Costing Coach Operation
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Factors affecting entry into passenger vehicle operation with examples of the expense of running 31and 41-seaters.
iN contrast to the difficult conditions which face the public service vehicle operator, private-hire work continues to provide a margin of profitability if efficiently organized. As in other fields of daily activity, the passenger operator finds that the travelling public have differing standards for their working and leisure hours. Only by the prudent assessment of such variations and the subsequent provision of an appropriate service can, the operator hope to be successful. But although the coach operator is not so directly concerned as a p.s.v. operator in variations of fares amounting in total to a few pence, he has his own peculiar difficulties to contend with, not the least of which is keeping abreast of changing conditions.
A major factor which has to be borne in mind from the outset •by those considering entry into coach operation is the fact that there are approximately 6m. motorcars on the road today. As. a result, they have not only to compete directly for passenger seats but, in addition, it is now almost inevitable that all potential coach passengers will be familiar with, and expect, car standards of comfort whenever and however they travel. Whilst the modern coach can undoubtedly provide such standards, this situation, more than ever before, compels the passenger operator to pay particular attention to the comfort of his passengers.
Coaches must therefore be replaced comparatively frequently if the operator is to maintain a standard at least equal to that of other local coach operators and, additionally, to that of the continually-improving standard provided by the modern motorcar.
Apart from the probability of having to adopt a policy of more frequent replacement, this higher standard of comfort now demanded by. passengers could restrict the flexibility of operation which was formerly possible. Previously it has been common practice in a fleet of passenger vehicles to " demote older types of coaches to what was considered less important work and shorter journeys. Whilst such a practice must continue to exist for economic reasons, there will undoubtedly be increasing passenger resistance to this procedure and, on a long-term basis, the ill-will thereby created in some instances might ultimately more than offset the apparent immediate gain.
THERE is also a psychological factor that the public, in their leisure hours, are requiring first and foremost a complete change from whatever activities they are engaged in during the day. This extends to the type of vehicle they travel in for pleasure which should be clearly distinguishable in appearance from the bus they use for the home-to-office journey, in addition to the added comfort it should provide.
Whilst it must obviously be largely speculation as to what effect the increasing number of vehicles on the road, and in particular private motorcars, will have on the Prosperity of the coaching industry, it is not unreasonable to surmise that future developments will not be entirely to the disadvantage of the industry, provided that the service they offer is adjusted to the new conditions which are likely to arise.
The total number of vehicles already on the roads now exceeds 10m., of which, as already stated, 6m. are private cars. Moreover, this number is confidently expected to increase year by year. Despite the most optimistic estimates as to the n18 completion of new and improved road schemes in the next decade, it is unlikely that the strain to which the driver of a private car is subject will diminish. Moreover, because the major proportion of new vehicles put on the road in the future will continue to be private cars any road congestion now existing on popular routes during normal leisure hours-evenings and week-ends--'-will almost certainly worsen.
Since the opening of the Ml, motorway travel has proved both attractive and advantageous to all types of user. But despite the undoubted saving in time thereby made possible to motorists, the journey Still requires absolute concentration by the driver in sharp contrast to the relaxation enjoyed by passengers on the motorway coaches which in all probability arc travelling at a higher average speed than the motorist. This contrast is one that should he given adequate publieity by coach operators.
CONVENIENCE is undoubtedly the private ear's greatest asset which, once enjoyed, is seldom likely to be surrendered by the owner. This factor, however, is not completely incompatible with the possibilty of attracting new coach passengers on the score of freedom from responsibility which such passengers enjoy compared with the driver of a motorcar.
Transhipment is invariably an expensive and complicated exercise for the goods vehicle operator. For the passenger operator, however, the problem does not exist because 'the load," if necessary. can tranship itself. Consequently, for appropriate types of private hire work, there would seem to be increasing opportunity for coach operators to provide free car parking facilities at their garages and points of departure, for passengers. By such an arrangement the convenience of car travel is largely retained, whilst responsibility for the major proportion of the journey is undertaken by a professional driver.
Apart from endeavouring to estimate the long-term prospects for coach operation, it is obviously essential for any would-be operator in this field to make a thorough investigation as to the likelihood of an adequate amount of profitable traffic in the immediate future. This presupposes knowledge of the cost of operating the type of vehicle he has in mind, whilst it would also be necessary to know the licensing procedure applicable to the operation envisaged.
As coach operation only is being considered, the licensing procedure relative to contract carriage work will be applicable. It will be necessary to apply to the Traffic Commissioner in whose area it is proposed to operate for a public service vehicle licence which would authorize the use of the vehicle—or vehicles—as a contract carriage. This term, more commonly referred to as a private hire vehicle, is defined in the Road Traffic Act, 1960, Section 117 as a motor vehicle used for carrying passengers for hire or reward but not at separate fares, and adapted to carry eight or more passengers.
Nevertheless passengers may be conveyed on contract carriage at separate fares provided that the organization to bring the passengers together has not been made by the coach operator, or anyone receiving, payment for organizing the journey. Moreover such journeys must not be advertised, except by a notice at a place of worship or in a relevant periodical.
The holder of a public service vehicle licence must make a record containing the prescribed particulars within 72 hours of completion of the journey. A work ticket showing the name and address of the holder of the p.s.v. licence, registration mark of the vehicle, time, date and route of journey must be carried by the driver, together with the name and address of the organizer.
