Off-peak Hiring Yields Profits
Page 48
Page 51
If you've noticed an error in this article please click here to report it so we can fix it.
How an Operator in Christchurch, New Zealand, Obtains Full Employment for his Fleet of 45-50 Passenger Vehicles with No Interference with Scheduled Services: Low Rates an Attraction to Organizers of Private Parties
IHAVE had an exchange of letters with Mr. J. J. B. Conner, manager of Midland Motorways Services, Ltd.,. Christchurch, New Zealand. He described his problem as having to find work for his ' Vehicles during off-peak periods, and he solved it by offering vehicles for hiring work at rates which appealed because they were particularly low.
• _ His company, he told me, operated a fleet of 45-50 vehicles on a network of routes varying in length from 4-68 miles radiating from Christchurch. The fleet included 10 29-seat coaches, whilst the remainder were buses of 33-36-seat capacity.
The vehicles were chiefly engaged on -scheduled services, carrying on hiring work as a subsidiary activity. Off periods occurred during the day and the evening, and there were major off-peak periods during the week-ends. His letter was mainly concerned with the assessment of rates for the contract services and arose from his reading my article in the March 21 issue in which I discussed charges for coach hire, and dealt with that problem in relation to vehicles employed chiefly on tours, excursions and private hire.
High Standards
In fixing charges, Mr. Conner wrote, regard was had to making hiring facilities attractive to the public, and to ensuring a profit. The service was made attractive by a high standard of vehicle appearance,. comfort and maintenance. Thorough attention was paid to detail in booking and catering' for inquiries. A special clerk with his own office dealt with this.
In assessing rates, he told me, he kept in mind that a great proportion of the traffic was composed of young people. He also had regard to the person who organized a trip on behalf of some lodge, club or sports team.
The organizer's problems in getting sufficient people together and promoting a trip were reduced if he could quote a low fixed rate per passenger. This could be done if he were quoted a price based on mileage irrespective of the number travelling, because the individual cost to each member varied according to the size of the party. In the opinion of my correspondent, operators who take this easy method of charging do not build up their charter business to the fullest extent.
. The method used by this company did not entirely elimin1,38
ate such adjustments but nearly, did so. It was as follows: a minimum rate was based on the overall cost per pile' for .fleet operation. The individual passenger rate was fixed at Id. per mile, which; as he says was cheap by any standards. If the overall cost per mile were 2s., a minimum 'of 24 passengers must be guaranteed for the trip. This involved accepting the liability to have to do hiring work at bare cost, but the individual rate,' provided' 24 passengers travelled. was as low as it could possibly be and was therefore attractive, .. No Risk Involved
Experience showed that there was no risk that this section of the business should be operated only at cost. Statistics revealed that the average number of passengers carried per contract throughout the year was in excess of 24.
It was inevitable that there should be circumstances which compelled some adjustment of the rates. For example, on Saturdays drivers had to be paid at the rate of time-and-a-half and on Sundays, double-time. This extra cost had to be covered and was done by charging a flat additional rate of 9d. per passenger on Saturdays and ls. 3d. on Sundays. Mr. Conner admitted that it would be more scientific to charge the actual additional wages against the hirer, but this would not be compatible with the company's policy of getting, as near as possible, a firm quotation per passenger.
An extra charge was also made for overnight trips. The usual figure was £4, including provision for driver's accommodation of £1 10s., the balance to meet two days' wages for the driver and the loss of use of the bus for two days. A comprehensive schedule of rates was published and was available to organizers. An extract is published with this article.
In compiling the schedule, certain departures from the basic rate were made especially when the time factor was out of proportion to mileage. For instance, where there was a popular picnic ground only 12 miles away, the basic rate should be 2s. (24 miles return) per passenger, with a minimum total charge of £2 Ss. Trips to such places usually meant that the bus and the driver would be away all day, and on the basic rate the bus with 30 passengers would earn no more than £3, which was insufficient. Experience and local knowledge confirmed that it was necessary in such cases to raise the rate from 2s. to 3s., giving a minimum of £3 12s.
One reason why the company had prepared a comprehensive schedule was that it enabled potential inequalities to be discovered and eliminated. Moreover, it made it unlikely that different rates would be quoted for the same trip. This system of working, had, I am told, been operated for about 20 years and the business obtained seemed to indicate that the low rate per passenger was one of the main features in ensuring success.
The fact that there was a minimum number specified did not deter organizers because they could easily induce members of their organization to travel at the low basic rates and they had no difficulty in obtaining their 24 passengers. It might happen that a trip had to be run at cost: on the other hand it was often the case that a 36-seat bus might be full, giving a yield of 3s. per mile against a cost of 2s.
Unrestricted Running
The company's charter, which appeared to be similar in operation to our Licensing Authorities' grants to run tours and excursions, enabled the company to send its buses and coaches anywhere in the South Island. The distances run -varied from local trips of 40-50 miles return up to trips of 400, 600 and even 1,200 miles return. Trips of 200-600 miles were a large proportion of the total..
