Pros and cons of franchising

Thursday 11th October 2019

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I spent an enjoyable couple of days this week helping to run the twice-a-year Young Bus Managers Network conference. It’s always an inspiring event to attend with such encouraging positive energy and enthusiasm emenating from around 80 to 100 young people in their twenties and thirties; some fresh faced into the industry from University this autumn while others exuding much more experience including career progression to operations, commercial or engineering managers from driver and the engineering shop floor.

This time we were based in Croydon and enjoyed a busy 25 hour period from lunchtime on Tuesday to mid afternoon on Wednesday with site visits to Arriva’s Croydon bus garage and Purley Way iBus control centre and fascinating talks and presentations from leading bus industry directors including Transport Commissioner for London, Mike Brown, managing director for Go-Ahead London, John Trayner and managing director of UNO Bus Jim Thorpe as well as three of our own Network members giving a presentation and other speakers on legal and regulatory compliance and an update on the latest DfT quarterly statistics for the bus industry.

IMG_0839.jpgThe task for the conference’s regular workshop session immediately after lunch was topically for the young managers to come up with three benefits of a “London style” franchise model for running buses, as well as three disbenefits. The report back after the group discussions brought forward an interesting selection of ideas which included…….

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Benefits of a public authority controlled bus network with private bus companies contracted to run specified routes at predetermined fares and ticket acceptance were assessed to be:

For the passenger: integrated travel with simplified pricing and no restrictions on ticket acceptance; a unified brand identity with consistent standards; potential for greater stability in the network during the life of tendered contracts.

For the local authority: potential to actively use buses to achieve modal shift from cars as part of an overall transport policy; accountability for public officials and local politicians overseeing the tender procurement process; potential to take a lead in handling customer service directly (as TfL does); direct link between bus provision and infrastructure requirements eg bus lanes.

For the bus company: a guaranteed income stream at fixed profit margins with no revenue risk; no expenditure incurred on marketing and publicity; all bus companies are judged by the same standards; bus companies can focus exclusively on customer service; entry into the market may be easier if tenders are let on a route basis

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Disbenefits were assessed to be:

For the passenger: entrepreneurial spirit and therefore innovation and creativity is stifled and likely to be absent with the public sector naturally more risk averse than the private sector; localised political pressure leading to skewed decisions about the network rather than it being market led; buses being dependant on political colour; lack of competitive pressure could mean higher (not cheaper fares) and less service provision.

For the local authority: taking the revenue risk (which is alien for a local authority culture) means harder to budget and can lead to short term decisions to correct shortfalls – but may not be possible due to contractual issues; the requirement for public funding will rise.

For the taxpayer: increased public funding will likely require higher taxation.

For the bus company: entrepreneurial spirit, innovation and creativity dies; failure in the tender market could mean loss of business; employees face uncertainty when contracts change hands; bus companies work for the contractor rather than directly for the customer; if tenders let on network basis may be difficult for small bus companies to enter the market.

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A lack of time meant these were just headlines from each group’s deliberations and a number made the point the benefits listed above for the passenger and local authority can also be achieved by effective partnership working between authority and bus company as exemplefied in towns and cities where there’s been consistent growth in passenger journeys for many years. Obviously for me, Brighton & Hove comes to mind but there are many other examples around the country, particularly where there’s a strong market for student travel where growth and innovation are endemic. In such places, the local authority can concentrate on the all important infrastructure issues and complimentary policies on parking and car restraint rather than having to be concerned at day to day revenue risk of running a bus fleet, something they’re not usually equipped to deal with.

This is all very timely with Transport for Greater Manchester embarking on its formal public consultation about plans for buses in that conurabtion. It will be interesting to see how that pans out.

Finally, off topic, I couldn’t let the opporunity pass over dinner on Tuesday evening to share my hobby horse with Mike Brown of there being no map for TfL’s bus network either online or in print form. Surprisingly enough he agreed with me, which just goes to show even a Transport Commissioner can’t always achieve what he knows is right to be done!

Roger French

 

4 thoughts on “Pros and cons of franchising

  1. As a resident Londoner I’d take our set up over the deregulated free for all any day. And just look to Europe where this model of planned service whether franchised or run by a municipal undertaking is the norm. I go to places like Manchester and Sheffield or any number of rural areas and our public transport failure is just embarrassing. There are exceptions like Brighton, Oxford, Nottingham, Reading and Edinburgh but that’s about it. Furthermore I think the poor employees outside London of the innumerable companies that go bust, change hands and so on with bewildering rapidity would probably prefer working in the London model than the alternative. As for innovation I don’t see why quality bus managers can’t work for the local authority. TfL is actually not bad in many ways with many good people working for it. And tax – well we’re probably under taxed compared to many European countries at the moment and we also need to get the huge tech companies to pay their share to support the common good. Good on Mike Brown for coming and well done for raising the maps issue. More to the point what’s he going to do about it.

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  2. I seriously don’t see any entrepreneurial spirit, innovation or creativity in the industry rather the opposite

    The current system is clearly failing . As far as passengers are concerned they want a network not an ad hoc random collection of routes often inefficiently operated and run to suit the operator rather than the customers

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  3. In spite of all the negativity now being displayed about the “failures” of de-regulation, one only has to look at Roger’s previous post regarding Cornwall. Regulation prior to 1986 did absolutely NOTHING to halt declining passenger numbers, and there are many areas that have vastly improved both in terms of service level and quality. As with the old British Rail(ways), the moment Politicians and H.M.Treasury get involved, Transport is always the first to suffer financial reductions when “difficult” decisions need to be made. Local Government/Councils have all the powers now, and have had since 1986, to plug any gaps in perceived lack of service provision. The fact that most have failed to do so in recent times (because of “savage Government cuts” quote) says it all, and those who think a regulated paradise is just around the corner may be sorely disappointed. Bus services would be wonderful throughout the UK IF people used them, and until restrictions either logistically or financially are placed upon car worshippers, the downhill slide will continue whoever runs our buses.

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  4. Well done for ‘banging that drum’ but why can ‘el supremo’ not reintroduce the free bus maps that used to exist especially in a city that is so full of strangers, tourists, etc.?

    Alan

    Is there an issue here for the next YMBN conference for someone to discuss the costs and perceived benefits of different ways of communicating their networks (print versus electronic) with existing and potential customers, perhaps especially the letter?

    Liked by 1 person

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