[Article] Bus Éireann warns it may go bust due to privatisation

Victor

http://home.eircom.net/content/unison/national/2998951?view=Eircomnet

Bus Eireann warns it may go bust due to privatisation
From:The Irish Independent
Monday, 12th April, 2004
Treacy Hogan Environment Correspondent

BUS EIREANN has warned that it faces going bust under Government privatisation plans.

The state bus company, with a workforce of 2,700, has told the Government that it faces bankruptcy when foreign multi-national bus companies launch a cut-price tendering offensive to get a toehold in the Irish market.

The current integrated public transport network will be "ripped apart" under the plan to liberalise services, claims a top level report prepared for Bus Eireann.

Services will "significantly worsen" and an ineffective transport service will result from the controversial proposal to franchise out more bus routes.

Foreign giants entering the bus market will be offering cut price tenders in order to get their hands on franchised routes. Bus Eireann and indigenous private bus operators face being forced out of the market.

Once established on the Irish market, these companies will impose "massive price hikes" similar to those experienced in Britain and other countries

The stark warnings are contained in a report prepared for Bus Eireann on the effects of throwing open the bus market in the greater Dublin area to a competitive tendering process under a new Transport Authority.

The report, warns: "Predatory pricing could potentially lead to bankruptcy of Bus Eireann and the indigenous industry," it warns.

Among the findings of the review are:

* Bus passengers face significant fare increases from services operated by multi-national transport companies if they get their hands on lucrative routes.
* There will be more expensive layers of bureaucracy when the Public Transport Authority gets up and running.
* The expected benefits of lower costs, better services and reduced fares will not happen.
* The measures will reduce consumer confidence and lead to fewer passengers.

The report is highly critical of the plan to establish a new transport authority, which which is intended to franschise out routes through tendering and be responsible for marketing, safety, security, fares and ticketing.

Bus Eireann, which already faces competition on national routes, received a €22.8m subsidy from the Government last year.

senordingdong

* The expected benefits of lower costs, better services and reduced fares will not happen.


I think i missed something. Why is it that the expected benefits above will not happen?

John R

Because the large bus companies have a large amount of experience at market cornering and price gouging, just take a look at the services in many parts of the UK where these companies have dominated the market.

silverside

Dont Bus Eireann face (and deal well with) a lot of competition already (Nestors, McGinleys, etc) - what is changing?

Imposter

They only face competition on the main national routes. These are probably the more profitable routes and they just about hold their own on them.

I used to travel regularly on the galway-dublin route and people were changing to Citilink, Nestors and even Kearn's where possible as Bus Eireann's so called service was becoming a joke with buses not stopping, coming late and being more expensive than the competition. They did have a more extensive timetable though.

If competition is introduced on commuter routes that doesn't have competition at the moment, bus eireann will be in trouble unless they make some serious changes.

Crossley

The problem with all these deregulation scenarios is that the private operators (naturally) cherry-pick the profitable high demand routes and the incumbent operator is left to battle it out with the new operators on these routes and operate the unprofitable routes in addition. Inevitably this gives rise to cutbacks on the lesser routes which need to be run as a social service. Of course the government will say that they will continue to subvent the unprofitable routes but when there are pressures on public finances and cutbacks need to be made ......

This will be an even bigger problem here than in the UK because of the laissez-faire attitude to one-off housing in the countryside which makes all matter of services, transport included, unviable.

BuffyBot

The problem with all these deregulation scenarios is that the private operators (naturally) cherry-pick the profitable high demand routes and the incumbent operator is left to battle it out with the new operators on these routes and operate the unprofitable routes in addition.

AFAIK the model being adopted is a "franchise" one. Bus Eireann won't actyually be competing with other companies on a particular route.

For example take the Dublin - Limerick service. The regulatory authority will offer a franchise to operate this route for a period (e.g. 5 years). Bus Eireann who currently operate it, will be able to bid for this franchise alongside other operators such as National Express, Kavanaghs or whoever else may bid. The regulatory authority will consider the bids on the basis of overall cost, frequency of service, vehicle type etc

The route will be handed over from Bus Eireann on such and such a date to the new operator who will then operate that service.

I stand to be corrected on this, but I'm sure it's not going to be a free for all service where the routes can be operated by whoever feels like it, when they feel like it.

senordingdong

Now im really confused, wouldnt the introduction of other bus companies cause compitition among the existing bus companies and therefore force them all to reduce their fares in an attempt to "win-over" customers?

