I was sent an interesting yet worrying article from passengertransport.co.uk the other day which predicts an uncertain future for First Group following a takeover bid from Apollo Asset Management, a North American private equity investor. Although the bid was rejected, as most preliminary bids are, city analysts are saying First cannot continue in its current form, and the break up of the bus sector is inevitable.
In 2013 shareholders injected £615m into the business, for the purchase of new buses and pay down debt, but have yet to see any return on their investment, and now the task of turning around multiple underperforming businesses was "too big and too complicated".
So what can we expect? Well, if Apollo come back with a successful bid the least we can expect is the end of First's involvement in the rail industry, due to political conflictions, and the sale of the worst performing bus businesses. If Apollo fails in their takeover, then according to the analyst " the minimum sales expected are a major, possibly all
of, the UK bus business plus Greyhound, both of which require
substantial capital investment and management attention".
I am reliably informed that First Eastern Counties are one of the better performing bus operations, but one has to assume new owners will want greater profits, so it is a foregone conclusion that loss making routes will go, putting yet more pressure on already underfunded Councils.
Just today First Essex have announced the axing of several routes in Clacton. Hedingham have said they will take the routes over but for how long? First won't have dropped the routes if they were making money, and Go East's track record leaves a lot to be desired. If I lived in Clacton I would be very worried.
We have seen Stagecoach desert Norfolk, indeed as I write I'm hearing on the radio that Go To Town - part of West Norfolk Community Transport are taking over the 2, 3, 4 & 5 in Kings Lynn. Apparently £1m has been spent on buses, recruiting drivers and opening a new depot. If anyone knows more/has pictures then please let me know. Is the future yet more fragmentation of the industry, with the day of the big boys over? That's not good news if you want to take more than one journey as until there is an integrated ticketing system it will, once again, deter fare paying passengers from travelling. Re-regulation is not a panacea, but it would go a lot further to protect the loss making routes and give motivatioon to make them pay through vision and innovation, rather than just dropping them damning the few loyal users. Galloway are doing that in May by withdrawing the 456 and 459 Stowmarket to Diss services.
Some villages on the route will be served by other routes, but to quote the suffolkonboard website "Thornham Manor (other than Saturday), Forward green, Wickham St, Mellis and Yaxley will not be served by the current local bus service." Bus users in those villages will be forced onto Connecting Communities, which you have o book days in advance and are not guaranteed to get you where you want to go, when you want to go anyway. Hardly progress.
It does make you wonder what the future is if you want to use the bus but don't live in a major town or city. While areas such as Reading, Nottingham and Leeds have seen huge investment and improvement in bs services, inspired by innovative and forward thinking management there are other parts of the country where bus services are in such decline you have to wonder if there is a future at all. If we had a fit for purpose Department for Transport that would help, as maybe a similar system could be put in place such as there is in our schools and hospitals - ie if bus services in an area were seen as inadequate then the area would be put into "Special Measures" where the local authority took the running of bus services over until a recovery was facilitated, with specialist management put in place - like Superheads are at schools. That way the operators such as Reading and Nottingham could keep moving forward, but the operators who couldn't care less about their passengers - not even putting padding in their seats - were brought to book.
It will never happen though. So we'll carry on wondering which route the axe will fall on next, and see our bus services continue to erode like the cliffs at Hemsby.
You can read the full article on First here, and if I hear anything regarding our area I'll let you know as and when I do. And some wonder why I prefer 37's on the Sizewell branch......
The Braintree outstation, which was once a depot, then an outstation, then a depot again!, is also closing with the service 70 moving into Chelmsford depot.ReplyDelete
Regardless of whether the Apollo bid is successful or not, First Bus will need to be seen making changes and generating higher margin as existing investors are making noises. It will also be very interesting to see if Go Ahead can make a success of the routes First are vacating, considering their East Anglia operations seem to be a basket case.
Go to Town is West Norfolk Community TransportReplyDelete
Suffolk is a horrible area for bus services. Too many tiny villages for miles with very little areas of value.ReplyDelete
First Bus are pulling out of Clacton and closing the Garage there. The only routes I guess will be those running out of ColchesterReplyDelete
And Walton OTNDelete
Government control is no panacea, the problem isn't the ownership structure but the fact that the wider UK society isn't prepared to invest the money in public transport that is needed to provide the comprehensive bus network that we really need (& the government controlled & funded networks in Europe don't have a noticeably better rural bus network despite the massive subsidies they receive, outside school buses there is next to nothing in most places). Northamptonshire is the latest authority to plan removing all supported bus service funding (including reportedly the DRT services) leaving huge swathes of the county with no bus services (though some of the parish/borough councils are trying to fund replacements the money available will be lucky to fund more than a couple of journeys a week in most cases) whilst Leicestershire are consulting on withdrawing around 2/3rds of their supported network next year. Cost pressures are really causing a problem for the bus industry at the moment, it appears that only Stagecoach are close to a sustainable operating margin at the moment and even they are under cost pressures (as highlighted by Kings Lynn) and many of the smaller operators have been driven out of business.ReplyDelete
We do need to find a new way of delivering rural bus services, ownership isn't the question but councils do have a big part in to play in a possible solution through their statutory school bus network. Currently most councils still specify their school buses based on the traditional seating capacities of old coaches (such as 57) which tends to prevent school vehicles from being used on local services due to disability regs. Combining statutory school flows that have to be funded with off-peak shopper buses is the best change for many of these very rural networks, particularly now that all the regs & pressures on the bus industry has driven so many of the small independents that kept these routes going out of business.
