Go-Ahead Dublin City Routes - Updates and Discussion

antoinolachtnai wrote: »

End 2016 it was 989.

So 125 buses is something like 13%?

VWD8 wrote: »

The point I was making is that the cash cow routes are hugely inflating the Dublin Bus revenue figure used in the calculation above. Therefore saying the 10% would generate 10% of this revenue would be well off the mark.

The 10% argument is flawed in general though.

125 buses is not 10% of the Dublin Bus fleet, if that was the case then Dublin Bus should have 1125 buses to account for the other 90% - they don't.

You also need to take into account that there is also big frequency increases happening on the routes that are being transferred as well so the amount you're deducting from Dublin Bus and the amount you are attributing to Go-Ahead will not be the same.

My point is - unless you've seen both bids, or someone has stated all the results - it's impossible to tell for sure as there are so many variables and that is before you even consider that the contract itself could be radically different from existing ones.

devnull wrote: »

So 125 buses is something like 13%?

Well the expended fleet will be something like 1075 so it will be more like 11.6 percent of that. If DB fleet has grown in interim it will be less.

Separately, I see the coverage says the €172m includes full mobilization costs so this must include the cost of the buses. It would make no sense to include the costs relating to a depot but not the costs relating to vehicles.

Stephen15

devnull wrote: »

That's an extremely poor assumption to be honest.

Orbital routes in Dublin are never going to be as cheap to run, or bring in as much revenue as ones that are going to and from the city center - this is not a 10% random selection of routes, far from it, it probably contains a very high percentage of the most expensive routes to run and the heaviest loss making in the DB Stable.

If you had a route by route breakdown of the costs in DB then you'd be able to make a better comparison, but the 10% of routes that are going to Go-Ahead are in no way shape or form representative of Dublin Bus as a whole - there was clear selection bias involved rather than taking a 10% sample that was representative of DB as a whole.

The likes of the 17, 17a, 18, 75, 76 and the 102 are generally busy routes and judging by numbers I have seen using these routes I would say they are profitable routes, I would also guess that the new 175 route will also be profitable. So I don't think they all the heaviest loss making routes on the current DB network.

There are plenty of routes which will remain with DB post GA which I don't think are profitable either.

antoinolachtnai wrote: »

Well the expended fleet will be something like 1075 so it will be more like 11.6 percent of that. If DB fleet has grown in interim it will be less.

Indeed - my point more was that this whole discussion about the 10% is flawed because what we are talking about is a few percent more than 10% so basing things off 10% makes little sense since the figures don't support that percentage.

Separately, I see the coverage says the €172m includes full mobilization costs so this must include the cost of the buses. It would make no sense to include the costs relating to a depot but not the costs relating to vehicles.

Do we know how the buses are being bought? Are they being purchased directly by the NTA or is there a grant that is going to the operator from the NTA who in turn then buys them? Always found it a complicated set-up with DB.

devnull wrote: »

The 10% argument is flawed in general though.

125 buses is not 10% of the Dublin Bus fleet, if that was the case then Dublin Bus should have 1125 buses to account for the other 90% - they don't.

You also need to take into account that there is also big frequency increases happening on the routes that are being transferred as well so the amount you're deducting from Dublin Bus and the amount you are attributing to Go-Ahead will not be the same.

My point is - unless you've seen both bids, or someone has stated all the results - it's impossible to tell for sure as there are so many variables and that is before you even consider that the contract itself could be radically different from existing ones.

Yes you are correct there will be expansion but that expansion would have been delivered anyway by Dublin Bus if the tender never happened, yes for more money but in the same proportion of their total cost/revenue now to the GoAhead payment.

A driver of the difference in cost is assumably the depot but it hasn’t been exactly stated if the NTA is paying for that or not. Would seem a bit silly to pay for it seeing as an extra 100 or so buses could easily be slotted in across the extra garages (Dublin Bus had ~1200 buses in the Celtic Tiger and now has ~1000).

