Calculating Charges for
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COACH HIRE
Assistance for the Operator Whose Fleet is Divided Between All-the-year and Seasonal Work. Rates for Theatre Trips and Other Contract Work
IHAD an inquiry a short time ago from an operator who said he had eight 32-seater coaches, and of these two were regularly engaged for 50 weeks in the year, each one covering 15,300 miles per annum. One was engaged for only 12 weeks in the year, during which it covered 3.600 miles, Six, including, I imagine, the one which has already bee`n mentioned as running 12 weeks per annum, were to be used from Easter to about the end of September of each year for contract hire and for excursions and tours.
The operator asked me to tell him what his costs werb likely to be and what his earnings should be. There was no information other than that which I have already given, so that, having in mind the scant data provided, I regarded this as being a rather tall order.
Depredation First
The first thing to do, of course, as in all these cases, is to set down some basic data for costs of operation.In this a start must be made with depreciation, which is always difficult, and particularly so in a case such as this, in which some of the vehicles may be depreciated over a year and are used throughout the year, and others must be depreciated per annum but are used for only six months. It seems to me that if an operator has eight coaches to-day, they must be fairly old, probably not less than seven or eight years, and it would he fair, therefore, to work on the basis of depreciating each over eight years.
I am, nevertheless, going to take as the cost price the amount which the operator would have to pay to-day it ne were to buy a new vehicle of the same type. I have always insisted that that is the correct procedure, because in costing as a basis for fares assessment, it is necessary to regard depreciation as the provision for the purchase of new vehicles to replace those in use. It is significant that in the Transport Bill, the Government also adopts that attitude in arriving at the value of an operator's fleet for compensation. I shall assume that a 32-seater coach, suitable tor use on luxury tours will cost in the neighbourhood of £3,000. If I take £3,100 and deduct the cost of a set of tyres at £100, I have £3,000 as the cost of the vehicle, less tyres. Then I assume residual value of one-tenth (£300), which gives me £2,700 to depreciate over eight years, and it is sufficiently accurate to take £340 per annum as the athount to allow for depreciation.
The other items of fixed charges comprise tax at £57 12s.; garage rent at E26 (this operat6r's headquarters are located in a comparatively small provincial town, and £26 is a fair assessment); insurance, £60. Next comes interest on capital outlay. I do not think I am justified in taking £3,000, but rather the amount which was probably,paid for the vehicle when it was new, say £1,600, so that the interest provision per annum amounts to £64 I allow £150 for overheads, or establishment costs, so that the total is £697 12s. It will he sufficiently accurate to place the fixed charges at £700 pet annum.
That is, of course, in relation to the two vehicles which are in use all Lhe year round. I will deal with thefl others later. , • Running Costs Now for the running costs. I propose to take a fuelconsumption rate of 8 m.p.g. and Is, 8d. per gallon as the price of petrol, which gives me 211 per mile. Oil I will assume to cost 1-10d., tyres 1-1c1., and maintenance 1 9-10d., thus reaching a total for running costs of 6d. per mile.'
The vehicles, which cover 15,300 Miles per annum: will, therefore, cost £382 113s. for running expenses, plus £700 for fixed charges, a total of £1,082 10s. I have not yet made provision for wages, as it is usual, in dealing with passenger vehicles, to treat wages separately. I think a round figure of £250 per annum will fit the case, and if I add £17 .10s. to that to cover employees' insurances and holidays with pay, the total is £267 10s. That sum, added to £1,082 10s., gives £1,350 per annum, the total cost of each vehicle.