West Briton

Away from the main Expressway routes, Bus Eireann hardly offers a service at all. Go onto the website and you will discover a plethora of routes with bizarre frequencies like Weds and Fris only, all geared to Pension day presumably. Even some of the five day a week routes offer the thinnest of skeleton services that rarely interconnect with other buses or God Forbid the railway.

God help any misguided Civil Servant relocating and then discovering that they are stuck with their cars after all.

John R

Originally posted by senordingdong
Now im really confused, wouldnt the introduction of other bus companies cause compitition among the existing bus companies and therefore force them all to reduce their fares in an attempt to "win-over" customers?

Perhaps initally that will happen although fares on most express routes are close to the margins already.
What happened in many parts of the UK was that certain large operators would enter a market and offer lower than cost fares while engaging in other competition killing tactics. They would flood certain routes with buses and intentionally run services just in front of the competition to catch all the passengers. Eventually the smaller operators would start loosing too much money and fold up or sell-out to the large operator at which stage the fares would rocket and services would be slashed. Anyone else attempting to compete with them would be met with the same tactics.

Two of the companies who operated in this manner are already involved in public transport in Dublin.

John R

Originally posted by BuffyBot
AFAIK the model being adopted is a "franchise" one. Bus Eireann won't actyually be competing with other companies on a particular route.

For example take the Dublin - Limerick service. The regulatory authority will offer a franchise to operate this route for a period (e.g. 5 years). Bus Eireann who currently operate it, will be able to bid for this franchise alongside other operators such as National Express, Kavanaghs or whoever else may bid. The regulatory authority will consider the bids on the basis of overall cost, frequency of service, vehicle type etc

The route will be handed over from Bus Eireann on such and such a date to the new operator who will then operate that service.

I stand to be corrected on this, but I'm sure it's not going to be a free for all service where the routes can be operated by whoever feels like it, when they feel like it.

No-one knows what form the privatisation will take because the Department refuse to give any proper details, the only goal the minister voices is "A large amount quickly" hardly a recipe for good regulation.

As far as being good for the customer, the Department has made several anti-customer decisions recently to curtail CIE services so as to placate private operators, in one case effectively stranding several people in Dublin city centre late at night.

John R

Originally posted by Imposter
They only face competition on the main national routes. These are probably the more profitable routes and they just about hold their own on them.

I used to travel regularly on the galway-dublin route and people were changing to Citilink, Nestors and even Kearn's where possible as Bus Eireann's so called service was becoming a joke with buses not stopping, coming late and being more expensive than the competition. They did have a more extensive timetable though.

If competition is introduced on commuter routes that doesn't have competition at the moment, bus eireann will be in trouble unless they make some serious changes.

This is a prime example of the worst of private operators. Although to the few who use them they are cheap and convenient. Meanwhile they are sucking up the maximum profit without a consideration to the needs of the majority of public transport users. It is very easy for these operators to undercut BE on selected routes at selected times, they have a fraction of the overheads and offer a far poorer service overall.

Victor

Originally posted by John R
As far as being good for the customer, the Department has made several anti-customer decisions recently to curtail CIE services so as to placate private operators, in one case effectively stranding several people in Dublin city centre late at night.

Care to explain?

Imposter

Originally posted by John R
This is a prime example of the worst of private operators. Although to the few who use them they are cheap and convenient. Meanwhile they are sucking up the maximum profit without a consideration to the needs of the majority of public transport users. It is very easy for these operators to undercut BE on selected routes at selected times, they have a fraction of the overheads and offer a far poorer service overall.

No it's not. It's a prime example of the problems with Bus Eireann's 'service'. While the prices are usually slightly cheaper with the private operators they are also convenient for the users. Bus Eireann not bothering putting on enough extra buses on Sundays being my biggest gripe with them. If the private operators don't do it then a significant number of people are without a required service.

Add to that the service that Citilink and Nestor's run is often better organised and far more user friendly than most of Bus Eireann's services. A fine example of this would be Nestor's buses continuing on to the airport. Of course you can always go to Busarus with Bus Eireann and fork out an extra 5€ to get to the airport!

Also who exactly are the majority of public transport (in terms of Bus Eireann) users you speak of? What services would they require? Are you saying that most of the demand is not on major routes?