Stephen15 wrote: »

The likes of the 17, 17a, 18, 75, 76 and the 102 are generally busy routes and judging by numbers I have seen using these routes I would say they are profitable routes, I would also guess that the new 175 route will also be profitable. So I don't think they all the heaviest loss making routes on the current DB network.

There are some good performing routes in that pack but an awful lot of poor ones as well that don't carry much, have some terminus locations that are not close to bus garages which will impact on running costs, and also those which do very well at times but outside these times do very poorly.

Orbital routes generally don't perform as well as routes going to/from the City center in my experience, I'm not saying it is always the case, but it is a lot of the time. I doubt all those routes you say are profitable though, because €60m is a lot of public money to pay to an operator if they have as many profitable routes as you are inferring.

devnull wrote: »

Indeed - my point more was that this whole discussion about the 10% is flawed because what we are talking about is a few percent more than 10% so basing things off 10% makes little sense since the figures don't support that percentage.

Do we know how the buses are being bought? Are they being purchased directly by the NTA or is there a grant that is going to the operator from the NTA who in turn then buys them? Always found it a complicated set-up with DB.

Also not sure why the number of buses came up? I didn’t mention it. I think you are wrong on it being more then 10% anyway as it is actually less. The NTA tender documents said the number of buses used was 88 and that passenger numbers were 9 million out of Dublin Bus 112 million total so in both cases it was less then 10%.

VWD8 wrote: »

Also not sure why the number of buses came up? I didn’t mention it. I think you are wrong on it being more then 10% anyway as it is actually less.

Dublin Bus has 989 buses in it's fleet according to it's last annual report, the figures for which you have been using so we'll stick with that source.

125 vehicles is almost 13% of the Dublin Bus fleet, which is more than 10% and not less.

What is this 10% you keep talking about? 10% of what?

devnull wrote: »

Dublin Bus has 989 buses in it's fleet according to it's last annual report, the figures for which you have been using so we'll stick with that source.

125 vehicles is almost 13% of the Dublin Bus fleet, which is more than 10% and not less.

What is this 10% you keep talking about? 10% of what?

Why are you onto me about the 10%????

It’s what the NTA calls it, what everyone calls it, it’s the name of this discussion!!!

Also you clearly didn’t read the figures I gave later in the post.

Stephen15

devnull wrote: »

There are some good performing routes in that pack but an awful lot of poor ones as well that don't carry much, have some terminus locations that are not close to bus garages which will impact on running costs, and also those which do very well at times but outside these times do very poorly.

Orbital routes generally don't perform as well as routes going to/from the City center in my experience, I'm not saying it is always the case, but it is a lot of the time. I doubt all those routes you say are profitable though, because €60m is a lot of public money to pay to an operator if they have as many profitable routes as you are inferring.

There also other routes there which I would say are borderline between profitable and unprofitable. What percentage of the DB network is actually profitable anyway. A survey should really be done.

I think there are many routes out there that would be profitable at peak times but are nothing but fresh air carriers the rest of the time.

VWD8 wrote: »

Why are you onto me about the 10%????

Because you're using such figures in your calculations to try and make a point even though you are unable to explain to me what this figures actually is that you are using in your calculations.

So two questions:
1) What is the 10% a measurement of? Is it buses, routes, drivers, what?
2) Can you explain how you arrived at the conclusion that it was 'actually less' than 10%'

If you're using figures in your calculations you should easily be able to illustrate what they are, how they have been arrived at and how you came to the conclusions that you did.

devnull wrote: »

Do we know how the buses are being bought? Are they being purchased directly by the NTA or is there a grant that is going to the operator from the NTA who in turn then buys them? Always found it a complicated set-up with DB.

The sensible thing would be for GA to buy them using their financial resources and factor the cost into the contract. This would keep the borrowings for the vehicles off the government balance sheet.

The DB thing is a palaver and not at all transparent. The grant for buses is never recognized as revenue on the P+L even though it is revenue for all intents and purposes.

