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Can independents run peak services fairly?

11th December 1982
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Page 19, 11th December 1982 — Can independents run peak services fairly?
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Which of the following most accurately describes the problem?

It all depends what we mean by fair competition — and what is meant by the public interest. What about fringe services? The whole theatre of bus and coach operation since the 1980 Transport Act was discussed at a talk-in led by Noel Millier

i`f have not independent orators made more chalges for the stage-carriage rk of the public operators? Is possibility has been on the ds for some while now — ce the 1980 Transport Act.

It least established operators N have to be constantly aware rt tougher competition may be punted within a short time of )lication. But just what do bus orators think about this? What their attitudes to the whole etre of operators? With a nnber of bus professionals, 1 d a long talk-in on these )jects at CM's Sutton head3rters in September before present Transport Bill was I before Parliament.

n the shires, the county coun; have an overall responsibilfor public transport. Just how as this relate to the opportuy for competition? For the Jnty view I invited Bob Grery of Hampshire County uncil to join us.

)ur professionals were: rry King, managing director of Tillingbourne Bus Company Surrey. He operates a xessful independent stage eration in parts of London, rrey and Sussex; hard Cochrane, corporate vices executive of the Greater inchester Passenger Transii Executive; rek Keeler, development ector of London Buses; cl David Rabey, traffic manor of National Bus Company traidiiry East Kent/Maidstone cl District.

infortunately, private transrt failed — Bob Gregory was able to join us: his car broke wn. However, he wrote to me

our proposed topics for scussion and these are dined at the end of this feae. As our professionals talked, the conversation was taped. is is a summary of what they d: As an independent, I think t want a mix of the difent type of operators; each should work amicably with others — all contributing to 3 benefit of the whole network. lust confess that, surprising as it may seem, when we have situations where independents compete directly with established services — but only between 07.30 to 16.30 Monday to Friday — I think it is detrimental • to these routes.

DR.: I agree. We all have experience of large and small public and private operators working together. If such an operation is carried out in a planned and coordinated fashion there are plenty of opportunities to be had. Equally, there are dangers; small operators can come on to a very good route and damage the balance of operations.

Some operators come along just to run services from seven in the morning to six at night. The public on that route may benefit at those times, but there are people who wish to travel, during the evenings and on Sundays. As a consequence they have no service at all then; is that in the public interest?

N.M.: The Yeowarts Coaches in Whitehaven application resulted in probably one of the most controversial recent decisions; as a consequence, increased services at certain hours brought the fares down and proved the public weren't too worried what colour bus they travelled on.

The public benefitted from in creased services and lower fares, but as a result CMS thought it necessary to withdraw, rural services. This suggested that the people in Whitehaven had been paying for the rural services through their higher fares.

N.M.; Is it in the interest of the public for the people on this route to benefit?

D.R.: Cumbria County Council felt that it was against the public interest.

BK.: Was the action of the NBC company in withdrawing the routes absolutely necessary or was it just making a political point? They gave very little warning of the withdrawal of the services, so there was very little chance for the county council to negotiate with another operator to retain a consistant service. D.R.: As far as I am aware the company gave plenty of warning of the probable need to withdraw some services to rural areas. I cannot comment on the specific way it was handled, but the danger was well known.

D.K.: A point made by the Monopolies Commission is that there is cross-subsidisation and that the entry of other operators could distort the pattern. Whether it is right to do that or not is a question of judgment in each case, but the authorising authority must be fully aware of what the likely result might be.

I do not want to enter into the Cumberland discussion, but it would seem that it is right for an established operator to say what will be the effect if another operator is allowed to come in.

In London we are selling a network — not just the bus services but a whole package of transport; our marketing of passes is something that it may or may not be possible to join in with. The question of Fares Fair meant that LT was paying independents in London compensation for the fares policy in operation at that time. If there are independents in a large network it becomes more difficult to manage. Proposals for fares changes in spring 1983 extend the policy of integration with rail through using travelcards for both bus and rail travel.

N.M. If you protect the network operator, does it have any way of ensuring value for money? I am not suggesting that any large operator does not give value for money, but an element of competition could perhaps help to create better value for money.

