number of local markets this will result in a ‘live and let live’ attitude where the threat of retaliation in other markets means that the operators tend to respect each others territories rather than seek to compete in new areas.

Ok then: Arriva v GNE in the North East. Stagecoach v First in Sheffield, Arriva v Stagecoach in Merseyside, Arriva v First in GM, Arriva v First in Leicester, Arriva v First in Chester and the Wirral, Stagecoach v First in Glasgow, Go Ahead v Nat Ex in WM (now sold), Stagecoach v Go Ahead in Oxford, Go Ahead v First in Southampton. Live and let live eh!

4.8/Fig 4.1 The map of depots

Rural services can't be viable then. Great big swathes of the UK have no depot within 20 minute journey time. Or don't outstations count?

4.25 Bus operators can act in a number of ways to reduce the carryings of their rivals. Such behaviour might include: ....... or declining to engage in multi-operator ticketing schemes to limit the scope for entry or expansion by smaller operators.

Would love an example!

4.30 The OFT has received many complaints about alleged exclusionary behaviour by bus operators. Since the CA98 came into force in March 2000, the OFT has received around 30 complaints concerning predation or exclusion in bus markets, approximately one every four months. Out of these, the OFT has made one infringement decision, one non-infringement decision and has in addition undertaken four other investigations.

Which suggests that the "many" complaints are spurious. Surely two decisions from 30 complaints is hardly "many".

4.32 During this market study many of the LTAs and some operators we spoke to said that in their view smaller independent operators tend to concentrate on supported services as they do not wish to take on the major operators on commercial routes: largely because of a fear (justified or otherwise) that they would be subject to an aggressive, exclusionary response. During our study we found very few examples of supported services being used as a platform to launch commercial services in an area. This seems somewhat surprising given the survey responses mentioned in paragraph 4.68 to the effect the supported services are an effective 'bridgehead' into commercial services. This supports the assertions made by LTAs about the fear of aggressive response to entry.

Doesn't this ignore economics? Small operators are well placed to win secured service contracts due to a lower cost base. This gives them a low risk revenue stream. Given constraints on their capacity (overheads, management, finance etc) can it not be said that their focus on secured services is simply a product of risk management? A secured service should be lower risk than even a competition-free commercial bus service. Why does every action from a small operator have to be perceived as a result of fear of the big boys?

4.38 More on customer behaviour.

Surely this tells the OFT that the consumer model is different from most other of its assessments. It's not simply about brand choice, it's choice of mode, not choice of supplier.

4.58 Operators have criticised certain aspects of our methodology, notably the way in which we estimated concessionary passenger boardings. They have also raised various issues about the quality of some of the underlying data. We have considered their points very carefully but after carrying out additional analysis (see Annexe C) we concluded that, on balance, our findings are sufficiently robust for the purpose of consulting on a proposed decision to make a market investigation reference to the CC.

Jolly good then - how convenient!

4.70 There are a number of reasons why prices could be rising: the services provided might be of higher quality and the introduction of a number of new funding sources such as the rural bus subsidy grant may have meant that LTAs now support more marginal services than previously; underlying costs of provision may have risen; and service providers may have increased their profit margins.

What about the issue that the services are in inexorable decline. Is it not relevant the Income has fallen from £193K in 2002/3 to £119K in 2007/8? Surely this is a factor in expenditure rising faster than mileage.

4.88 On the face of it table 4.4 shows only one PTE, Centro in the West Midlands, where there is a healthy competitive environment.

This is bizarre. The table shows average bids of 4.6 in WM, and 4.6 in GM, 3.8 in Merseyside (in both cases there are many more contracts). All that is 'best' about WM is that it had the fewest service withdrawals. Why that suggests there is a healthy competitive environment in this area, but not in others is curious. [Indeed one could argue that a higher level of competition for tendered services is linked to dominance of commercial markets - as this restricts the opportunities for other operators to the tendered market]

4.92 It appears that the level of competition is significantly influenced by the behaviour of the LTA when they are designing and tendering the  contracts for supported services.

