Entering the Coaching Business
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Page 79
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Some Legal Aspects Concerning the Running of Coaches in Addition to the Operating Costs of 31and 41-seaters are Detailed
Here
DESPffE the difficulties which bus companies are meeting in endeavouring to contain increasing costs within stable, or even decreasing, revenue, coach operation continues to prove profitabl&when soundly organized. This is obviously recognized by several readers who have recently asked for advice on how to go about setting up in the coaching business, and it is proposed to devote this article to comment on some of the factors involved.
Whenever advice is solicited on how to enter the transport industrywhether goods or passengers—it is recommended that three main aspects should be considered, namely, adequate assurance of profitable traffic; the likelihood of a successful application for the appropriate licence; and a full appreciation of the relevant operating costs.
The extent to which traffic would be available to a new entrant to the industry must obviously be a matter which can be determined only by the would-be operator himself. However difficult the initial canvass for such traffic might be, it is imperative that this should be made as thoroughly as possible. Disappointment experienced by discouraging results at this stage is nevertheless preferable to obtaining similar information only after financial commitments have been made.
Regarding licensing, it will be assumed that contract carriage work is contemplated. But, even so, a public service vehicle licence will be required. Application for this has to be made to the Traffic Commissioner for the Traffic Area in which the vehicle will be ordinarily used. This licence will authorize the use of the vehicle—in this case—as a contract carriage. As defined in the Road Traffic Act, 1960, Section 117, a contract carriage is a motor vehicle used for carrying passengers for hire or reward but not at separate fares and, additionally, that it is adapted to carry eight or more passengers.
TTHERE is, however, further provision that in certain circumstances cumstances passengers may be carried on a contract carriage at separate fares. This is permissible when the organization to bring the passengers together has not been made by the coach operator, his deputy or anyone receiving payment for organizing the journey. Such journeys must not be advertised, except by a notice displayed, or announcement made, at any place of worship, or alternatively in any periodical published for the information of persons attending a particular place of
worship. .
It is also required that all the passengers must be carried to the particular destination, or for the greater part of a tour. Where the journey is to a particular destination no regular traveller may be carried.
As required by , Public Service Veh;cles (Contract Carriage Records) Regulations, 1960, the holder of a public service F16 Vehicle licence must make a record containing the prescribed particulars not later than 72 hours after the completion of the journey to which it relates. The driver must carry with him a work ticket showing the name and address of the p.s.v. licence holder and the registration mark of the vehicle, together with the time and date and route of the journey. In addition, the name and address must be given of the organizer.
1 N accordance with Section 129 of the Road Traffic Act, 1960,
a licence to use a vehicle as a contract carriage cannot be granted unless a certificate of fitness has been issued by a certifying officer that the required conditions as to fitness have been fulfilled in respect of the vehicle concerned. Unless previously revoked or cancelled, a certificate of fitness continues in force for seven years unless the certifying officer determines a shorter period, which may not be less than one year. The fee for a certificate of fitness is £5 1.0s., whilst fora public service vehicle licence the fee is £6 with a normal validity of one year.
Dealing with the operating costs of two typical examples of coaches commonly employed on private hire work, details applicable to a 31-seater oiler will now be given. The first of the five items of standing cost, namely licences, will include expenditure incurred not only on excise duty, as applicable to hackney carriages, but also in payment on the necessary fees for the public service licence and certificate of fitness. For the 31-seater the total annual apportionment would be £24 fis., or the equivalent of 9s. 9d. a week.
In contrast with the statutory rates payable to haulage drivers, there is no nationally agreed rate for coach drivers and an amount of £11 per week will be arbitrarily assumed in this instance. Rent and rates incurred in garaging the vehicle will be reckoned at 14s. 4d., whilst vehicle insurance adds £1 10s. 7d. a week. This is based on an annual premium of £76 10s. As with the previous standing costs, this latter weekly amount is calculated on the basis of a 50-week year to allow for two weeks when the Vehicle may be off the road for either major repair or driver's holidays.
Assuming that the initial outlay on this 31-seater oil-engined coach were £3,600, interest charged at a nominal rate of 3 per cent, would amount to £2 3s. 2d. a week: The total for these five items of standing costs would then be £15 17s. 10d. Where the average weekly mileage throughout the year was 600, the standing cost per mile would be 6.36d. At 400 miles per week the corresponding figure would be 9.53d. per mile.