If routes that were not viable were put out to tender to counties or other authorities, wouldn't that go some way to ensure value for money?

A possible result would be that the same operators would be running the service, anyway. Would that not be a better way of introducing a competitive element without destroying a network while keeping operators on their toes?

D.K. Would that work? If you put the whole operation out to tender, maybe. There has got to be a cut-off point as the established operator has got overheads already established. N.M.: It would be unlikely that anyone else would be able to establish the necessary infrastructure. D.K.: But the independent could make a lower bid for the peripheral operation; that would throw back on the established operator the need to spread his overheads over a smaller operation.

N.M.: Would it, if the established operator were still running the viable money-spinning routes — the corridors and main routes — and the local operators took small housing service routes? D.K.: The policy in London is that where there is no case for LT to run a service, it is not going to prevent an independent coming in.

R.C.: We have found little activity on the independent side for wanting to come in. If they run at a loss for us and 60 per cent of our services run at a loss, it is very unlikely that they will be able to run them at a profit.

N.M.: You do have some successful independents operating within Manchester, do you not?

R.C.: We have one. Arthur Mayne has run the services for a long time and makes money at it. They run something like 15 buses under our umbrella and survive. I suppose we could learn a lot from their survival. I understand some passengers prefer to wait for a Mayne bus instead of catching a GMT one just behind. They prefer the Mayne bus because they know the driver and conductor.

N.M.: Is that an important consideration?

D.R.: I think it is, but you must remember that a significant proportion of NBC rural operation is conducted from smaller depots and the benefits the private operator has apply equally to National Bus. In a large urban area, whether services are run by a public or private operator, I doubt if you ever will build up such a relationship.

B.K.: Generally, the smaller operator has lower operating costs and there are routes on the outskirts of a main operator's territory that the independent could take over and run without subsidy. But how many routes of this category would there be? D.R.: Value for money is very important. None of us has any God-given right to run bus ser vices and we must be able to demonstrate to whomever is paying the bill that the money spent running a service is money well spent.

D.K.: It should be clear, if there is a question who should run a par ticular service, that it is important that it should be the same specification of service that is on offer. There have been occasions where an alternative operator has been favoured for offering an alternative for less support, but the service has only operated, say, from seven to seven. The established operator was running an all-week, all-day service. It is therefore a question of whether the other operator is giving to be cheaper than the established operator on the same specification of service. It is, of course, up to the established operator to show whether he can be competitive or not.

R.C.: Are you saying that the same specification would include all-day running or all-theyear "running, or would it just be those period of the day that the alternative service is proposed?

D.K.: Whatever the sponsoring authority is buying should be offered back to the established operator to see what its costs would be for running the same type of service. If the established operator's bid for a full operation is beaten by a bid from an independent operator, then the established operator should have the opportunity to bid for the part-time service as well.

R.C.: We had a similar example for running a university service in term time and we didn't say we could run a service as cheap as Finglands. We said to run it in term time would be disruptive to our total operation. We just could not quote for the type of service proposed in a sensible way. I do not think a major urban operator can quote for a partday or part-year operation.

D.K.: Part-year no, but certainly part-day. I would like to be able to quote for a seven to seven type operation if the full operation was not thought to be worthwhile by the sponsoring authority. R.C.: We do have this situation with works and school services, which we are happy to let be taken on by private contractors. B.K.: In London Transport areas in Surrey quite a few routes are being hived off to London Country. Presumably this creates no savings in LT overhead costs. Do you think with going down the scale that this will happen with some outlying operations going to lower-cost operators? Will, even, some deep rural routes be hived off to independent operators? Are counties going to see this as a way to save money? D.K.: I would guess Surrey does see it that way. The counties around may see cascading operation through their area to secure best value for the money they have to spend. But the fact is that immediately one makes a cut in services there is not a similar reduction in overheads. One then wants to find ways to reduce overheads in the medium term. The services run down progressively, but overheads come down in steps, so it is then possible to look at the total number of garages and the impact on those.

