Fortune Favours the Company Operator
Page 58
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Differences Between Company and Municipal Bus Undertakings Expounded by the Reading General Manager
BECAUSE they can subsidize unremunerative stage carriage services by profits on express services, excursions and tours and contract work, companies are better able than municipal bus undertakings to maintain levels of fares.
This was one of:the submissions inade fly Mr. W. I. Evans, M.I.E.E., Minst.T., general manager of Reading TranspOrt Department. in a paper which he read to the Berks. Bucks and Oxon section of the Institute of Traasport. He pointed out that about 20 per cent, of company operators' traffic derived from work other than stage-carriage services— about 10 times as much as that of the average municipal undertaking.
Under post-war conditions, with the spiral of increasing costs and limited scope for earning revenue, the large majority of operators limited to stage services had to apply for increased fares. It was significant that, with a few exceptions, operators who could sell all forms of passenger transport had found it unnecessary until recent months to apply for fares increases on stagecarriage services, Mr. Evans observed. It was even stated as a fact by company operators that, until the recent heavy increases in costs occurred, profits from contract 'carriage work had been sufficient to cover stagecarriage losses. Mr. Evans said that over the past 11 years, costs of municipal and company operators had risen uniformly. . Company • profits, however, which were greater in past years, had rapidly reduced as expenses rose and labour conditionsimproved. .
Reduced Fares
It was argued, he stated, that the present-day wage structure did not justify travel concessions to workers. Most municipal and a few compaify operators were compelled to run special services at reduced rates. This often resulted in a vehicle having to run four journeys_ to obtain the revenue of an ordinary single fare. Recently, trade unions representing platform staffs had been objecting to cheap fares for one section of the community at the expense of low wages for their members.
The stage-carriage service had to attract regular and casual travellers. For long periods in the day it was doubtful whether revenue covered cost, and in handling peak traffic, expenses were out of all proportion to revenue.
Mr. Evans examined the costs which had to be met. Wages and salaries took about 12s. out of every El spent.
Concerning modern mechanical appliances, such as washing machines, he considered that they gave better results at lower cost. Modern washing units could effect a 25-30-per-cent. reduction in staff.
One high cost was that of training c20 platform staff. The inducements of the five-day week and greater pay in other industries had hit the transport industry. Security in employment to-day had created a large proportion of floating personnel. In some transport concerns, especially where the work was exclusively stage-carriage services, the turnover amounted to 30-40 per cent. of the traffic staff per year.
In contrast to companies' "directors' fees and expenses," municipal operators had to contribute to "town hall expenses," which often bore no relation to services rendered and were a way of extracting money from transport department funds. The figure for town hall expenses might vary from 0.043d. to 2.239d. per vehicle-mile.
Mr. Evans pointed out an anomaly in rating. Operators of trams and trolleybuses were considered for this purpose to be tenants of the transport system. The net receipts were assessed and a proportion was taken as the rental which the hypothetical tenant could afford to pay. Motorbus systems were rated in the same way as any other business.
Rating Differences
For the Reading undertaking, the rateable value of the trolley bus side was £8,000, but that of the motorbus side was £1,700.If the trolleybuscs had been treated like tile motorbuses, their rateable value would be E.2,300.
The involved method of rating trams and trolleybuses 'ensured a handsome contribution from transport revenue
towards local rates. A tram licence cost 15s. a year, but the trolleybus was penalized twice. It came under the same rating system as the tram, but had to pay into the Road Fund on the same basis as the motorbus.
Whilst the law compelled companies to cover third-party claims, municipal authorities could carry third-party and accident risks on the security of the general rate fund. It was interesting to note that municipalities carrying their own risks did so at half to one-third of the cost which an insurance company would have charged.
Greater compensation to claimants was now awarded by the courts. To meet such heavy liabilities, it was vitally important to build up a substantial accident reserve fund. Mr. Evans expected that the nationalized undertaking would create such a fund and eventually carry its third-party risks.
To-day's practice of operators buying tyres on a mileage basis, with the contractor responsible for maintenance, was cheaper than outright purchase, Mr. Evans considered. Vehicle-replacement programmes should be planned three to five years ahead, so that the useful life of the vehicle coincided with the minimum financial outlay to
keep it safe for passengers. Experience during the war showed that the
economic life of a motorbus could be safely increased from eight to .10-12 years, and that of the trolleybus from 10 to 14-16 years.
Mr. Evans compared 1939 and 1951 price levels. The percentage increases in cost of various items were: Vehicles, 135; lubricating oil, 163; oil fuel, 127; petrol, 150; ticket rolls, 139; timber, 410; trolley wire, 141; uniforms, 231; wages of platform staff, 90-110; wages of craftsmen, 7545.
The present Is. 6d.-per-gallon tax on fuel cost about 2d. per mile for a double-deck oiler on town service. The figure was not so high for longdistance services, on which modern high-geared coaches could average 18-20 m.p.g.
One disturbing factor was the high cost of capital replacements, which was far in excess of the ratio of increased passenger...revenue required to pay for them. The Government had recently allowed municipalities a slightly longer period for loan repayment, but this assisted little.
During the war, when vehicles could not . be replaced, some surpluses were accumulated, but these were much reduced by excessive taxation. When new vehicles became available, reserves were insufficient to meet the accelerated replacement programme.
Referring again to town hall expenses, Mr. Evans thought it wrong that local authorities should appropriate a transport undertaking's profits, which should go into reserve against lean times. Profits transferred into the rate fund did not necessarily benefit the persons who subscribed to them.
To allow profits to go into reserve enabled the passengers to benefit from low fares or better services. This was soundfinancial practice and gave stability to the undertaking.
Good Scheduling
Because 60-70 per cent. of wages . went to platform staff, good scheduling was important to ensure full economic use of labour. With regard to profitsharing schemes, municipal managements were not in a position to control some items of expenditure.
One urgent need was to impraVe the load factor of the stage-carriage operator who had to keep a large number of vehicles to deal with peak traffic. It might mean that dual-purpose vehicles would have to be designed to suit various types of traffic.
Mr. Evans painted a picture of the future in which the public relied to a greater extent on bicycles and autocycles for short journeys. Public transport, at higher minimum fares, would "carry the children and the mellowing section of the population who cannot withstand the rigours of providing their own means of propulsion," he said.