The only apparent acknowledgement of other parties' influence in the market. Could also apply to provision of infrastructure and concessionary fares schemes.

4.94 Contracts were sometimes bundled by locality rather than type; this potentially increases the opportunity to for smaller operators to exploit economies of scale as smaller operators with a single depot can only bid for a bundle of contracts if they are all near the operating depot.

Interesting logic. Surely bundling reduces competition as there can only be one winner. The losing operator may then withdraw from market, so reducing competition in the future. Surely bundling also acts in favour of all operators, not smaller ones - indeed a bundle of contracts expiring at one go is less risky for a big operator than a small one.

4.101 In the analysis of the PTE data there is a positive correlation between the number of commercial services withdrawn and the number of contracts receiving one bid. What we have been unable to determine with the available data is how these two facts are related, if indeed they are: this will require further detailed research with better quality data.

What a fantastic comment. There is a correlation between to bits of info (in some area) but we don't know if or how they are related. We need better data which presumably doesn't exist or it would have been supplied in the first place.

4.102 We observe cost increases after controlling for route changes and cost inflation. We have not been able fully to control for the effects of higher quality contract specifications, again due to deficiencies in the available data.

Nor have you even given passing recognition to revenue trends.

4.103 In some areas the level of competition looks extremely low, for example West Yorkshire PTE where 95 per cent of all contracts only receive one bid. It appears there are only two PTEs, West Midlands and Merseyside, and one non-PTE area, Kent, where the competitive environment for supported services could be described as healthy based on our analysis.

Aha now its two PTEs not one. And good old Kent, though it should be pointed out it was only one of four authotries - two others being the most remote bits of Scotland and Wales!

4.113 During our price concentration study we found that the average fare is indeed higher (and markedly so) in those areas where there is a greater proportion of the population eligible for concessionary fares. We think there are two possible explanations for this. First, this may be due to the error in measurement of concessionary passenger boardings along the lines suggested in Annexe C. However, it could also be due to the fact that operators' incentives when setting single fares to paying passengers may be affected by the fact that these single fares are used in part as a basis for setting concessionary fares which operators recover from LTAs.

Piffle. Why are the only explanations available either data failings or the nasty bus operators? Is there a correlation between market size, concessionary proportion and price? Surely an area with low population density (with or without a high proportion of eligible pass holders) is likely to have a higher fare due to lower yield. Equally a low population may have a lower level of service which is more unattractive to cash payers than concessionary holders who are not time constrained.

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The OFT report on local bus services - a commentary

The Office of Fair Trading yesterday issued a document entitled Local Bus Services:  Report on the market study and proposed decision to make a market investigation reference (www.oft.gov.uk).

I used the opportunity of a long train journey to read the report and grew sadder as I progressed through it. It is often said that the high standards of public administration for which this country was once famous have largely disappeared, and this report seems to bear this out.

Fundamentally, the OFT would appear to have undertaken a colossal fishing expedition through the Department for Transport's statistical database. Now, anybody who has worked with that database (or indeed had responsibility for completing the forms on which it is based) knows just how flawed the data is, how inconsistent and variable it can be, and just how unreliable it becomes when disaggregated. None of this has deterred the OFT from making fairly serious allegations in large part based on this data.

I was also disappointed that the report used only one calculation for price –  revenue earned per passenger journey – which is a fairly arcane calculation bearing little if any relationship to the prices that the public actually sees. This is also rather worrying since, in order to make what they consider to be an accurate calculation of that figure, they have to make some fairly heroic assumptions. The fact that these results are then used in the report and put forward as a valid basis for making public policy invites rigorous stress testing. There is no clear evidence that this has been the case.

The problems with this methodology are further compounded by the fact that, though the report acknowledges that markets for local bus services are just that – local – it then fails to take proper account of the variability of operating conditions and operating costs which the industry faces in very tightly defined local markets.