D.R.: There are dangers to county councils in some services being hived off for this very reason. If the major operator, in which the county has a financial interest, does not benefit from reduced overheads from loping off of a few services, then the overheads have got to be met by a smaller package of services. Then at the end of the day the county would not save very much money. Again it is up to the operator to explain the situation carefully to the decision makers.

N.M.: Hiving could just lov vehicle utilization and revenut D.R.: Yes, and also there can some disadvantage to the pub with a multitude of operat running services in a partict. area. The marketing of ticket: denied to people in areas wh the identity of an operator changed.

D.K.: Where sponsoring auth ties in different areas ; involved in the same serv there are dangers whc overheads saved in one area crease costs in the other. R.C.: We have met this arot the boundaries of Greater M chester, where discussions tween counties are complica because private operators h, sensed an opening.

B.K.: Do we think the cou councils are filling their resp sibilities adequately, sh counties in particular? The t shire counties with which I d have completely different proaches to co-ordination revenue support.

D.R.: The main county I d with is Kent and I do not thin has a tendency to sit on fence. But I am aware of so neighbouring counties wh appear to do so.

When some fairly controt sial proposals have come alc they have said that they do support or object to the parti lar operation and have left n ters up to the Commissioners such cases the Commissior have instructed the county come off the fence and rec nise their obligations.

In Bexhill a case attracte fair amount of interest wl some ex-drivers made a v brave attempt to run servi formerly run by M&D. Fa quickly the operation was ta by another operator in the to He has had to contract from more thinly populated area: the town on to the routes TV are left with and the county been content to watch as situation evolved. The ston not finished yet as the count trying to co-ordinate opera in the town.

D.K.: In the London dm stance the counties where have a major bus operating terest are extremely suppor and their co-ordinating sta1 very professional; and they support us if there are object to joint LT — County policy. D.R.: Our relationship with vate bus operators and Bri Rail is also generally very gc BR gives us more problems t trivate operators.

LC.: We would include National lus as a private operator.

I.K.: If we look at the areas there over the past couple of ears independents have introuced competitive services, the asults for the independent have een pretty grim. In some cases le large company has cut fares ) try to eliminate the competion. With the notable exception f Yeowarts, there have been ery few independent services thich have been introduced and urvived.

I.R.: In 1980, when the Transort Act was about to become Kent made no secret of their Iterest in becoming a trial area. he elected members thought lere were definite benefits. I relember a meeting where lational Bus, Maidstone °rough and private operators let councillors and we spelt out le dangers. I think they just lought we were saying what ley expected us to say, but fere surprised when the memers of the coach operators' asociations repeated the same iews.

They confirmed that they rould have no interest in the )utes in the very deep rural reas.

IM.: One of the few cases there an independent operator as obviously aimed at an estabshed urban operator was the :K Coaches case in Cardiff. fere, the independent operator )st. Did it lose because it was :K or would the same thing lave happened to any similiar iperator? R.C.: In Manchester, with 2,500 buses, we could just swamp any independent. It is not a tactic we would follow, I think, but we could do it.

B.K.: What would the LT reaction be if someone decided to run a service between Aldwych and Victoria and was granted a licence. What would be the LT attitude to a rival Red Arrow?

,D.K.: It would very much depend on what type of operation was

put to us. The central area of any large conurbation probably has the same type of difficulties; there is heavy traffic congestion and the problem of actually getting enough staff to work there.

We would be arguing the competitive argument about cross subsidisation being minimised by somebody coming in on one of the central routes and also be saying that there would be some effect on the labour pool.

What we would do would de pend on the size and the character of the operation. The 1930 Act was set to deal with an intensely competitive situation where the politicians decided that the public was not getting the best deal. I am not suggesting that the system that was set up then is ideal and cannot be modified; but we are not starting with a clean sheet of paper.

N.M.: The network that evolved was one that made money initially and now is a network that is paid for from the rates.

O.K.: All the more reason for the sponsoring authority to set out what their strategy is for network provision whether the coverage they are looking for is by area and times, so that every one can then see what they are bidding for.

R.C.: You mean, set it down in the TPPs or PTPs?