It would make sense for NTA to factor the DB capital grants into the PSO except for one thing: DB is basically forbidden from borrowing any money to buy buses (for very good reason). So the grant is being used to provide financing that any regular company would get from the bank or financial markets.

antoinolachtnai wrote: »

The sensible thing would be for GA to buy them using their financial resources and factor the cost into the contract. This would keep the borrowings for the vehicles off the government balance sheet.

The DB thing is a palaver and not at all transparent. The grant for buses is never recognized as revenue on the P+L even though it is revenue for all intents and purposes.

It would make sense for NTA to factor the DB capital grants into the PSO except for one thing: DB is basically forbidden from borrowing any money to buy buses (for very good reason). So the grant is being used to provide financing that any regular company would get from the bank or financial markets.

Grants for assets are amortized over the expected useful life of the asset. So for a Bus it would probably be taken to revenue over 10-15 years. The rest of your analysis would seem correct.

It would make no sense for Go-Ahead or any company to borrow as the government can borrow for cheaper as things stand.

devnull wrote: »

Because you're using such figures in your calculations to try and make a point even though you are unable to explain to me what this figures actually is that you are using in your calculations.

So two questions:
1) What is the 10% a measurement of? Is it buses, routes, drivers, what?
2) Can you explain how you arrived at the conclusion that it was 'actually less' than 10%'

If you're using figures in your calculations you should easily be able to illustrate what they are, how they have been arrived at and how you came to the conclusions that you did.

Saying it's so because someone else said it is so doesn't isn't really an answer what is essentially a maths question.

This is going around in circles and you are clearly not reading my posts but I will repeat it again here:

The NTA described these routes as the 10%. I don’t know what basis they used. Ask them if you want to know.

Well I said that the number of buses per the tender document was 88. This is obviously less then 10% of the Dublin Bus PSO Fleet.

The NTA also said that these routes accounted for 9 out of 112 million passengers on Dublin Bus which is less then 10%.

I posted all these figures and calculations already and I can’t understand why you are repeating the same questions.

GM228

This whole 10% of 2016 figures argument is completely flawed.

First of all comparing a DB 2016 figure with a GA 2019 (late 2018+) figure is a bad comparison, PSO has increased since then for 2017 and 2018 (by 13% and 11% respectively IIRC). We don't know exactly how much extra has gone to DB as the figures are not yet published. Revenue has also increased year on year and another point is a percentage of that (probably small) is from DBs commercial operations Airlink, Nitelink, GoDublin and private hire.

It is likely that had DB continued with 100% Direct Award post 2018 the figures previously quoted would be much higher.

Also to note that 10% of routes tendered does not automatically equate to 10% of costs or revenue. For all we know 10% of routes could account for say 14% of costs and only say 6% of revenue, we just don't know as that is not the way accounts are reported. The GA contract most likely includes the cost of purchasing new buses.

Also bear in mind that the 10% of routes tendered are being increased by 35% when GA take over, so if people insist on dividing the 2016 figures by 10% it would be nearer to 13.5% of whatever the current costs are. But the reality is as Devnull has pointed out that it is impossible to say weather GA were dearer or cheaper than DB until we know the DB figure.

VWD8 wrote: »

The NTA described these routes as the 10%. I don’t know what basis they used. Ask them if you want to know.

So you admit that you do not know as to what the 10% actually refers to and for 10% of what we are talking about. It isn't routes and it isn't buses because I've done the figures and neither of them come to 10% (they're more)

Well I said that the number of buses per the tender document was 88. This is obviously less then 10% of the Dublin Bus PSO Fleet.

Do you have a copy of the tender document which you refer to?

I remind you that Go-Ahead stated in a statement to the London Stock Exchange that they will be operating a fleet of 125 buses when they were announced as the winner of the contest. I doubt they misled their investors.

The NTA also said that these routes accounted for 9 out of 112 million passengers on Dublin Bus which is less then 10%.