My concern at the approach taken by the OFT was intensified at the realisation that, at no point, does the OFT refer to the levels of profit which the industry is making, and whether these are fair or sustainable. Indeed, it makes no attempt whatever to address the question of what constitutes viability and how this might be achieved - a fact that led me to ask this question: how you can address the question of the price of a product without either properly understanding how much it costs to provide or considering how much profit the provider is making or should make?

As well as the flawed nature of the data which the OFT has used, I was even sadder to see that the report’s analysis of the nature of the industry’s costs is virtually non-existent. Where costs are referred to at all, it is a cursory mention of operating cost per kilometre.

Now operating costs per kilometre have been discredited as a valid measure for over 30 years to my certain knowledge (I am old enough to have been around when the National Bus Company introduced its first Operational Costing Manual 34 years ago).

The fact is that, as NBC recognised all those years ago, the overwhelming majority of industry costs are time-based and not distance-based. By ignoring this, the OFT completely disregards the influence of vehicle speeds on the costs of operating different types of services, hence on the viability of different types of routes and therefore the levels of fares which operators will seek to charge.

From this superficial understanding of the industry’s costs the OFT has gone on to ignore the differentials in labour costs in different geographical markets – which is doubly surprising since over 60% of a bus company’s costs are labour costs. Consequently, since labour market conditions vary quite substantially between different regions and sub-regions, a methodology which seeks to analyse the industry’s approach to pricing and performance but takes no account of such variations must call into question any conclusions that it then seeks to propound.

This tends to indicate that the OFT's analysis of the market for tendered services may also be seriously flawed. The report’s discussions about rising tender prices take no account of increases in operating costs; nor do they make mention of the growing tendency for tendering authorities to issue specific vehicle specifications, which have also pushed up the costs of operation, since operators have been obliged to stop costing tenders on a marginal basis.

It is particularly distressing that the OFT ignores the fact that fares are not the only cost of undertaking a bus journey, and that the real public interest in bus service provision is in minimising the total cost of the journey, including the fare but also the time taken to undertake the whole door-to-door journey including access time to the network, waiting time at the stop and the time actually spent on the vehicle.

It seems to me that the report leaves more questions unanswered about the provision of bus services in this country than it answers. The report is based on flawed data, ignores the vital issues of viability and cost, and disregards the variability of operating conditions across the country. The OFT purports to represent the public interest, but issuing this report does not, I suggest, advance the public interest very far at all.

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Rail replacement services: cock up or conspiracy?

I owe Ian Morgan* (half) an apology. Back in March, I expressed the conspiracy-theory opinion that the railways wanted rail replacement services to be seen badly. Ian took me to task about this, and said that they were a customer-focussed operation who couldn’t afford to annoy their customers in this way.

On the basis of my journey today, I’m prepared to revise the conspiracy theory in favour of the cock-up theory. But it was so un-customer-focussed that I’m only prepared to give Ian half an apology!
My railway line from Worcester to London is being dug up this summer between here and Oxford so as to be able to double-track most of the line. This will improve the reliability of the service - and (probably) allow FGW to restrict the availability of reduced-price tickets. For the current three weeks, the digging-up means travelling by road between Moreton-in-Marsh and Evesham.

I went to London yesterday and came back today. Outward journey was straightforward, mainly because my daughter drove us to Oxford so that we didn’t have to suffer the rail replacement service (she’d experienced it and advised against on the grounds of my blood pressure).

Well, I say straightforward because at least we had a seat. As you can see from the first of the photos, that wasn’t true for everybody.

FGW clearly think that a 3-car train will handle the traffic that offers at Slough at 17:15. They’re wrong.
Anyway, today, interested as I always am in how different operators handle things, I came back on the 11:22 from Paddington to Moreton. Usual delightful ride in a FGW “refreshed” HST. The view from the seat (in steerage) is shown in the second photo.

It’s just possible that Ryanair might be worse.