O.K.: Yes.

N.M.: One problem I noticed from visiting CK in Cardiff was that there a coach operator jumped in with both feet. He bought five ex-LT Fleetlines and some other old rear-engined double-decker buses.

The operation just did not appear to be able to keep up with maintaining them. CK had met the quality requirements for its operator's licence, which might suggest that for that type of intensive urban operation the quality requirements should be strengthened?

B.K.: The previous operator on our route from Orpington to Croydon ran in to the same type of problems.

R.C.: Commissioners should make a thorough appraisal of an independent's assessment of the market? Presumably CK had worked out that they could maintain Fleetlines.

N.M.: Maybe there should be an upgrading of facilities for different types of operation. It seems that running intensive stage operation puts more pressure on maintenance facilities than school contracts and private hire, with fairly simple, less sophisticated coaches.

D.R.: For passengers the services are a lifeline and it is just no good for an efficient, existing operator to have to give up a particular service and for that to replaced on the cheap by a suc cessor. I think there is scope for a tightening up on the operators' licence requirements and in addition, perhaps, more scope for individual county councils to assess very carefully the standard of the operator that is going to operate a particular service.

B.K.: Do we think that there are going to be many private operators coming forward to run bus services? I do not think there are lots of companies waiting on the sidelines.

D.R.: It varies up and down the country. In my own area there is not much evidence of people waiting to step in. There wasn't prior to 1980 and not much has changed.

N.M.: One of the most spectacular areas where competition has occurred has been in commuter and other coach services.

O.K.: Commuter coaches have the same implications of compe tition for the established operator that we have been talking about before. A lot of their trade is coming off BR.

N.M.: Surely if the public chooses commuter coach services it must be in its interests to have that choice.

D.R.: If the railway line only carries enough passengers to jus tify its existence in the peak, and some of that traffic is removed, then the justification for the whole service is in question in some cases.

N.M.: How is the public interest served? If the Southern Region lines disappeared, for example?

D.K.: The public interest certainly is not served in London if, for example, the commuter coaches were to take over a significant part of the Southern operation; the number of coaches that would be required just could not be accommodated on London's roads.

N.M.: I wonder how many people actually leave their cars and go on commuter coaches. The people who leave their cars and travel by coach must help to relieve traffic congestion in London.

D.R.: We haven't, in our case, just taken people from rail. I think we have taken people from their cars as well.

N.M.: It must be in everyone's interest to have 53 people corning up in a coach rather than 53 separate vehicles.

D.K.: Just a guess, but the commuter coaches really took off when the rail strike occurred, so I think a large proportion transferred from rail.

D.R.: I am not sure that really applies to North Kent, where the services were well established before the strike. There has been some development since, but this has been very limited. I think there were as many people travelling by coach from North Kent 12 months ago as there are now.

N. M.: The Inner London Education Authority hires about 200 private coaches taking children from their schools to swimming baths and playing fields. Most start at about 9.30am and fisfinish by 3.30pm. Could some of these vehicles help out at the peak? A lot come from depots in the suburbs and run to Central London empty.

In Singapore, school buses run services with the regular buses in peak hours. Do you think this an idea worthy of development here or are the problems of introducing coaches and buses on the same service too great?

D.K.: With the work that we have been doing to see just how we can extend the o-m-o boundary further in the central London area operation, new developments will depend largely on the type of the vehicles and the fare-collection systems bein a -Used.

The boarding speed is paramount and we would be worried about coach-type vehicles running in inner London. I would suspect that they would not be capable of being as fast as we expect. But the whole area of school contracts is interesting because at one stage LT used to be in that market very much.

It was only when the staff shortages became acute we decided that we had got to concentrate on the main-stage operation. There certainly is scope, am sure, for greater integration. There are numbers of fleets of vehicles around now which are doing similar types of operation. There is the basic stage operation, there is the school operation of ILEA and its supporting coach services, and there are all the social services operations that the counties run. I am sure we are going to see a greater coordination of those operations. D.R.: There are major differences up and down the country in the ways in which school transport has been well integrated in some counties and hardly at all in others. In my area the county council believes that if they are paying for a stage-carriage network it's up to them to fill the seats in the peak with school children rather than pay again for another operator. I think that is a very sensible approach.

