McGill’s Buses hosted Album’s annual event in Glasgow to pick apart the hot topics…
It seems likely that 2019 will be a year of significant change in the bus industry thanks to a four-pronged attack by lower retail footfall, deepening of supported-service cuts, cheaper car travel and the elephant-in-the-room that no politician is yet prepared to tackle: Congestion.
Add to this the increasing regulation and a dysfunctional DVSA and Department for Transport – as clearly demonstrated by their failure to deal with the MoT tester shortage and recent cack-handed implementation of the Buses Act – it’s easy to see why few operators have a smile on their faces.
Against this background the title of this year’s Album conference – Driving Stability out of Uncertainty – captures the industry’s mood music. But, beyond gloomy clouds, there are bright spots, delegates discovered
Manufacturing
“A steady diet of hard work, quality and misery’ is what Alexander Dennis Limited (ADL) CEO Colin Robertson self-prescribes, in his quest to see the UK’s biggest manufacturer through tough times as it – along with Wrightbus and Optare – faces an overall year-to-date market decline of 25%.
ADL is no stranger to tough times, he reminded the delegates, yet the result is a financially healthy “UK business with international tendencies” with a 45% UK market share, and turnover expected to hit £650m. It has consistently ploughed profits back into R&D meaning that it “leads the world” with a vast range of products.
In a passionate address, the straight-talking Scot accepted that in the past it hadn’t been as customer responsive as it should have been, but now it will continue to be robust by “building quality products, delivered on time, service supported with fuel efficiency… otherwise, we’ll become the Foden or the Seddon Atkinson of the bus industry.”
Franchising
Walking delegates step-by-step through the proposed bus franchising process, Backhouse Jones Director James Backhouse reminded delegates that unlike true franchising – for example McDonalds or KFC, which sees private sector entrepreneurs having access to brands – bus franchising creates a monopoly, closing the market to everyone other than the winner.
Manchester is the only region actively pursuing the process and is part way through the first stage, after when it will make a decision on whether to go ahead with a scheme.
“Small independent bus operators are at risk if they don’t win the tender; their business is finished,” he said, “as they cannot move their assets elsewhere.”
There do remain “significant financial risks” for local authorities that choose franchising,” he cautioned.
Passengers and tech
Last year’s Album, hosted by Blackpool Transport, saw it ask local sixth formers what they thought about buses. A year later, their thoughts have been incorporated into the municipal’s new Palladium-branded ADL Enviro400s. Blackpool Financial Director James Carney reported that a new survey – revealed in a video played to the conference – viewed all the improvements positively.
But, there is work to be done improving drivers’ customer service skills, with the result that new training is now underway. “If we can get it right, we will retain customers for longer, with all the benefits that brings. Next, we’re going to run focus groups with commuters.”
Host, McGill’s MD Ralph Roberts, reminded delegates that 75% of costs are outside the industry’s control, which means it’s vital to get the best out of the costs you do have control of.
Started nine years ago, Ticketer is now a major player and MD John Clarfelt argues “ticketing is not just taking the money. I don’t understand how anybody can run a business and not know minute-by-minute what’s happening.”
Driven by a quest to rapidly evolve and develop its systems, most enhancements have been suggested by operators, meaning its system can now do many things and is already future proofed for what is known will come, such as weekly and monthly capping for contactless payment.
Seemingly thriving on the ‘why can’t we do that’ challenges, it is working on a single app for demand-responsive service (DRT) include hybrid models where part of the journey is on a core bus route.
“We should be selling tickets through Google maps, in the same way as app-based taxi companies do. We’ve got to give you the tools to be part of this.”
Clean air and money
The introduction of Low Emission Zones (LEZ) and Clean Air Zones (CAZ) is “an opportunity, not a threat” says Low Carbon Vehicle Partnership MD Andy Eastlake. He argues that a Euro 6 bus – whether diesel, hybrid or gas – is ”very clean” and that the industry should “focus on the objectives, not the technology,” before adding “please do not buy new Euro 5 buses anymore.”
Operators should “embrace CAZs – it’s the biggest opportunity for towns and cities to discourage cars.” He urged smaller operators to “apply now” for the open funds, and be ready for future funds. On retrofit he warns: “Make sure you buy an accredited system. Beware of ‘snake oil’ salesmen.”
While Brexit, congestion and franchising may worry insurance providers, the bigger issues are around fraudulent claims and the changes to Ogden tables (doubling payouts for long-term injuries), says Willis Towers Watson’s Mark Prowting. The result is fewer insurers in the coach and bus market as it’s not profitable.
He warns of a new model of a ‘loss corridor’ insurance that operators with a poor claims history might have no alternative to take, meaning hefty cost rises. “It is not an easy market at the moment.” He urged Album members “when you lobby government how often do you talk about insurance? It’s a big cost and will increase. You have a collective voice; use it to argue that we need to work together with government to ease the pressures.”
routeone Comment
The conference’s theme didn’t pull any punches; despite this the mood outside of the hall was upbeat.
With around 57 supplier trade stands and eight buses outside on display, the 37 operators – with a large number from Scotland – represented also enjoyed an excellent selection of social activities and excellent networking.Information is power and delegates left better informed about issues they face. But also that the supply side of the industry – from manufacturers to system providers – are continuing to invest to enable operators to leverage the best value from their assets.
And, if anyone was in any doubt, it’s clear that smaller operators need fierce tenacity to face up to the challenges of an uncertain world.
Find out more: www.albumbus.co.uk