Great Western Coffee Shop

Chief executive Tim O’Toole says profit margins at some of the group’s regional bus operations ‘are simply unsustainable’ and action is required. UK Bus operating profit margins have fallen to 3.2%

 FirstGroup has instructed all its UK bus businesses to draw up and accelerate plans to cut costs and revise timetables in a bid to counter the division’s rock bottom profitability. Changes will include service cuts in loss-making and low profit areas so that buses can be reallocated to create higher frequency core corridors.

In a briefing to City analysts, chief executive Tim O’Toole said low profit margins at some regional bus operations “are simply unsustainable and it’s about making changes”.

Group finance director Matthew Gregory also warned that further closures and sales would be considered. “We are not ruling anything out, frankly,” he said in response to questions from City analysts on whether First’s plans involve selling businesses as well as changes to services.

The announcements came as First reported in its half year results that worsening traffic congestion and consumers’ ongoing shift to shopping on line rather than travelling to high streets was continuing to hit bus revenue and patronage.

Like-for-like UK bus revenue fell 1.3% to £426.1m in the six months to October, operating profit fell from £15.3m to £13.5m and the profit margin fell further from 3.5% to 3.2%.

In considering the future shape of the UK bus division, O’Toole said he would balance the long term benefits of turning round a larger business against “changing the portfolio to achieve a healthier overall business sooner because we do not expect conditions to change in the medium term”.

Each UK bus company and region will be subject to a detailed assessment of future opportunities which will include the potential to create higher profits through reallocating buses, the potential to supplement earnings with major contract services and local authorities’ willingness to put congestion-busting measure in place.

Simple mileage cuts have been ruled out. “The trick is to refocus and rededicate the mileage in those corridors where you’ve got the [customer] volumes that will sustain it over time and you can have a frequent, successful network,” O’Toole explained.

Spelling out a warning to local authorities that they need to take action on traffic congestion, O’Toole said First could not tolerate ongoing increased costs from having to put extra buses on its routes simply to maintain frequencies and reliability.

Across the group, First said declining performance in its UK bus and rail businesses had been compensated for by improved results in North America, particularly at the school bus business. Overall, group half year revenue increased from £2.44bn to £2.56bn. Operating profit rose from £88.4m to £89m.

From Passenger Transport (http://www.passengertransport.co.uk/2016/11/nothing-ruled-out-as-firsts-bus-profits-slide/)

And, just for the record, my employer's grocery home delivery service is free (minimum £60 spend).

I'm happy to have given you that opportunity to expound further, grahame.  ;) :D ;D

The advent of new technologies being developed by Uber, and others, allows the exciting prospect of dynamic flexible bus routes to be created.

For example on your bus app, request a bus from one stop to another, and a return, and the app will then collate other bus requests to create routes that match demand.

Whilst it sounds simple, people will effectively prepay for a bus ticket and will have to be at a bus  stop at a scheduled time.

The main benefit of this is that routes will be created to reflect demand.

...says Mr Lanning, who adds that First has told Unite that the Hampshire and Dorset business is in “dire financial straits.”

If First Bus want to make more money, provide more routes, more frequent services and bus hubs where people can change buses without waiting for 30 minutes for the next one.

Which will encourage even more free pass holders to use them - and we all know that bus companies aren't properly reimbursed for each journey.

This needs to be looked at, I think fares in general have got to the point where a large proportion of the journeys are effectively being subsidised by people who can ill afford it. There needs to be a balance struck, but IMO the viability of routes is potentially being distorted by this system which is paying a nominal value for the journey.

It is also a question of fairness, some of the journeys are obviously longer distance discretionary ones. I have suggested getting the train to ENCTS passholders in the past, but they would much rather have a free journey above all else.

A 10 mile journey where I lived in Redruth was £7.50 for a return ticket. Yet I could and did get the Megabus to London for £10 return on several occasions. How is Megabus making such good profits on long distance travel for so little, yet the local bus companies cant?

This needs to be looked at, I think fares in general have got to the point where a large proportion of the journeys are effectively being subsidised by people who can ill afford it. There needs to be a balance struck, but IMO the viability of routes is potentially being distorted by this system which is paying a nominal value for the journey.

It is also a question of fairness, some of the journeys are obviously longer distance discretionary ones. I have suggested getting the train to ENCTS passholders in the past, but they would much rather have a free journey above all else.

I think it's because everyone pays the £10 on Megabus but probably less than a third of passengers on the local bus pay the full fare.

As I said. Legislation requires 'no better or worse off'. If councils aren't reimbursing operators to that end then surely the operators would be very vocal.

Some of them are vocal behind the scenes ... but where your income on a supported service comes from the local council in a subsidy contract first, ENCTS reimbursement second, and farebox third it's a very brave or foolish operator who risks his contract by bad-mouthing the council in public.

"No better, no worse" is a jungle to work out ...

26 appeals were lodged in 2010/11; nine of these were subsequently withdrawn and the remaining 17 have now been determined and issued.

Interesting that they're saying changes in shopping patterns are affecting their revenue. It's not an effect I would have thought of, though I suppose it's quite an obvious one – maybe it didn't occur to me because living in the centre of a city (and having other modes of transport available and being fittish and youngish enough to use them, as well as having time and money for them) I would never take a bus to go shopping anyway; the internet shopping I have delivered replaces either a short walk or bike ride or a long train journey or is something I would simply not have bought otherwise.

As I said. Legislation requires 'no better or worse off'. If councils aren't reimbursing operators to that end then surely the operators would be very vocal.

May I offer an example here of Mrs A, who actually lives in Wrington, North Somerset?  ;)

Mrs A has mobility issues, but still uses the local community bus (which is run by a charity) to travel to Nailsea and back with her companion, once a week.  They don't use the First Bus service, because that only goes from Wrington into Bristol and back.

As she is unable to carry anything on her mobility frame, Mrs A does her actual shopping online, and I then deliver it to her - that is when I tend to meet the fairly lightly loaded First Bus in a country lane ...  ::)

My point is, rural bus services generally don't meet the requirements of many (particularly elderly) residents in such relatively isolated rural communities - so those buses are not used, and the whole service is then vulnerable to being withdrawn altogether as it becomes unviable.

 ???

Thing is, why do they put on such inappropriate services? Wouldn't it perhaps be better to start with some research, asking people in the villages where and when they want to travel, then put together a service to meet that need? Inevitably it would be a compromise between conflicting demands but as it is there seems to very little if any consideration of where and when people want to travel.

Oddly, putting "option 24/7" into a search engine, I get prompted "option 24/7 ibadan". I wouldn't have thought there was much demand for buses from Wiltshire to Nigeria!