‘Legacy’ rates agreements for coach hire represent the biggest challenge to operators in passing on the increased cost of fuel and such arrangements can leave those businesses in an awkward situation, the head of one SME coach company has said.
The difference between a rate that was agreed up to, or over, a year ago and one for an identical single-day hire calculated now can often be measured in the hundreds of pounds, they add. That is a result of rising diesel prices and cost pressures elsewhere, such as on staff wages that have accelerated to take account of the growing cost of living.
However, attempting to renegotiate the agreed rate can be difficult and put the operator in an unenviable position, they continue. The landscape is much different where work is priced under current conditions, however. The operator has found that much of the market is largely accepting of the higher quotes that it must now issue, particularly for hires carried out at short notice.
In addition, a strong return of demand has left customers sometimes facing difficulties in sourcing a sufficient supply of coaches. That has had a further upward impact on rates. A buoyant market local to the operator concerned has resulted in an ongoing busy period even while some schools are in the early part of Easter holidays. Staff sickness remains an issue, however.
While the business proceeds with all coach hires that it has committed to at the agreed charges, it has seen evidence of some operators cancelling work that had previously been confirmed on the basis of what now constitute unsustainable rates.
That has left customers in difficulty at short notice, although such a move may be understandable where it would otherwise lead to a loss being returned, they say. “That is the moral dilemma that operators now have.”
Analysis early in April showed that the bulk price of diesel had risen by almost 50% in the 12 months to March. Feedback from another operator is that the 5ppl reduction in fuel duty announced by Chancellor Rishi Sunak on 23 March has had no effect on rising costs. The average bulk price per litre exclusive of VAT was 144.94p in March against 97.57p a year earlier, RHA found.