N.M.: I notice at Sutton station. that at least three times an hour there are coaches from local hospitals taking people to the station and shopping centre. Around four bus routes pass within reach of the hospitals, anyway. Surely that traffic could be slotted into one of the bus routes.

D.R.: We are beginning to look with Kent into finding an area of the county — probably a deep, rural one — to see how we can meet the total transport needs of that community. There are so many places where there is the ordinary service bus, the school bus, the social car, hospital visiting service and your ambulance all arriving just to convey two or three people.

The idea of putting all that together and having one vehicle committed into trying to meet as many of those needs as possible I think would save a fair amount of money.

D.K.: In London the problem has been the quality of service that we have been able to offer and now that we have schedules, introduced on September 4, which match the resources with the timetable, we will be able to offer a service which people can rely on to a much greater extent, certainly in the outer suburbs.

We do run some services into hospital grounds and I think now we have the opportunity for being able to offer a service that is going to be meaningful to the people that we are talking to. Formerly they may have not been so sure that the bus will be there when the timetable says it will be.

N.M.: Will LT have the opportunity to start competing for ILEA school contracts again should' the GLC opt for a basic, viable network option? It would have lots of spare buses.

D.K.: Obviously what we would be doing is what we are now doing and that is looking to see how we could maximise the returns on the resources we are employing. If we found that there was a useful opportunity for us to tender for contract operations, then I think we would certainly want to do that. N.M.: So we could end up with a position of LT worrying independent operators with competition instead of the other way round.

D.K.: It is not going to be us suddenly completely reversing the situation. This is something that, if it takes off, will be on the fringe. It is not going to be us suddenly taking over a complete operation.

B.K.: There is scope for integrating stage and contract work. On our Orpington to Croydon ser vice we have a problem with heavy loadings in the peak and we need an additional journey feeding into the railhead at East Croydon in the morning and from it in the evening. We could utilise that bus in Croydon on contracts between the peaks.

N.M.: With public operators competing actively for school contracts and that type of opera tion, it is very difficult to say to the small, independent operators that they can't have a go back at their lucrative stagecarriage operation. If he is sitting in his depot and sees a full NBC bus go past every 10 minutes on a seven-mile route, and if he has

just lost a school contract to tt, NBC company, he may think thu if they are charging 75p froi end to end I could do that ft 50p, therefore I will have a g and how dare they stop me. D.R.: With his one bus?

N.M.: With his one bus or wi1 his five buses or however mar buses he has got.

D.R.: Yes, but if an applicatio for that were granted, then would require some managi ment response from us, partici lary if it was a good route thu was being attacked. You go bac to Cumberland, to the origin, well-recited argument about tt public interest.

* * *

Our discussions continued be equally far reaching. To .ics included the scope fc greater commercialisation maintenance facilities and tt seeeming contradictions in ti various Transport Acts that gh PTAs and Shire Counties re ponsibilities for co-ordinatir public transport with one han yet encourage direct compe tion with the other.

The points raised highlight tt need for a firm governme policy towards the provision public transport and a clear de nition of what if defines as ti public interest in order to esta lish a national guideline to cros subsidisation and network pros sion.

Bob Gregory, in his letter, sal that the Transport Act 1980 " an extent was in response to grass-roots movement and th rightly and wrongly numbers the public believe the major ty operators to be inflexible, inef cient and generally poor value' If it is successful, the BCC car paign may modify this opinio He continues that the Act ge an opportunity for others demonstrate their efficiency al to the established operators show how well they operate the face of competition. I thinks they have responded we "It was the Monopolies al Mergers Commission receni who in considering the situatil in Cardiff found nothing u reasonable in the attitude of ti municipal operator in respon ing to the inroads of the enti preneur," he says.

"Public transport in the lot sense is not an easy game. Tn. profitable operations are pc sible, but the public service e ment would deteriorate drarr tically if this were taken to logical conclusion. Mo operators do a very good job difficult circumstances."

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