The rising fuel prices due to the war in the Middle East are forcing coach operators into difficult decisions, writes Simon Ingham, Edwards Coaches Commercial Manager
Among many classic comedy moments in Only Fools and Horses, one from Trigger is particularly poignant in relation to my column this month.
He stated: “Fuel prices going up doesn’t affect me. I only ever put in £20.” Joking aside, few in the coach industry can claim that fuel price hikes don’t impact them and we’d be foolish not to be concerned over the threat of further rises and volatility.
Before the recent fuel price surge, we at Edwards Coaches typically spent around £20,000 a day on fuel to keep our vast portfolio of work streams running – intercity scheduled express contracts, local bus services, school services, private hires, UK and European coach holidays and executive travel. We’ve found that shopping around for the lowest fuel price weekly is often more advantageous than hedging.
Like many other coach operators, we’ve seen rises of 30% or more compared to previous baselines. This is concerning, particularly where there is no immediate mechanism to recover additional costs where fixed-price contracts apply, for example.
‘Perfect storm’
The UK Coach Operators Association reports the situation as a “perfect storm”: rising costs, constrained revenue, and very limited flexibility putting severe pressure on cash flow and business sustainability for some.
Operators may need to make unfortunate decisions, perhaps including handing back contracts that are no longer viable, reducing headcount, downsizing of fleets or perhaps succumbing to additional borrowing in the hope that the storm will blow over.
Fingers crossed the industry can weather the storm – hopefully through the assistance of the Department for Transport with the pursuit of meaningful conversations via the support of trade bodies.
Operators like us have found it increasingly necessary to consider implementing fuel surcharges to ensure viability of services. However, this is easier said than done, particularly where market sensitivities and competition occur, for example.
The Confederation of Passenger Transport (CPT) has reported that fuel – dubbed interestingly as “liquid gold” – remains the hot potato, with ongoing global conflicts translating into inevitable fuel price volatility.
Like other trade bodies, CPT has campaigned to the government for coaches and buses to be exempt from fuel duty increases and to be on the priority list for fuel, should shortages occur.
Perhaps this situation will accelerate developments in the world of battery electric technology in the world of coach. Can reliable, sustainable and strategically placed infrastructure be pursued in reasonable timeframes?
What will be the impact be on price and availability for electric coaches? It is timely to ponder, considering the backdrop of the resurgence of the Depot Charge Scheme.
Everyone in our sector remains rightly vigilant about global developments as the impact on fuel can have serious impacts to our already low-margin businesses.
Embodying the ethos that every little helps, we are encouraging drivers to refrain from excessive idling and ensure stop-start and anti-idle technology is active.
We are encouraging defensive and fuel-efficient driving, aiding route planning to prevent mileage wastage and ensuring the most appropriate, fuel-efficient vehicles are allocated to jobs, including crew movements.
Upsides to the crisis?
We remain hopeful that authorities will encourage coach ridership as a more cost-effective option to taking the equivalent journey by car.
We may see the public turning to affordable coach holidays if alternative travel methods are too costly or even non-existent, due perhaps to the lack of aviation fuel, for example.
Let’s hope that global events will ease and normality resumes for everyone impacted.