Before a contract carriage licence can be granted, a certificate of fitness most have been issued by the Certifying Officer in respect of the vehicle concerned. This normally continues in force for seven years and the fee is £5 10s. A public service vehicle licence is normally valid for one year and costs £6.
As an indication of the costs a would-be operator of a coach is likely to meet, and on which charges would have to be based, the following examples are given relative to a 31-seater in the quantity-produced class, and fitted with petrol engine, and alternatively a 41-seater based on a higher-priced chassis and fitted with oil engine.
The initial outlay for the 31-seater is reckoned at £3,380 and the total cost of licence dues and fees the equivalent of £24 6s. per annum or 9s. 9d. per week, based on a 50-week year. This total is made up of Hackney carriage duty, p.s.v. licence and certificate of fitness fees.
in the absence of a national wage rate as applies in the haulage industry, the total cost of drivers' wages to the employer, inclusive of insurance contributions and an allowance for holidays with pay, will be nominally assessed at £11 10s. per week. Rent and rates in respect of garaging the coach are estimated to amount to the equivalent of 15s. 9d. per week.
The annual insurance premium for this 31-seater coach is calculated to be £74 10s.. or £1 9s. 9d. a week. Interest charged at five per cent, on the initial outlay would add the equivalent of 13 7s. 8d. per week, so giving a total of £17 12s. 11d. for these five items of weekly standing costs.
ONE of the difficulties with which the coach operator has to contend, assuming he is not engaged in limited-stop services, is the spasmodic nature of private-hire work. Even if regular work is obtained during the summer, over the year there would usually be substantial seasonal variations in average weekly mileages. Whilst such variations may not be so severe as to justify de-licensing a vehicle during the relative off-season, they must undoubtedly decrease the overall annual mileage. Because of this, an average of 800 miles per week which might seem reasonable during the summer may well be reduced to 400 miles per week when averaged out over the year. On the basis of this lower figure the standing cost per mile would be 10.59d.
Dealing now with running costs, it will be assumed that petrol is purchased in bulk at 4s Id. per gallon and the vehicle averages 10 m.p.g. The fuel cost per mile is therefore 4.60d. whilst lubricants add 0.24d., inclusive of the recent increase of approximately 10 per cent in the price of oils.
Based on a conservative tyre mileage life of 40,000, the tyre cost per mile is reckoned at 1.02d., whilst maintenance is assessed at the equivalent of 2.77d. per mile. Superimposed on the difficulty of operating coaches economically, despite substantial seasonal fluctuations in mileage runs, is the problem of obsolescence. This is particularly severe and costly for the coach operator if he is to remain competitive, and is not in a position to employ old vehicles on less important work.
Despite the low average weekly mileage over the year of 400, i.e., 20,000 per annum, replacement of the vehicle may well become necessary on the score of obsolescence long before the vehicle is mechanically worn out. For this example it will be assumed that the vehicle is replaced after five years, although only 100,000 miles will have been run.
IN order to obtain the balance to be written off as deprecia-, lion, the equivalent cost of the original set of tyres is first deducted from the initial cost of the vehicle, and a further deduction is made in allowance for the ultimate residual value. Based on the vehicle mileage life of 100,000 as already determined, the depreciation cost per mile becomes 6.90d.
The total running cost is therefore 15.53d. per mile or £25 17s. 4d. per week. Added to the standing cost this gives a total operating cost of 26.12d. per mile or 143 10s. 5d. per week when averaging 400 miles per week throughout the year.
The chassis chosen as a basis for the 41-seater coach is in the higher price range and is fitted with an oil engine. The overall cost is reckoned at £4,670.
Because of the higher seating capacity, the total licence duty' and fees will now amount to 129 6s. per annum or I Is. 9d. a week. As before wages will be reckoned at 111 10s. and rent and rates at 15s. 9d. a week. Due to the higher initial cost and greater seating capacity the annual insurance premium will now be £92 10s., the equivalent of £1 17s, a week. Similarly interest charges will be increased to £4 13s. 4d. a week, giving a total for the five items of standing costs of £19 7s. 10d. a week.
Because the type of operation envisaged has presumably justified the purchase of this larger and more expensive vehicle, it will be reasonable to assume that the average weekly mileage will be higher than was the -case with the 31-seater, and this will now be reckoned at 600 miles per week. On this basis the standing cost per mile would therefore he 7,76d.
With fuel oil purchased in bulk at 4s. gd. per gallon and an average rate of fuel consumption of 13.5 m.p.g. maintained, the fuel cost per mile would be 3.69d. Lubricants are reckoned to cost a little more at 0.27d. and tyres 1.1Id. per mile. Maintenance is assessed at 2.55d. per mile.
Due to the higher weekly mileage and the type of vehicle now operated, the vehicle mileage life would now be reckoned at 200,000, the equivalent of approximately seven years running.. Adopting the same procedure as before the depreciation cost per mile becomes 4.82d.
The total running cost for the 41-seater oil-engined coach when averaging 600 miles per week is therefore I2.44d. per mile or £31 2s. per week. Correspondingly the total operating cost becomes 20.20d. per mile or £50 10s. per week.
Because of the higher average weekly mileage these latter amounts are not directly comparable with the results obtained with the 31-seater, which was assumed to average only 400 miles per week. At this reduced mileage, the 41-seater would cost 30.30d. per mile to run. S.B.