John R

Originally posted by Victor
Care to explain?

Since February 2001 for all changes and additions to Dublin Bus and Bus Eireann services the companies have been required to give the Department Of Transport at least 4 weeks notice, if the DoT decide to they can demand DB/BE to suspend any alterations until they decide if there is a conflict with other operators services. They can also at any time demand DB/BE suspend any service they wish for the same reason.

On several occasions that I know of services have been suspended with no notice given on Departmental orders, I would not be surprised if other incidents have occoured that are not known about but neither CIE or the DoT will give official info on these matters. I do not know why CIE will not publicise these events, my only guess is that they have been warned off by the DoT. It is almost impossible to get any info from the DoT about these matters, they claim that they cannot divulge info about who holds what licences because it is "commercially sensitive". The DoT has for some time now been operating, no doubt under Minister Brennan's orders is a very biased way against CIE. They are trying to actively trying to encourage private operations without any consideration to the travelling public's needs.

The service cancellations are only the tip of the iceberg in this matter, the DoT routinely wait months before even considering additions and changes to DB/BE services and regularly deny their applications even for services that no other services operate in. DB/BE have hundreds of applications waiting approval or denied.

In July 2000 BE significantly increased the frequency of buses on the Cavan - Dublin route to an hourly service from 6am - 8pm, the service was very successful and dramatically increased loadings on the route. sometime in 2002 another operator complained to DoT that they held a licence for this route and although they had not operated it for some time they wished to re-commence but the BE service was preventing them from doing so. Late Dec 2002 The DoT instructed BE to stop operating the 6am, 7am and AFAK 8am weekday services from Cavan from Jan 1 2003 which they did, leaving passengers effectively stranded at Cavan watching the BE service leave the Cavan depot empty to pick up at the next town Virginia. Passengers were left with the prospect of using one operator to get into Dublin and another to return to Cavan. I am not sure exactly what service the privateer operates but it is not more than one or two trips per day. The situation has changed somewhat in that BE resumed the 7 and 8 am services but the 6am bus still leaves empty, a similar situation also occoured with a different operator over the sunday evening Cavan - Dublin services where BE were once again stopped in favour of a small operator with no interest in offering a full service to Cavan just in scooping up the large student traffic.

Over Christmas 2002 DB began operating several additional Nitelink services including the 84N to Greystones and Kilcoole. The service ran for a short while before being cancelled, I am not sure of the exact dates. The operator Finnegans Of Bray who run a night service to Bray complained to the DoT that the DB service was infringing on theirs, even though they did not go past Bray. and the DoT duly ordered DB to cancel the 84N with no grace period to warn prospective passengers, leaving a DB inspector to tell people at 1.30 3.30 am that no bus would be provided.
The service remained cancelled until christmas 2003 when it was re-started, I am not sure what the status of Finnegan's service is or what agreement was reached for DB to operate the service.

These two events were sourced from various places both published and personal accounts. as for proof there have been articles in at least one national newspaper on the Cavan incident, I am sure I have it stored locally although I cannot find it now.
Also the incident was the subject of several Dail ministerial questions. Parliamentary Question No. 443 on 11 February 2003 and Questions 422-425 code 5556/03 - 5559/03 of late Feb early March 2003 (exact date unknown).

There have been more questions on the issue of DoT delays and obstructions, at least one from Progressive Democrats Transport Spokesperson Senator Tom Morrissey in May of last year about a 15 month delay in responding to an application to extend the 238 service to Tyrellstown, the app of April 2002 still not having been approved because of interest from a private operator.

senordingdong

Does anyone else think that "John R" might work for CIE?

Just a guess.

But seriously...let me see if im getting this...the introduction of other companies would lead to compitition, but this wouldnt last forever as the "losers" would sell out to the "winners" and once this new company has monopolised the service it will shoot its fares right back up to the same ridiculous rate were paying now?


If thats the case then so what? I feel were all being ****ed over by Bus Eireann and now that theyre gonna get ****ed over i wont jump to their defence.
Meanwhile we enjoy a short or long period of reduced fares untill this "winner" company takes over and the fares rise again to what were currently used to.

Victor

Originally posted by senordingdong
But seriously...let me see if im getting this...the introduction of other companies would lead to compitition, but this wouldnt last forever as the "losers" would sell out to the "winners" and once this new company has monopolised the service it will shoot its fares right back up to the same ridiculous rate were paying now?

