Go-Ahead wins initial Manchester large bus franchises

The Greater Manchester Combined Authority (GMCA) has awarded both large bus franchises tendered via the first round of service reregulation in the region to Go-Ahead Group subsidiary Go North West (GNW). They capture Bolton and Wigan respectively and will begin on 24 September 2023 as part of the wider integrated Bee Network aspiration.

GNW will displace current principal operators Diamond Bus North West (DBNW) in Bolton and Stagecoach Manchester in Wigan. The two awards will involve 750 employees, over 300 buses and 55 routes. It is understood that the flagship Vantage services, which use the Leigh guided busway and are currently operated by First Manchester, are included.

While Rotala subsidiary DBNW will relinquish its Bolton depot, it has concurrently won seven of the nine small franchises tendered in the first round. Those will operate in Bolton, Bury, Farnworth, Leigh, Salford and Wigan and represent annual revenue of around £18.7m, the group says. The winner(s) of the other two small franchises have not yet been named.

GNW ‘saw off eight others’ for Manchester large bus franchises

GNW claims that it saw off competition “from eight other operators” for the two large franchises. Those contracts will be worth up to £400m in revenue over seven years. The contracts awarded to Rotala are for a period of between three and five years in duration.

Rotala says it has already agreed “in principle” to dispose of its Weston Street depot in Bolton to GMCA, and the majority of the fleet there to other franchise winner(s). Stagecoach has not yet commented.

DBNW will purchase 67 new buses at a cost of around £13m as part of the seven small franchises’ requirements. It expects to see annual revenues in Greater Manchester decline by around £6m as a result of the change to its position.

Performance-related payments in Manchester bus franchises

Announcement of the winners in the first of three rounds of contract awards that will encompass all of Greater Manchester came on 23 December. That was later than expected, although Transport for Greater Manchester (TfGM) has confirmed that the delay was not as a result of a legal challenge, as had been speculated.

GMCA says that punctuality and reliability and the number of customer complaints “will sit at the heart of… operators’ contracts and impact what they get paid,” a point quickly underlined by Mayor of Greater Manchester Andy Burnham.

Speaking about the successful tenders for the two large franchises, GNW Managing Director Nigel Featham says: “We are extremely proud and excited to have been selected to run the first franchised bus services in Greater Manchester, and to be able to play our part in delivering the Bee Network.

“We are absolutely committed to providing the best possible service to the people of Bolton and Wigan and we can’t wait to get started. This new era of public transport will not only represent major change for bus passengers, but the thousands of people working to provide these services.

“While change can be exciting and full of new possibilities, it can be unsettling, and I want to reassure staff working at the depots to be run by Go North West from next September that we will be working hard to ensure a smooth transition in the coming months.”

At the same time as announcing the first successful bidders for the initial tranche of contracts for reregulated services, TfGM also confirmed a further order for 50 more BYD ADL Enviro400EV battery-electric double-deckers at a value of £22.7m.

Those buses will be used in Bury, Oldham and Rochdale as part of the second round of franchising, which is scheduled to be introduced in April 2024. 50 other Enviro400EVs, ordered earlier in 2022, will be used in Bolton and Wigan.

Above market value return for Rotala on Bolton assets

In a trading update issued immediately after the contract awards were announced, Rotala outlined how buses with an operator that has been unsuccessful in bidding for its existing work will move to the incoming business.

Via a residual value mechanism (RVM), operators will agree with TfGM which fleet members are to be placed in an asset pool.

TfGM will then allocate vehicles to franchises and the incoming operator will purchase them from the outgoing business. The price of each is set by the RVM, which will be incorporated into the contract for any franchise agreed by TfGM.

Disposal of Bolton depot and most of its vehicles is expected to realise around £30.1m for Rotala against unaudited book values of £22.7m. After sale of the depot is completed, Rotala will lease back from TfGM at a “nominal rent” it and anything else necessary to deliver services until the franchises commence. Vehicles will not be sold until September 2023.