The clean air agenda demands big investment from operators, and an opportunity for local authorities to make genuine positive changes, argues First Bus MD Giles Fearnley
How you look at the bus industry, and how it is perceived, depends on your point of view. Politicians, passengers and peers have pre-formed perceptions of what a company is, what it stands for and where it should be going.
Nudging 6,000 vehicles in its fleet First Bus has all this baggage, but under the dynamic leadership of MD Giles Fearnley for the last seven years, that has been changed, and change continues.
As we meet at The Point, the new London HQ for FirstGroup which has leased a floor in this building in the redevelopment area overlooking Paddington Basin and the main line terminus, Giles remains as passionate as ever about UK Bus.
Yes, the business has been turned around; the hard work has been done. Yes, there have been some unexpected twists, such as the impact of currency on fuel prices after the Brexit vote. And yes, the air quality agenda is opening new opportunities in terms of setting new relationships between operators and local authorities.
Investment
It’s the big subject on everyone’s lips. Numbers for the groups have yet to be released but our understanding is that, generally, UK new bus orders will be down by around one-third, compared with bumper pre-PSVAR deadline orders.
First too has yet to announce its investment, but promises that where appropriate, the money will continue to flow.
“First can’t be clearer: We will invest, and invest significantly, where local partners are willing to do their bit,” says Giles.
This means proper partnerships and meaningful talks, he says, strengthening comments he made at the UK Bus Summit.
“Bus is on the way back, mark my words – I’ve never been more confident of that.”
He adds that many of the markets First serves are growing year-on-year, citing Cornwall, York, Leicester, Norwich, Southampton, Bath and the Bristol, the latter having seen four years of continuous growth.
There’s also been a revolution in ticketing and information with m-tickets, contactless, smart, and “fabulous apps,” he says.
“Two years ago, who’d have believed that fleets in virtually all urban markets would be contactless by the end of 2018?
“But we have this now and our customers love it. Our early-adopter markets are heading for 50% cashless. Within nine months almost 30% of our customers in Aberdeen are paying by contactless.
“Add those using mobile and over 50% of passengers are no longer paying cash. And, who’d have believed that First Bus would roll out a multi-operator app, but that’s what our customers want.”
He argues that pan-industry, busways in Gosport, Manchester, Crawley, Cambridge, and Luton/Dunstable demonstrate the power of investing in dedicated bus priority. “They are a great success with passengers, exceeding pre-opening passenger forecasts.
“The Manchester Vantage service, which we are proud to operate, started in April 2016 and is now carrying 2.2 times the number of customers than used previous services.”
Air quality opening
Air quality issues are “an opportunity for Euro 6, which is a first-class low-emission product. Bus is the only way of securing transfer from cars in most cities,” he says.
As an industry: “To succeed, we need to open constructive discussions about integration, multi-operator ticketing and branding, with no more false divides between operators or local authorities.
“It’s all about what the passenger wants – in every decision, in every intervention, we must be certain the customer will benefit.”
He envisages a sector that is ideally placed to exploit the benefits of electrification, connectivity and autonomy. One that is “champing at the bit to invest in the clean, smart, high-priority, high-frequency and high-volume corridors” to feed employment, education, retail and leisure centres.
This, he says, is a sector that is talking to UK, Scottish and Welsh Ministers and local authorities “with a new can-do ambition, looking for a private/public partnership not an endless series of subsidy crutches.”
It is, he says, about “key investments and interventions that create the opportunity for buses to play out their full potential.”
Honesty
“But we need some mutual honesty if we are to exploit these opportunities,” he cautions.
For bus operators this means: “No more going through the motions on partnership. No more tolerating second-best delivery.”
For local authorities: “No more treating bus as an afterthought. No more treating private-sector operators as an object of suspicion. No more muddling through. No more yo-yoing on policy.
“We deliver together or we deliver nothing.”
There are encouraging signs in some of First’s areas: “Leeds gets it, Cornwall gets it, Hampshire gets it and so do some others. I’m hopeful that Glasgow may be about to get it.”
But that honesty must extend everywhere. In Manchester, elected Labour Mayor Andy Burnham has just authorised £11.5m to “develop a franchise strategy”.
Five years ago First ‘repositioned’ the Manchester business in terms of fares, cutting day, weekly and monthly prices by 28% overnight. The result was fare-paying passengers up by 16%. Although it wasn’t enough to cover the newly-created financial gap, it was part of a five-year strategy for the region.
First has just put in 130 new buses, and improved service quality. “We were investing for the future and also bought Finglands from EYMS, enabling us to launch cross-city services, connecting the northern city network with universities and hospitals on the south side.”
Clear strategy
“The strategy was that we would take a hit in that first year or two, to build back up.” That was “very badly affected” by increasing congestion and Metrolink tram extensions works in the city centre, causing all buses entering the centre to be “extraordinarily unattractive” to customers.
“We lost 10% of our passengers on the affected services and that congestion lasted for over two years.”
That caused First to “re-draw the plan”, while in 2015-16 the effect of online retailing on the high street trade generated a further decline. Both impacted on the 2013 recovery plan. “We know we did the right thing. We are having to be much more patient.” In the year to March 2017 it made a small loss on a £85m turnover, according to accounts filed at Companies House.
With the “likelihood of plans for franchising,” it makes the “recovery and returns we need to justify the investment we’ve made, much more difficult to see,” adds Giles.
“In 2015 we put in 21 extra vehicles, just to try to maintain the service, as part of our commitment to create a strong network.”
He repeats that First is willing to invest where local partners are prepared “to do their bit.”
But in Manchester, the authority is focusing on franchising, which means the returns for any investment are “uncertain, as we don’t know what the shape of the business model will be.
“As a result, we’ve not invested in the Manchester fleet over the last two years (beyond the previously committed Vantage network).”
Tough decisions
The First Bus network will continue to change. In Berkshire “we had a number of loss-making services, exacerbated by congestion in Slough. It’s an extraordinarily difficult place to run buses whether they are commercial or supported. We have twice put additional resource into the market, but it was declining because congestion meant it could not be an attractive product.”
So First made the difficult decision to reduce its local network. “We are committed to Slough; we would have left if we weren’t, but we can’t afford to lose that amount of money on the town services.”
First has also retrenched in Essex, to match supply with demand, while in Weymouth the winter timetable is reduced at the very seasonal operation. Similarly, in some areas of Somerset town services have been reduced, although inter-urban services remain robust.
In some cases it’s about reducing frequencies, rather than cutting routes. There’s also an impact when councils cut tendered routes. “It’s easy to underestimate the effect on a town network, where there are interchanges, when tendered rural feeders are removed,” adds Giles.
Up for the challenge
The networks will continue to evolve, he adds: “The emphasis is on continuing businesses. They must make enough money to be able to plough back the profits and afford to invest.
“This is ever-more demanding with the move to clean air.
“We are up for the challenge of delivering great bus services that enable the roadmap to zero emissions to be a reality.”