At Moreton we transfer to a road vehicle. And for once, First have decided that a low-floor bus will be appropriate. And indeed, it is (just) sufficient to handle the traffic. Interesting that the passengers on an eight-car HST will actually fit inside a single bus. For the benefit of Roger Davies†, it was fleet number 66979. Anyway, it’s emitting less (a lot less) CO2 per passenger-km than the HST was.

And although it’s sufficient for the number of passengers, it’s not really equipped to carry the three buggies and assorted luggage that these passengers brought with them. That passengers should want to travel with luggage is always a matter of some surprise to FGW (W.S. Gilbert once wrote to the directors of the Metropolitan Railway: ‘Saturday mornings, though occurring at frequent and well-regulated intervals, always seem to take this railway by surprise’). Third photo shows something of what I mean.

The bus takes the A44 to Evesham and the northern half of the by-pass so as to approach the station from a sensible direction. Unfortunately, the County Council, in a splendid piece of joined-up thinking, have also decided to make use of the school holiday opportunity to allow e-on to dig up this road, so there’s traffic lights and single line working.

Despite this, we get to Evesham in good time. We alight from the bus outside the front of the station – and find that FGW want us to use the other platform, the one over the bridge. Now why they can’t operate the Evesham – Worcester shuttle in and out of the platform that’s alongside where we’ve alighted from the bus isn’t immediately apparent to me. Evesham is a single track loop, so you’d think it’d be possible to reverse the train in either platform. You might have to clip the points to do this, but it ought to be possible, especially given that you’ve been planning this blockade for the best part of a year.

Anyway, all that luggage (and the three buggies) have to be got across to the far platform (4th photo).

Now if Network Rail’s signal engineers have decreed that you must use the far platform, then there might be some merit in using the access ramp that was installed a couple of years ago (courtesy of money left for the purpose by Thames Trains). But this would have meant stopping the bus by the ramp instead of outside the front of the station. Perhaps (conspiracy theory) they don’t want to make things too simple for their passengers.

The little two-car shuttle arrives. The timetable means that it turns back in 6 minutes. Our HST is still sitting in Moreton : having got there at 12:59, it has a rest until 14:44. This layover is actually longer than the journey from Paddington to Moreton. Gosh, how tightly stock is worked on the railways.
The driver gets out and walks away, over the bridge. A new driver walks back, over the bridge. Now our new driver wasn’t on the bus with us, so presumably he’s come in a taxi from Oxford, and the taxi will take the other back there. Gosh, how tightly staff are scheduled on the railways.

The shuttle takes me to Foregate Street.

Where I decide to buy the ticket I need for Monday (fortunately, the journey doesn’t involve FGW, but there may yet be another post in this series).

In the Travel Centre, a young woman is asking if there are buses to Droitwich (she’s just missed the train). She is directed towards the Bus Station, some 300 metres away. I feel obliged to point out that she could catch the same bus by the simple expedient of crossing the road. On http://www.nationalrail.co.uk/stations/wof/busmaps.html, it’s the difference between stop F (Bus Station) and stop A. Further down on the same page, you’ll see that, for Droitwich, National Rail would prefer you to walk away from the station to stop E.

OK, cock-up theory wins hands down. But customer-focussed? I think not.

* -  this year's President of the UK bus and coach industry trade association, the Confederation of Passenger Transport, and a distinguished bus industry manager from award-winning operator Trent Barton

† - Renowned bus industry commentator and former senior manager.

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TfL quarterly statistics show London travel growth slowing

STATISTICS published by Transport for London show that demand for travel continued to grow in the third quarter of 2008/09, albeit at a slower rate and generally below budgeted levels.

The report shows that 830 million journeys were made on the TfL network during the quarter, 2.8% more than in the same quarter last year.

The London Underground network carried 265 million passenger journeys, which represented growth of 1.5% over last year, but this fell 2.4 million below the target for the quarter.

The quarterly report notes that Period 9, which includes the Christmas shopping season, is normally the busiest of the year, and had recorded the highest four-weekly total of the year in each of the previous five years. In 2008, however, patronage fell slightly compared with Period 8.