Hang on, who mentioned passenger numbers? A moment ago you said you did not know what the 10% refered to, now you're talking about passenger numbers.being less than the 10%?

fritzelly

Can someone explain to me how this makes business sense for a business?
NTA control everything about the route - how do you make money? I always thought DB would be hemorrhaging money if not for the subsidies (not sure how it works for GA in the UK)

GM228

antoinolachtnai wrote: »

The DB thing is a palaver and not at all transparent. The grant for buses is never recognized as revenue on the P+L even though it is revenue for all intents and purposes.

This is actually pretty standard and in accordance with accounting guidelines (the Financial Reporting Councils FRS102 standard).

There are two types of grant, a Revenue Grant and a Capital Grant, buses are provided for under Capital Grants.

For Revenue based grants, these will be written off to the profit and loss account as and when the relevant expenditure has been incurred, for Capital based grants the grant will be recognised in the profit and loss account over the life of the asset to which it relates (i.e. matched with the relevant depreciation charges) which could be upto 14 years for PSO buses.

devnull wrote: »

So you admit that you do not know as to what the 10% actually refers to and for 10% of what we are talking about. It isn't routes and it isn't buses because I've done the figures and neither of them come to 10%.Bu

Do you have a copy of the tender document which you refer to?

I remind you that Go-Ahead stated in a statement to the London Stock Exchange that they will be operating a fleet of 125 buses when they were announced as the winner of the contest. I doubt they misled their investors.

Hang on, who mentioned passenger numbers? A moment ago you said you did not know what the 10% refered to, now you're talking about passenger numbers.being less than the 10%?

The only reason I mentioned figures is because you were producing figures that were showing 13% etc and I believed you were incorrect.

I don’t know how the NTA arrived at 10% as far as I can see as buses, revenue and passenger numbers are les than 10% but the NTA is a public body and I take its figures as being correct. Although it did say something a few years ago about tendering giving 30% saving and I don’t see how that’s possible now but maybe they realise that too on hindsight and I’d give them the benefit of the doubt.

The Tender document is available on etenders.

GM228 wrote: »

This is actually pretty standard and in accordance with accounting guidelines (the Financial Reporting Councils FRS102 standard).

There are two types of grant, a Revenue Grant and a Capital Grant, buses are provided for under Capital Grants.

For Revenue based grants, these will be written off to the profit and loss account as and when the relevant expenditure has been incurred, for Capital based grants the grant will be recognised in the profit and loss account over the life of the asset to which it relates (i.e. matched with the relevant depreciation charges) which could be upto 14 years for PSO buses.

100% correct, I said some of this too to the poster

GM228 wrote: »

This whole 10% of 2016 figures argument is completely flawed.

I completely agree - the only reason I used 2016 figures is that is the newest figures that are contained in Annual Reports for Dublin Bus and I try and use official figures rather than ones which I cannot confirm.

Also to note that 10% of routes tendered does not automatically equate to 10% of costs or revenue. For all we know 10% of routes could account for say 14% of costs and only say 6% of revenue, we just don't know as that is not the way accounts are reported.

That is essentially what I was trying to say, the 10% of routes are not a typical random bunch that represents Dublin Bus as a whole. They are a totally different kind of route to what Dublin Bus is keeping so could have different revenue and cost profiles. They are not a reflective sample as DB as a whole.

Also bear in mind that the 10% of routes tendered are being increased by 35% when GA take over, so if people insist on dividing the 2016 figures by 10% it would be nearer to 13.5% of whatever the current costs are.

That's my point, it's not 10% of the current routes, however that 10% figure was arrived at and whatever it's 10% of, it's the 10% plus the 35% increases which is 13.5% or so as you have pointed out.

The trouble is we don't have up to the minute costs for Dublin Bus and without that we cannot really come to a definitive conclusion of how expensive/cheap someone is comparatively unless we see both bids that were made at the same time.

VWD8 wrote: »

The only reason I mentioned figures is because you were producing figures that were showing 13% etc and I believed you were incorrect.