Assuming fuel oil were purchased in bulk at 3s, 101d, per gallon and an average rate -of consumption of 15 m.p.g. were maintained, the fuel cost per mile would amount to '3-.12ct (Continued on page 27)
Lubricants are reckoned to add 0.23d. and tyres 1.02d. per mile. This latter calculation is made on the basis of a cost per set of £170 and an estimated mileage life of 40,000.
Maintenance, when averaging 600 miles per week, is assessed at 2.1 Id per mile. At the same weekly mileage, depreciation is reckoned to cost 3.48d. per mile. This figure is obtained by first deducting the equivalent cost of the original set of tyres from the initial price of the vehicle, followed by a further deduction appropriate to the estimated residual value. 6 vehicle life of 200,000 is assumed.
THE total running cost per mile is therefore 9.96d., giving a running cost each week of £24 18s. when 600 miles a week are averaged. At this weekly mileage the total operating cost for this 31-seater coach would he 16.32d. per mile, or £40 15s, 10d. a week. Where only 400 miles a week were averaged, the standing cost each week would remain the same at £15 17s. 10d but, as already stated, the standing cost per mile would increase to 9.53d., because of the reduced usage. It should he appreciated, however, that, particularly in coach operation, substantial variations in actual weekly mileage may well occur.
The first three items of running cost, namely fuel, lubricants and tyres, will remain the same when only 400 miles a week are averaged. The maintenance cost will, however, increase to 2.39d, at this weekly mileage, on the assumption that washing, and possibly some of the lighter servicing tasks, will be carried out weekly irrespective of mileage.
The cost of depreciation will also be reckoned slightly higher to allow for obsolescence, which is especially applicable to this type of commercial Vehicle. This is because a modern and attractive vehicle is essential in competitive private hire work. Allowing for a figure of 3.83d. per mile for depreciation, the total running cost at 400 miles a week is thus 10.59d. per mile and £17 13s. a week. Similarly, the total operating cost at this lower weekly mileage is 20.12d. per mile and £33 10s. 10d. a week.
Due to the greater seating capacity, the total annual apportionment in respect of licensing for the 41-seater coach will be £29 16s., or the equivalent of I Is, 9d. a week. Wages will be reckoned the same at ill a week, as will rent and rates at 14s. 4d. Because of both a greater capacity and higher initial outlay, the weekly cost of vehicle insurance will now amount to £1 16s. Interest charged on the initial outlay of £4,450 would cost E2 13s. 4d. a week, giving a total standing cost each week of £16 15s. 5d. At 600 miles a week the standing cost per mile would be 6.71d., increasing to 10.06d. at 400 miles per week.
With an average rate of consumption of 13.5 m.p.g., fuel cost per mile will now amount to 3.47d., whilst lubricants add 0.24d, per mile. The cost of a set of tyres is now reckoned slightly higher at £185, and, with the estimated mileage life remaining the same at 40,000, the tyre cost per mile becomes 1,11d. Maintenance is reckoned to cost 2.43d. and depreciation 4.46d. per mile when a weekly average of 600 miles is maintained.
At this weekly average, the total running cost is 11.71d, per mile, or £29 5s. 6d. a week, whilst the total operating cost is correspondingly 18.42d. per mile and £46 Os. lid, a week.
Making similar adjustments as before when the weekly mileage is only 400. maintenance will be reckoned to cost 2.75d. and depreciation 4.91d. per mile, giving a total running cost of 12.48d, per mile. The total running cost each week would be £20 I6s. and the total operating cost 22.54d. per mile and £37 I Is. 5d. a week.
V-,
OMPARISON of the four alternative operating costs per mile—namely 16.31.1. and 20.12d. at 600 and 400 miles a week respectively for the 31-seater, and correspondingly I8.42d. and 22.54d. for the 41-seater—reveals the importance of thoroughly assessing the availability of potential traffic before entering the passenger field. Because of the seasonal nature of much passenger operation, over-assessment of the likely weekly average mileage—throue.hout the year—could easily be made. This could have disastrous results on profit margins if quotations for contracts were made in the belief that 600 miles per week were likely to he average when, in fact, only 400 were actually maintained.
Whilst understandably many new entrants into the passenger field will be particularly concerned with limiting the amount of initial outlay, it will be noted that a further 10 passengers can be carried for the addition of only 2.10d. per mile operating cost, at 600 miles a week, or 2.42d. at 400 miles a week.
The corresponding additions each week would be £5 5s. Id. at 600 miles a week Dr £4 Os, 7d. at 400 miles a week.--S.B.