Not quite, we would probably end paying more.

senordingdong

Ok, but how would we end up paying more?
Isnt there some sort of authority to regulate public transport fares?
If there is i would imagine that Bus Eireann are doing the bare minimum to keep themselves in line with this authority, the result being the high fares we are currently paying. What would be differrent?

John R

Originally posted by senordingdong
Does anyone else think that "John R" might work for CIE?

Just a guess.

NO HE DOES NOT

John R

Originally posted by senordingdong
Ok, but how would we end up paying more?
Isnt there some sort of authority to regulate public transport fares?
If there is i would imagine that Bus Eireann are doing the bare minimum to keep themselves in line with this authority, the result being the high fares we are currently paying. What would be differrent?

The fares charged by CIE are set with the approval of government, all price changes have to be cleared before being applied.
Private operators are currently free to charge what they like.

senordingdong

Originally posted by John R
The fares charged by CIE are set with the approval of government, all price changes have to be cleared before being applied.
Private operators are currently free to charge what they like.

Ok. Thanks for that...but just one more question.
If the private operators are free to charge what they like could anything be done to fight this?....besides strikes or protests or any of that nonsense.

senordingdong

Originally posted by John R
NO HE DOES NOT

Oh and dont take that the rwong way...i was just kidding.
Dont think im trying to wind you up or anything.

Victor

http://www.breakingnews.ie/2004/04/16/story143100.html

Bus Éireann's finances improve slightly - report
16/04/2004 - 8:11:50 AM

An increase in customer numbers and the addition of several new services helped Bus Éireann to achieve a surplus of more than €1.5m last year, compared to a loss of €9.4m in 2002.

According to a report in the Irish Times the company's turnover rose from €202m in 2002 to about €218m last year.

The number of customer journeys increased to about 92m last year - with 42m of these school bus journeys - from 89m the year before.

The €1.5m profit was produced after receiving a State subvention of upwards of €20m, believed to be a similar level to 2002.

Despite the improving financial health of the company, it has warned that traffic congestion continues to adversely affect its financial position.

senordingdong

Originally posted by Victor
http://www.breakingnews.ie/2004/04/16/story143100.html

Im probbly gonna get grilled for asking this but would an increase in profits result in them lowering fares?
I assume that they raise fares to make up for losses.

Victor

Originally posted by senordingdong
Im probbly gonna get grilled for asking this but would an increase in profits result in them lowering fares?

Unlikely, they would simply postpone a price increase or the government would lower their contribution.

Sarsfield

Originally posted by senordingdong
Im probbly gonna get grilled for asking this but would an increase in profits result in them lowering fares?
I assume that they raise fares to make up for losses.

A €1.5M profit on 92M journeys is 1.6cent per journey

Not much room to cut fares!

senordingdong

Originally posted by Sarsfield
A €1.5M profit on 92M journeys is 1.6cent per journey

Not much room to cut fares!

So that would explain that strange, unexpalined raising of fares by 1 euro last month.

Victor

Originally posted by senordingdong
So that would explain that strange, unexpalined raising of fares by 1 euro last month.

?

senordingdong

Originally posted by Victor
?

There was an increase of 1 euro in Bus Eireann fares sometime last month.
Since i have no credible source as to why this happened i decided to go by the next best thing...hearsay and rumour.
I figured if they made that much profit on 92 journies, that means they made 1.6 cent profit for every journey.

Im guessing they decided to make some more profit and from the info above, to make what...about 1.5m euro extra, all they have to do is raise each fare by 1.6 cent.
But seriously....what kind of cabbage would raise fares by 1.6 cent? So instead they raise fares by 1 euro and make an even bigger profit, also it was such a small increas that i doubht there were many complaints.

But i could be wrong ofcourse....nah, im never wrong.

Steve Conway

Bear in mind that a huge poportion of those 92m journeys would be on the city services in Cork, Limerick, Galway etc - due to their frequency they would probably add up to equal the number of Bus Eireann trips in the rest of the country, and on the city services the fares rose by 5 or 10 cent.

senordingdong

Originally posted by Steve Conway
Bear in mind that a huge poportion of those 92m journeys would be on the city services in Cork, Limerick, Galway etc - due to their frequency they would probably add up to equal the number of Bus Eireann trips in the rest of the country, and on the city services the fares rose by 5 or 10 cent.

Eh....yeah. That too.