' As a matter of principle it was considered that the policy of low profits and high turnover was particularly suitable for transport. People must travel to work, for shopping and so on, but they could refrain from going on football trips, tramping excursions, picnics and the like. When there was a tendency to refrain from pleasure use of vehicles, the reason was usually found to be that the rates charged appeared to the customer to be too high.
• In practice, the policy had been justified and had built up the volume of hiring work until it now represented a large percentage of the total turnover. Almost all the work had taken up hours in which the fleet would otherwise have been idle. It had added 200,000 miles to the total run by the fleet and had been useful in spreading overheads accordingly. Virtually no extra capital was needed and the drivers' paypackets had been kept full. Employer-employee relations were well maintained in that way.
The two outstanding factors which had to be brought into balanced relationship were the amount of idle time there was to sell and the size of the potential demand. It was not enough merely to meet the existing demand if that left a large proportion of idle time. If the idle time were great, then policy Must be revised to increase demand.
Buses From Services
A point which may occur to operators reading this article may be how it is possible to take away buses from regular services and use them during the day for hiring work, and at the same time be able to get the buses back again in time to do their jobs on the regular services.
Assume that the regular services will be at their peak' amount about 8-9 a.m. and 5-6 p.m. All-the charter work must be so organized as to occur outside those difficult periods.
Mr. Conner told me that there was a number of factors which contributed to the success of this work and made it possible for so much of it to be run Rotwithstanding the apparent limitation of hours available.
It should first be appreciated, suggested my correspondent, that the morning peak was more concentrated than the evening peak. The main demand in the morning was for workers starting at 8 a.m., this being 2-1 times greater than the demand at 9 a.m.
Second, many industries had f-hour for lunch and finished their 8 hours work by 4.30 p.m. Others worked the normal 8 a.m.-5 p.m. with 1 hour for lunch. Normally. there was always a certain amount of overtime worked in industry generally, which kept 8 a.m. workers in town until 8 p.m. or even 9 p.m. These factors spread the return peak of the 8 a.m. workers.
Similar factors helped .to spread the return peak of 9 a.m. workers, who might range from schoolteachers and students returning around 3.30 p.m. to 4.30 p.m., to shop assistants returning about 5.45 p.m. The actual peak requirement in vehicles from Monday to Thursday was 25 in the morning and 21 in the afternoon, leaving 20-30 vehicles available for hiring work. A further consideration was that the Friday evening peak was less than the Monday-Thursday peak, because Friday was late shopping night, with shops closing at 9 p.m. instead of 5.30 p.m. All people employed in retail business thus remained in town beyond the normal peak hours.
Many people made a habit of remaining in town after work for amusements and shopping, so that instead of returning home between 4.30-5.30 p.m. they might not do so until 9.30-11 p.m.
The effects of these factors on the ability to handle midweek hiring work can be summed up. The demand for charter vehicles in the mid-week was relatively small compared with week-ends. Much of it was confined to the period between peaks and, therefore, did not present a problem. With the number of vehicles and drivers available, it was practicable on Monday to Thursday to accept four jobs running through the day and into the evening. On Fridays, seven jobs could be accepted and could extend from Friday morning to late Sunday night without disturbance to the service work. In addition, Mr. Conner told me, there were usually some vehicles " spare " above peak requirements.
Changed Attitude
Because of all these considerations, it was possible to accept a-limited amount of week-day charter work. The capacity was normally in excess of demand, but it could happen that there would be a shortage of vehicles on some particular occasion. Then it became a matter of declining work or exercising sufficient ingenuity to squeeze that little extra out of the fleet: In conclusion, Mr. Conner stated that there used to be a tendency to regard off-peak hiring work as something pleasantly fortuitous; something in the nature of a windfall and likely to justify a good rate when the opportunity offered. This attitude changed when it was realized .that charter services could provide a substantial and fairly regular part of the total annual turnover. Once it came to be accepted as an integral part of the business, the wisdom of cultivating it was immediately apparent.
In the extract from the schedule of tariffs which accompanies this article, there are one or two points which require clarification. The column headed, "Extras per Passenger" indicates the amount to be paid per extra passenger. For instance, the first item on the schedule is a charter trip to Ashburton, the return mileage being 108. That, at the rate of Id. per mile per passenger. yields for 24 passengers the minimum rate of £10 16s. For every passenger additional to 24, earnings amount to 9s. There is also included an example of one of those charter trips which involve an extra payment because of the excess time element. The trip to Allandale, involving only 20 miles out and home, would, according to the basic method of calculation, involve the payment of no more than £2. The minimum rate, however, is seen to be £4 4s., the extra sum is to cover the idle time involved in so short a journey.
• The 40th edition of "The Commercial Motor" Tables of Operating Costs (1952-53) are now available from any bookseller, price 2s. 6d., or by post from Temple Press Ltd., Bowling Green Lane, London, E.C.1., price 2s. 8d. The figures it contains have been corrected up to September 1. This independent publication is widely acknowledged as the most authoritative guide to the many expenses involved in running all types of commercial vehicle.