GENERAL and INDUSTRY NEWS

TfL, London Buses and The Mayor

The recent appearance of a weighty tome in the form of a report by consultancy KPMG for the Mayor has looked at ways for TfL to perhaps make economies. Although the report says it sees no reason to move away from the present contract system, it does think that TfL’s specification for buses could be reduced. TfL’s own figures suggest it adds about £13,000 to the price of a single-decker and nearly £19,000 to a double-decker. It is critical of the need for upper deck cooling which costs £4,750 per bus. Other suggestions put forward are that TfL should lease buses direct for operators to use, allowing existing vehicles to remain even when the contract passes to another operator. The report also says that TfL should continue to develop sites for new garages which will help new operators. There are also concerns over the excessive costs of hybrids and of the NBfL (New Bus for London) project. Talking of the NBfL, two of the manufacturers, Scania and Mercedes-Benz, have withdrawn. They are not confident in being able to design, develop and test such a vehicle in such a short time scale as is required by the Mayor.

Operator and Corporate News

Travel London and Travel Surrey, since 9th June part of NedRailways, is to be re-branded. Back on 9th December 2008, NedRailways acquired Abellio GmbH, which had seven bus operations in various parts of Germany (see www.abellio.de). The London and Surrey operations are likely to take the name Abellio, although one presumes that TfL would need to approve. Whilst at first it might seem an outlandish name for a British bus operation, now familiar names such as Arriva and First, let alone Blue Triangle, have little relevance name-wise to current bus operations as such.

Effective formally from Sunday 23rd August, the bus operations of Galleon Travel (t/a Trustybus) at Harlow were sold to Centrebus Ltd. Twenty buses transferred. The small coach operation with four vehicles transferred to a new Centrebus company ‘Galleon Travel 2009 Ltd’.

On 1st September, it was announced that Arriva Southern Counties had agreed to sell its Horsham operations to Go-Ahead, in the form of Metrobus from its Crawley Depot. The effective date is 3rd October and nineteen buses are involved. It is reported that Go-Ahead paid £5 million for it.

On 19th August, FirstGroup announced that they were launching a Greyhound service similar to the service it operates in the USA. The first service will from 14th September link London with Portsmouth and Southampton. Fares will be as low as £1.00 depending on the time of travel. They will use the Greyhound grey livery together with the Greyhound logo. The livery gives no clue to FirstGroup’s involvement other than the five digit fleet numbers. The American theme should include named coaches; names to include Sweet Caroline, Barbara Ann, Jolene and Peggy Sue. Those of us of a certain age will be familiar with those names!

We have already noted in TLB539 (p.4) and TLB540 (p.5) the current turmoil at National Express. The Group’s results for the six months ended 30th June 2009 were published in early August and, as predicted in the interim statements in July, they show a substantial deterioration in the Group’s position compared to last year. There was a pre-tax loss of £48.1 million for the six months compared to a £52.4 million profit for the six months to 30th June 2008. Much of the loss results from exceptional items, mainly arising from their exit from the East Coast franchise next year. The Group’s debt was reduced to £977 million - a reduction of more than £200 million. Included in this is the £32 million gained from the sale of Travel London. The UK Bus Division showed profits of £11.2 million down from £20.4 million in 2008 whilst the troubles at the Rail Division brought a reduction in profits from £39.7 million in 2008 to just £2.5 million. The UK Coach Division showed the only increase with a rise from £7.2 million to £10.6 million now. Turnover fell slightly but the disposal of Dot2Dot in January no doubt helped. The North American and European Divisions both showed slight reductions in profits.

Meanwhile, recent developments have seen Arriva saying that they might mount a bid for the Group. And then late in August, NatEx rejected the Cosmen/CVC take-over bid, suggesting that a rights issue involving its shareholders would give better value. On 4th September, Cosmen/CVC then increased their bid to a figure which was regarded as valuing NatEx rather more realistically. Separately, the Stagecoach suggestion remains on the table, but the City’s Takeover Panel has given Stagecoach until 11th September to make a formal bid for NatEx. If they do not table an offer by then, they will be unable to do so again for six months.

Stagecoach announced orders for new buses for 2009/10 in early August. The order totalling 434 vehicles is worth £71 million. This order is in addition to the 26 Van Hool Astromegas for the Oxford Tube, some of which are in service already. The order comprises 100 Scania/ Enviro400, 100 all A-D Enviro400, 15 A-D Enviro300, 33 A-D Enviro200, 9 Volvo/Plaxton Profile coaches, 7 Volvo/Plaxton Panther (12.3 metres long), 29 Volvo/Plaxton Panther (15m), 10 Optare Versa and just one Optare Solo.

Other General News

We mentioned in TLB536 (p.4) the Office of Fair Trading’s (OFT) decision to start a study into competition in the bus industry. The study was released in late August and the OFT concluded that the rapid consolidation of the industry since deregulation in 1986 has led to reduced competition and higher fares. The study found a number of factors that pointed to reduced competition. Amongst these were that nearly two thirds of services are controlled by the big four – FirstGroup, Stagecoach, Arriva and Go-Ahead. There were higher fares in areas with little competition. Smaller operators have faced predatory action by larger operators designed to eliminate competition and a quarter of tendered services had bids from only one operator. The OFT therefore proposes referring the industry to the Competition Commission (CC). The Commission will now have to decide on any action needed which could include divestment, requirements on service levels and quality and even price caps.

Following the OfT investigation into Stagecoach in Eastbourne, on 5th September their initial findings were announced about Stagecoach’s purchase of Preston Bus. Predictably, they found against Stagecoach. Their final report is due by 12th November and they suggest that they might require Stagecoach to sell all or part of the Preston operation.

We mentioned last month (p.6) the £30 million Green Fund to promote low carbon buses. More details are now available. Low carbon buses are defined as having 30% less emissions compared to the current Euro2 diesel equivalent. Operators wishing to claim from the Fund will need to send their bids by 4th November. Depending on response, there may be a further round of bidding in 2010. The amount of cash available is limited to £30 million so if too many bids are received, grants may be scaled down. The DfT is encouraging operators to make joint bids. Decisions on bids will also be made so that manufactures are given an equal chance of winning orders. Bids that propose using a single manufacturer may well be reduced.

There was much media comment in August concerning a report on the English Concessionary Fares Scheme. The report was carried out by consultancy firm Oxera for the Local Government Association (LGA) which represents English local authorities. The report concludes that the present system of bus passes does not deliver value for money and local authorities would be better off targeting those most in need. It also mentions problems of local authorities at coastal resorts or major tourist attractions who have to partly finance free travel for visitors to their areas. The LGA does however recognise that bringing an end to the present universal system will be “problematic” [more like political suicide -Ed!).

And a tailpiece from the Financial Times: At the Volvo plant at Bangalore in India – which produces a large number of buses for the country - a large toy tiger has been affixed to the gate. This is to deter marauding monkeys who break in, smash the lights on the new buses and eat the upholstery!

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