FEC is a good company from the inside?ReplyDelete
Why are Galloway getting rid of the 456? I thought that service has council support.ReplyDelete
The contract had not expired. assume they pulled out of it probably because there were not making money from itDelete
It makes for fun, but I don't think the answer is labelling operators as good boys/bad boys like some cowboy western, or just throwing money (which we haven't got) at the problem indiscriminately.ReplyDelete
Councils and Operators like most of us have to try and balance income and expenditure and make ends meet. It is a struggle, getting worse, for everyone. Stagecoach and Arriva are cutting back, too.
I suspect the Clacton withdrawal is precipitated by the loss of Council contracts by First to Hedingham. When a network is marginally viable, it is the straw that breaks the camel's back. Its happened before, and will again. May be the Council will find a way to support some day time services too - that has happened before with commercial services, First in Chelmsford for instance with the 47. I suspect that First Essex (like First Berkshire, who have also suffered) have a high cost base (not least in the past because they found themselves competing for drivers with the London operators) which has now become a handicap. None of us like to pay more than we have to, as the High Street and just about every other business has found. The problem, I suspect, with First is that many of their OpCos have been too slow to adapt in the past - though FEC may be an exception with its concentration on the Norwich network, Ipswich inter-urbans, the X1 and a coastal strip, compared to the old sprawling ECOC. I've tried for years, unsuccessfully, to identify just what the First Essex core network is, especially when compared to Stagecoach East, Arriva Herts and Essex and yes, even FEC. When Stagecoach East and First Essex have income in the order of £60M/£50M and manage an operating profit of up to £10M/a 400k loss, something is very wrong with the Essex operation surely? It might not just be Clacton. FEC and Stephensons (who run services First Essex deem unviable) earn a decent profit. It does look to me that First Essex have a combination some of the highest wages, highest fares and lowest quality service I can find, which is not the recipe I would chose for success - certainly changing it is hard, but what else is management for? Adapt and survive - applies not just in nature, but in business too. Passengers as much as staff like what they are used to, of course, but the Holy Grail of lower cost and (hopefully) better service is an eternal necessity, and we have to learn to live with it. We can, and even end up with something better.
Rural services are always a struggle, here and abroad. Running empty buses for the sake of it, serves no-one.
But rather like Corporal Jones I have to utter "don't panic". There is going to be change, and may be even a painful adjustment. Instead of trying to recreate the past, we have to consider what future needs are and how they can best be met. I don't decry but welcome new operators, and different ways of working. That is the future. They might not always succeed. That's life. But more often than not, they do, and are always a learning experience. But what never succeeds is complacency and negativity. So that does mean innovation. Commercial operation has, and can continue, to achieve miracles. Overall, looking at what actual needs are and the use of resources effectively and quality, I think buses are as good as they have ever been. Just look at numbers if that is your game, and they are poorer than they have ever been. That matters to the enthusiasts, but to who else? Subsidy can never be the first option, but the last resort. That's life (and always has been). Rather sadly, as always in the UK, there are too many vested interests with fingers in the pie.
What is the Future for Bus Services in the UK?ReplyDelete
Most bus companies are in my view badly run. Services are already at such a poor level very few people use them and they still continue to axe services and their customer base continues to shrink. As the customer base shrinks costs increase so they cut more services. This is the spiral of decline. It is compounded by frequent cancelations and very poor time keeping
How long can the services last outside of the Major cities and towns ? . Councils response is to put on Demand Responsive Services which are infrequent and of little use to most people. Some even advertise them as useful if you want to visit a GP. Well they have not thought that one through. I tried giving up my car for a short time but it proved to be impossible to use public transport it could take over half a day to get to a GP and back
It's a bad situation and I do not see it improving only getting worse
If you look at the East almost every bus company is making a loss or nearly a loss
Arriva have a Flexi bus system going in Sittingbourne. It seems to be working successfully. It uses mini buses. I think ideally midi buses should be used, Wheelchair users or those with prams or buggies have to indicate so on the booking. . It offers a weekly season ticket at £22 which seems very reasonableReplyDelete
The user guide and information is a little vague and confusing and could be improved. You can book in pretty much real time but clearly the earlier you book the more chance of getting a time to suit
It looks like a system that could suite many of the towns in Essex , Suffolk and Norfolk and appear to be a big improvement on DRM although it probably only suits towns and the immediate villages
It does require n app which with many pensioners in the East might be an issue to over one. It dos not seem to be clear what phones or PC's the app will run on
Shares in FirstGroup have tumbled more than 12% so far this morning.ReplyDelete
Aberdeen-based FirstGroup, which has about 100,000 employees, operates the Great Western Railway and owns America's iconic Greyhound bus services.
Last month it emerged that private equity firm Apollo Management had approached FirstGroup about a possible takeover offer.
Now Apollo says it will not be making an offer.