As for revenue, this, as the work seems to be fairly regular, should be sufficient if it shows a profit of 20 per cent. on £1,350, which is £270. That means that the revenue per vehicle should be £1,620, which is equivalent to practically 2s. Id. per mile, or £32 10s. per week per vehicle. As the odd vehicle which runs for 12 weeks regularly is one of the six which are used seasonally, I think it will be quite near enough to assume that the cost per week and the revenue per week should also be the same (£32 10s. or 2s. Id. per mile). Considering the six vehicles which are used for only six months in the year, the fixed charges will, of course, have to be regarded differently, although many of them will remain unaltered. Depreciation, for example, will still be £340, but it will have to be spread over six months, instead of a year. Taxation will amount to £30, a little more than half the full year's tax; the garage rent will be unaffected at £26. but the insurance may be less-let us say £40. Interest on capital outlay will rema:n as before, £64, but I may reasonably, take £80 as being the amount of the overheads. The total, so far, is £580, and, adding wages at £120, the -aggregate of fixed charges becomes £700.
Now, it is necessary to make some assumptions First, I propose to take as 300 the mileage which will be covered by the vehicle in each week of the 25-week season. The total mileage will tie 7,500, and, at 6d. per mile, will cost £187 10s. The" total cost per vehicle, therefore, of the six which are psed only for the season will be £887 10s.
For work of this kind not less than 30 per cent. profit should 'be -taken. That means we should add £266 10s. to £887 10s., so that I can tell this inquirer that his average revenue per vehicle for the season should be not less than
£1,154-probably £1,200, His profit from that income would be in fhe region of £270 to £280 per vehicle per season.
Charges for Contract Hire
Another of his questions was how he should assess charges for various kinds of contract hire, excursions, and tours, and so on. In order to do that we must have a 'time and mileage charge, and this makes it necessary for me to assume the number of hours for which the vehicles are likely to be engaged during the season. I shall work on an average of 50 hours per week, or 1,250 hours per season. I arrived at a fixed charge of £700 per season. To that I must add 30 per cent, profit, which is £210, giving me a total of £910. If I divide that sum by 1,250, the time charge is nearly 14s. 6d. per hour.
To assess the mileage charge I take the cost per mile at 6d, and add 30 per cent. (8d.). With these figures I can suggest rates for various kinds of contract hire. The method of arriving at the charge will show the operator a reasonable profit is the same in both cases. He must bear in mind, however, that, when dealing with a contract-hire job, he must charge for the vehicle as a whole, as he is not allowed to charge separate fares. On the other hand, when dealing with excursions and tours, he will want to know the separate fares.
The simplest kind of job is the half-day or whole-day trip. Take a morning run of four hours and assume that the mileage is 20 each way. The charge must be calculated as follows: Four hours at 14s. 6d., £2 18s.; 40 miles at 8d., £1 6s, 8c1.; total, £4 4s. 8d., say £4 5s.
Now take a full-day tour, occupying 11 hours and involving 70 miles each way. For 11 hours at 14s. 6d. per hour the charge is £7 19s. 6d., and for 140 miles at 8c1.; £4 13s. 4d.; total, £12 12s. 10d. That is a minimum charge and 1 think the operator would be reasonable if he asked £13 for the hire of that vehicle.
Excursions and Tours
If the above be regular tours or excursions, it would be necessary to assess the fare to charge to each passenger. What that should be will depend upon whether the operator can expect to fill the coach regularly, or is likely to have to run the trip with fewer than 32 people on board. If there be any doubt, the best thing he can do is to take an average of 26 passengers and arrive at the fare per passenger on that basis.
For the half-day, for which he must earn a revenue of not less than £4 5s., he should charge a fare Of 3s, 6d., but if he be quite certain that he will carry•32 passengers on the trip, he can reduce the fare to 2s. 9d. Again, I must emphasize that these are minimum fares.
Similarly, for the day trip, the operator can rely on only 26 passengers; he must make 9s. 8d. each, say 10s. If he can guarantee 32 passengers, 8s. 2d. per person will bring him his charge of £13. A fare of 8s. 6d. would be reasonable.
Theatre trips are popular just now. The mileage covered is not usually great; up to and including 40 is the rule, although there are exceptions. Take such a trip involving +0 miles each way. Usuallythe coach will be expected to arrive at the theatre by 7.15 p.m. for a start at 7.30 p.m., and will return at approximately 10 45 p.m. Apart from the 31-hour wait, it can be taken that the travelling time in each direction will approximate to 1 hours, so that altogether the contract will occupy seven hours.