The report notes the growing popularity of Oyster PrePay tickets on the Underground network, with the proportion of passengers using this rising to 34.2%, compared with 29.1% in the same quarter last year. At the same time, the proportion of people paying cash fell from 3.3% to 2.8%.

Traffic on the bus network grew at above the target. The total of 541 million journeys was 17.9 million or 3.4% ahead of last year, and 1.8 million up on target.

The report notes that the proportion of bus passengers paying cash fell to 1.5% of all journeys, down from 1.8% last year. Oyster PrePay accounted for 18.8% of all bus journeys, up from 16% last year.

The DLR saw traffic fall, the total of 15.2 million journeys being 2.2m down on target and 5.6% below last year. TfL attributes much of this to engineering blockades and closures rather than the economic downturn.
Tramlink, meanwhile, continues to see strong growth. TfL notes that patronage was 6.7 million during the quarter, up by 4.4% against both last year and the target figure.


As we have noted before in looking at other quarterly statistics for last autumn, the real miracle is that traffic grew at all, as the economy felt the shock of the squeeze on credit and all that then followed.

Nevertheless, the signs are there that the long bull market in demand for public transport in London may be coming to an end - and as employment and GDP measures shown falls, so traffic may start on a downward path.

The impact of this fall on the future plans for transport in the capital is unknowable at this stage, but it is already clear that there are problems ahead, mainly associated with the disputed costs of the Underground upgrade and the continuing fall out of Gordon Brown’s discredited PPP scheme.

Even this small quarterly slowdown was set to cause a £37m gap in the TfL’s revenue budget for the year, so one can imagine the damage done if demand really did start to fall. Fortunately, at the moment, the operating budget was also coming in below forecast - but “mind the funding  gap” will surely be TfL’s watchword for the next few years.

Transport for London - Autumn Quarter

Full Year
Pax Jnys (M)
Last Year
Last Year
Year to Date    
Full Year
Income (£m)
last year
Surface Transport
London Rail
Tables may be subject to rounding errors. 
Source: Transport for London

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Boris and the bendies - again

I thought it might be a useful exercise to place on record in this blog the questions which I addressed for Channel 4 television in their recent Dispactches programme about the first year of the London mayor, Boris Johnson.

I must emphasise that, since I am not a registered elector in London, I have no interest in his reputation as Mayor, nor do I have a vote in the Mayoral elections. I am not anti-Boris out of political conviction or for the sake of it.

I just think that he is wrong on bendy buses. Wrong against the best interests of the taxpayer – both in London and indeed the rest of the country; wrong against the best interest of the passengers on the routes concerned who will experience a slower and poorer journey; wrong against the interests of the other road users on the route, who will experience more congestion on the routes concerned because the number of buses will be higher; and wrong from the environmental point of view, since the higher number of buses will consume more fuel, emit more noxious substances and contribute more carbon emissions into our atmosphere; and finally he is wrong, because the Mayor should not interfere in decisions about, or determine, which vehicle type should be run on bus services in London: he should stick the mantra of his own party in the House of Commons, “leave it to the professionals”.

This is not a trivial point, because political interference in the type of buses operated will increase the political risk of leasing or buying buses for service in London, and ultimately increase the leasing costs, so placing even more demands on the taxpayer in these straightened times.

The first question that Channel 4 asked concerned our estimates of the cost of replacing bendy buses and why these costs are necessary. In particular, why will the number 38 bus cost £3m a year to replace? Why will we need more buses?

My answer was:

  1. The total replacement figure is around £12m to £14m a year in operating costs, depending on what assumptions are made about providing the same level of capacity.
  2. The 38 is one of the busiest bus routes in London, running for 8 miles across the centre from Victoria to Clapton – the traffic conditions and the number of passengers on the route mean that it can take an hour and 10 minutes in the peak to cover those 8 miles.
  3. You need more buses to provide the same level of capacity, because a ‘bendy’ carries 149 people, whereas a double decker carries around 90 – 40% lower. Also, boarding times on the double decker are approximately  20% slower, so the journey takes longer, and therefore needs more buses to provide the same level of service.