So you introduced figures into a discussion that you were not sure of the validity of, or how they were arrived at to try and counter my points that you did not agree with? Fair enough.

I don’t know how the NTA arrived at 10% as far as I can see as buses, revenue and passenger numbers are les than 10% but the NTA is a public body and I take its figures as being correct.

We can't verify the figures either way if we don't know as to what the 10% refers. A term like 10% is meaningless if we don't know as to what it's 10% of, until we do we can't really come to any solid conclusion.

As I've said before 125 buses is more than 10% of the fleet of Dublin Bus and I've shown you the arithmetic to back that up and pointed out that GA said to the London Stock Exchange that they won a contract for 125 buses. If you don't agree with me you don't have to but I personally doubt they lied to their investors.

GM228

devnull wrote: »

Are they being purchased directly by the NTA or is there a grant that is going to the operator from the NTA who in turn then buys them? Always found it a complicated set-up with DB.

The norm is the operator receive the grant and then purchase* and register the bus.

*The NTA however issue the actual tender in their name for supply to the operator.

end of the road

fritzelly wrote: »

Can someone explain to me how this makes business sense for a business?
NTA control everything about the route - how do you make money? I always thought DB would be hemorrhaging money if not for the subsidies (not sure how it works for GA in the UK)

basically the NTA will pay a fee to the operator to operate the routes. go ahead will get a fixed fee, i'd imagine that includes the costs of running the service + some profit on top. in the uk, go ahead will operate tendered routes and will operate some commercial routes of their own as well.

fritzelly

end of the road wrote: »

basically the NTA will pay a fee to the operator to operate the routes. go ahead will get a fixed fee, i'd imagine that includes the costs of running the service + some profit on top. in the uk, go ahead will operate tendered routes and will operate some commercial routes of their own as well.

So if I get this right - some company (in this case GA) gets paid to operate some routes and the NTA pay them (with a bit of profit to make it worthwhile) whilst the NTA get all the fares and I assume any subsidies from said routes and should it not be profitable anymore for the NTA they could just cancel/rearrange the routes?
Is there not something inherently illegal about this?
I don't get why some national body has such control over who can run bus routes in the country whilst making money from it - does this not come under cartel laws?

Cookie_Monster

fritzelly wrote: »

I don't get why some national body has such control over who can run bus routes in the country whilst making money from it - does this not come under cartel laws?

how else do you manage it, it'd be a free for all without regulatory oversight and a single state company just leads to the likes of DB.

NTA set the routes and service requirements and franchise out bundles of routes via tendering. A set amount is paid for this service. Whether a company can meet all the requirements and remain profitable is their concern only, if they feel ultimately they can't then they won't re-apply in the next 5 or 7 or 10 years or however long the contract lasts for.

Cartells are individual companies operating together to defraud customers somehow, usually price fixing, how is a regulatory oversight body issuing contracts for a service a cartel in any way, shape of form?

VWD8 wrote: »

Grants for assets are amortized over the expected useful life of the asset. So for a Bus it would probably be taken to revenue over 10-15 years. The rest of your analysis would seem correct.

It would make no sense for Go-Ahead or any company to borrow as the government can borrow for cheaper as things stand.

The problem I see is that DB grants for buses (capital grants) are not accounted for as revenue of the company. They are revenue and should be recognized as such. This causes great confusion (including on this thread).

The government can borrow cheaply but it is limited in the amount it can borrow. Keeping the borrowing for buses off the government balance sheet increases the amount the government can borrow for other projects.

Bray Head

A thought experiment

Suppose government revenue is €50bn.
Say the government spends €51 billion in a year, of which €1bn is a capital grant to Dublin Bus to purchase buses.
The deficit for the government, is €1bn, which has to be borrowed and increases the national debt. There would be no borrowing if there had been no capital grants to Dublin Bus to purchase buses.

The spending for buses is very much on the government's balance sheet.