For seven hours at 14s. 6d. the income must be £5 is. 6d., and to that sum we must add 80 miles at 8d., £2 13s. 4d., the total being £7 14s. 10d. A figure of £8 would be reasonable as revenue for the hire of the coach only.
There are other things to be taken into consideration. It is my experience that there is little difficulty in obtaining a full complement of passengers for these trips, so that we have to divide £8 by 32, which gives us a coach fare of 5s., to which must be added the cost of the theatre ticket and booking fee, if any. If the total of those two be 6s., the all-in charge for the trip, including the seat at the theatre, should be not less than I Is. each.
Trips to Butlin's holiday camps to hear and see the Grand Opera, which was put on last summer, were run by many coach operators. It may be of interest to check the minimum fare for that class of work. Take a case wherd the town from which the trip was rui was 36 miles from the camp. Grand Opera, as a rule, takes longer than an ordinary theatrical performance, and it miyht well be that the wait at the camp would be five hours. For the 72 miles of running we can take 31 hours, giving a total of 81 hours. The rate for the coach would, therefoie, be made up of 81 times 14s. 6d. (£6 3s. 3d.), plus 72 miles at 8d. (£2 8s.); total, 18 Us. 3d. That, to the nearest unit, is equivalent to 5s. 6d. for each of the 32 passengers who are assumed to be carried. To that charge must be\added the price of the tickets.
A Ready Reckoner There is an alternative way of making these calculations which may appeal to some readers as being more of the nature of ready reckoning. This is to separate the waiting time from the rest and assess the mileage charge complete at a rate per mile for the coach. in order to do so we must assume an average travelling speed, and I think it would be safe to take that at 20 m.p.h. The full charge for an hour or. 20 miles would thus be 14s. 6d., plus eight times -20, which is 13s. 4d. The total is £1 7s. 10d., which is equivalent to nearly ls. 5d. per mile run, or, and this is the figure which matters, 2s. 10d. per mile lead.
As an example of the application of this method, assume that the waiting time at the theatre is five hours; the distance is 24 miles each way, i.e., the lead mileage is 24. That is equivalent to £3 12s. 6d. at 14s. 6d. per hour. Add 24 miles at 2s, 10d. per mile (£3 8s.) and we get £7 Os, 6c1., say £7, as the charge for the coach. The fare is thus 4s. 6d. per head, to Which, of course, must be added the charge for the tickets and booking.
As a check back, 'take the Butlin camp trip, already assessed in the long method, and apply this procedure to it. Once again we have five hciurs' waiting, which costs, as before, £3 12s. 6d.; add 2s, 10d. per mite for a 36-mile lead, which is 15 2s. ,T116 total is £8 14s. 6d., or 5s. 6d. per head, as before. The total amount is not the same, but the difference is so slight as not to. affect the actual charge.
Transport for Cricket Teams
A type ofhire to which I have not yet referred is that where a vehicle is "booked by a cricket side for a week's tour. As an example, I can take one within my own experience, in which a 32-seater coach was hired to travel from North London to Margate. It started on the Sunday for the. initial journey, which is approximately 80 miles. On Monday the team played at Margate; on Tuesday, Ramsgate (8 miles); on Wednesday, Folkestone (48 miles); on Thursday, Ashford (64 Miles); on Friday, Canterbury (32 miles); and on Saturday, Sittingbourne (64 miles). On Sunday the team returned to North London, a further 80 miles. The total mileage was 376-say 400 miles at 8d. per mile, or £13 6s: 8d. for the mileage only.
For time the operator would have charged for eight eighthour days at 14s. 6d. per hour, which is £46 8s. In addition, there would have been garaging for the vehicle, say £1 10s., subsistence allowance and Sunday payments to the driver, about £5 6s, The total was thus £66 10s. 8d.; that was the minimum rate and was not far from the actual charge of £70, which was made for this trip S.T.R.