Next, Channel 4 asked about TfL's estimate that it will cost £12m a year to replace all bendy buses. Do you agree? Is this significant? If so, why?

Our modelling suggests that this number is probably broadly right, especially if demand has stopped growing or is now falling because of the recession. As to its significance, it depends what you mean by significant. In the context of the total public funding for London bus services of over £600m, it’s not very much. However, given that the Mayor wants TfL to reduce its spending, and that public spending generally is going to have to be cut in years to come, it makes no sense to makes bus services less efficient and more expensive to operate.

It's also worth pointing out that the £12 to £14m is considerably greater than the total budget available to some local authorities in other parts of the country to support all their public transport.

Next, Channel 4 asked us about fare evasion, pointing out that TfL suggested that some £5m of the extra costs would be recovered from reduced fare evasion.  We were asked whether we agreed or whether we thought that this was an overestimate.

I replied that I thought that this was an over-estimate, since it would would imply that about a quarter of the revenue on the bendy routes was not currently being collected. Since only 3% of passengers pay cash, 29% travel free anyway and 50% have a travelcard or a period bus pass, this would imply that nobody holding an Oyster Pay As You Go card ever paid, and that simply is not true. In any case, even if it were true there are cheaper and more cost effectuive ways of recovering that revenue through increased enforcement.

Next Channel 4 asked what other impacts there would be from replacing bendy buses... congestion? emissions? Other?

There will certainly be higher emissions – on the 38 for example, you’ll be running over 20 more buses on the route, just to carry the same number of people – and that’s more fossil fuel being burned and more emissions if you compare like with like.

The extra peak buses also mean that there will be more vehicles on the already busy roads, and they’ll be spending more time at stops, so probably increasing congestion.

Next came the vexed question of accidents to cyclists: Boris has said that bendy buses cause more congestion and 'wipe out' cyclists ... your view on this.

The official figures show that, over the three years to 2007/08, there were two fatalaties and 57 serious injuries resulting from accidents between buses and cyclists in London. As the table shows, none of the fatalities and five of the serious injuries resulted from collissions with bendy buses.

Subsequently, the Mayor claimed that analysis undertaken by TfL showed bendy buses were involved in 36% more collisions serving similar areas per vehicle km. However, that differed from what TfL told the Channel 4 FactCheck web site last year:

“A breakdown compared collisions on all 12 bendy bus routes to collisions on 15 selected non-bendy routes.

“These selected routes tended to cover busy inner-city areas rather than the quieter suburbs. The number 43, for example, which goes from London Bridge, through Holborn, to Wood Green, or the number 8, which goes from Bow in the East End, along Oxford Street to Victoria.

“It's not necessarily a scientific study, but it would seem to be a more accurate representation of the kind of routes bendy buses serve.

“According to this breakdown, bendy bus routes threw up 5.6 collisions with pedestrians in 2006/07; non-bendy bus routes 5.17.

“Collisions with cyclists were 2.62 on bendy buses; but 2.78 on non-bendy routes.
David Brown, TfL's Head of Surface Transport, told the GLA last year, "The incidents that take place are both random, to do with the road networks themselves, and to do with weather conditions. They are not related to the type of vehicle that is operated on those roads."

“Overall, there were more bendy bus collisions - which could be to do with anything from a pedestrian, cyclist or vehicle to a lamppost, building, street sign or tree.

“There were 153 per million miles, compared with 117 for non-bendy buses. But cyclists and people made up a small proportion of these. Luckily, it's far more likely to be an inanimate object that gets over friendly with the bus.

Next, we were asked how bendy buses score against accidents involving the old Routemaster, and the answer we gave was:

Changes in routes mean that data isn't directly comparable, but according to other figures TfL gave Channel 4's FactCheck web site, between January 1994 and September 2007 there were 0.05 fatalities per million km operated by bendy buses and 0.08 fatalities per million km operated by Routemasters.

And this does not allow for the number of accidents inside buses, especially on staircases on double deckers: going up and down stairs on a moving vehicle is dangerous, especially the straight stairs that TfL specifies on its modern double deckers.

Lastly, we were asked once again about the new Routemaster, since before the election you calculated the cost of bringing in Routemasters would be £110m a year. Do you still stand by this figure ... and if so could you explain how you calculate this.

If you have already replaced all the bendies with ordinary double deckers, then clearly the cost of moving converting them to Routemaster operation would come down – but you’d need to recruit and train over 500 new conductors, which would cost around £60m a year, and there’d be a cost penalty for buying low numbers of specially designed buses. So we think another £75m or so, even after the £12m spent on replacing the bendies.

But that assumes that a new Routemaster could be built at all, given currently safety and product liability regulations, and then whether the authorities would permit its entry into service. The product liability laws are particularly important, since they mean that manufacturers could be liable if people fell off the open platform.

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Bus patronage falls in the autumn, but remains ahead of 2007

BUS and light rail passenger journeys fell during the autumn in all areas of the country, though they remained ahead of the numbers for the same quarter in 2007, according to the latest figures published by the Department for Transport.

Analysis shows that, in the October to December quarter, bus and light rail patronage was down by 0.6% in London, 1.9% in the PTE areas and 2.3% in the rest of England and 1.1% in Scotland and Wales when compared with the summer period.

The autumn quarter is normally expected to show an improvement compared with the summer as people return from holiday, and the build-up to Christmas begins. This is the first time since the Department began to compile these statisics five years ago that there has been a fall between the summer and autumn quarters.

Despite this fall, passenger numbers remained above the same quarter in 2007, analysis suggests. Traffic in London was 3% higher than last year, whilst the PTE areas were still 2.1% ahead. The English Shire areas remained 1.2% up whilst Scotland and Wales showed 2.3% growth.

The slippage in London, albeit very small, is nevertheless the first measured decline in bus use for twelve quarters, and the first fall since the terror attacks of July 2005. This analysis comes on top of this week’s admission by TfL of a 1% fall in Underground patronage in January. Expected shortfalls in TfL’s revenue budget have already led to the postponement of some upgrade works.

In the PTE areas, last autumn’s fall is the first quarterly reduction for five quarters, and is only the second since the introduction of free concessionary travel in the whole of England in 2006.
In the English Shire areas growth had also been consistent apart from one quarter since free concessions were introduced.

The slippage in Scotland and Wales was the smallest outside London. These two areas have benefitted from free concessions for a much longer period, which had resulted in total gains over over 20% since this index was first calculated.


This was the quarter in which economic growth fell off a cliff, and when the retail industry had its most difficult Christmas for years, with big names such as Woolworths going out of business. In addition, of course, the huge surge in oil and petrol prices subsided rapidly, so that motoring costs fell back from their peak.

Frankly, therefore, it would have been miraculous if there had not been at least some impact on bus passenger numbers. Like the rail figures we saw recently, one’s immediate reaction is that they could have been a great deal worse.

Retail sales seem to be falling once more, and unemployment is rising fast, which suggests that demand is not going to recover any time soon. Fasten your seat belts, it’s going to be a bumpy ride.

• Bus and Light Rail Statistics GB: October-December 2008 from www.dft.gov.uk.

Bus Patronage Statistics
London English mets English Shires Scot. & Wales
Passenger Journeys (Million)
2000/01 (Base) 1,401 1,270 1,296 592
Passenger Indices (2000/01 = 100)
Spring 154.2 93.1 99.7 108.4
Summer 155.3 94.6 102.1 118.5
Autumn 156.3 94.9 103.8 119.5
Winter 158 94.9 104.6 120.3
Spring 160.8 97.5 106.4 122.8
Summer 161.1 98.8 107.5 123.6
Autumn 161 96.9 105 122.2
Source: Department for Transport Quarterly Bus and Light Rail Statistics

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