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Old 11th February 2017, 17:18   #1
robertclark125
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Default Crisis at Bus Eireann

The latest issue of Buses magazine has popped through my door, and it mentions a possible crisis at Bus Eireann. Trade unions are considering an indefinite strike, over plans to make cuts in various areas, most notably the Expressway network.

The acting chief executive has warned the company could face insolvency within 18 months, having made a loss of 5.1million last year. One key aspect of the problems is that the expressway network now faces competition, since the long distance market was opened up to competition; Citylink and Aircoach are the main rivals now.

The strike is scheduled to begin on 20th February, and unions have threatened to extend it to fellow CIE group companies Dublin Bus and Irish Rail.

Just how sustainable is the expressway network, and indeed, just how sustainable is Bus Eireann? Also, What implications could the planned cuts have on both Bus Eireann and Dublin Bus?
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Old 11th February 2017, 17:43   #2
radamfi
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It sounds like privatisation and tendering of bus routes like in London and in several other parts of Europe is badly needed in Ireland.
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Old 12th February 2017, 11:56   #3
daikilo
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Originally Posted by radamfi View Post
It sounds like privatisation and tendering of bus routes like in London and in several other parts of Europe is badly needed in Ireland.
I don't understand your logic as the union is considering strike axtion because of the competition with Expressway, which by the way, under European law, cannot be franchised, it must be open access.
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Old 12th February 2017, 13:34   #4
radamfi
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I don't understand your logic as the union is considering strike axtion because of the competition with Expressway, which by the way, under European law, cannot be franchised, it must be open access.
Strike action is probably inevitable now anyway. CIE is obviously highly inefficient so privatisation is needed to cut costs. If private companies are doing a good job on main long distance routes and Expressway can't compete, perhaps they should stop running on those routes or at least subcontract.

London/Copenhagen style route by route tendering looks sensible for Dublin and perhaps we can have Dutch style area wide tendering for the countryside.

Last edited by radamfi; 12th February 2017 at 13:39.
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Old 12th February 2017, 13:57   #5
robertclark125
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Could one solution be to spin off Expressway as a separate company within CIE? This would allow Expressway to work as a network, but contract out the work to private firms, in the same way National Express works. Bus Eireann would then concentrate on city and country local bus services.
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Old 12th February 2017, 14:52   #6
Robertj21a
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I always love the way in which the staff in a troubled operation decide to take strike action - nothing like helping to kill it off even quicker !

In my view, a total rethink of all the Irish operations is long overdue.
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Old 12th February 2017, 17:37   #7
F Great Eastern
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Expressway is a fully commercial, self funded arm, it is considered as a "Commercial Operator" in the eyes of the law and has to adhere to the same licensing rules as any other commercial operator, in a regulated commercial market therefore they get the same treatment as any other commercial operator, they do not have any preferential treatment.

Essentially in Ireland the regulation on the commercial market is two operators on any particular route/service, which must be at least 15 minutes apart from the competition and must not conflict with any service which is in receipt of direct government subsidy (PSO services) and must not run from the same origin or destination bus stops as the competition.

The First two to apply for a service get licenses after that no licenses are issued for a route until someone else vacates them. This is to stop predatory timetabled services or people piggy backing on others investment which was a long held fear, that some operator could spend millions developing a service, only for another operator to run an identical service having allowed someone else to 'test the market'.

The problem with BE in particular is that the Expressway network for a long time has not been commercially focused. They have tried to appease local interest groups, politicians, protest groups, residents associations and everyone who has a moan every time they propose service changes. The end result is BE have been very loathe to do anything which may seem to harm the Expressway name, even if this means running services in a way that give less than the best financial results.

They just were not ruthless enough in other words. Any time they were faced with criticism with groups such as the above they backed down. Ultimately they tried to **** nobody off, but by trying to cater for almost every single person on every corridor, they've seen a large number of customers defect to other operators who give them more direct services.

The unions argument is that the government should never have allowed private operators to compete with BE, and that they have "saturated the market." and have "locked BE out of corridors." but they haven't - BE simply were not one of the first two applicants to apply for routes on many services, therefore they were locked out, just the same as privates are locked out of routes where BE and another operator own a license.

The other argument is that BE is forced to run services into small Towns on it's expressway services that privates are not interested in - also not true. They must adhere to the same rule as privates, the difference is when a petition is signed or a local politician makes a big song and dance about a BE route being culled, BE cave in. If a private have a petition or local pressure from a petition they just ignore it and get on with it. BE management are not used to making ruthless business decisions, and it badly shows here.

Expressway, has not and never was run in a commercially sustainable manner and what with the much higher costs in BE compared to the rest of the market, and the irresponsible management in the company who continue to spend vast amounts of money on vehicles and marketing campaigns and very little on service development, are sleepwalking into a death spiral. I wouldn't necessary blame the unions for everything here, management have to take their blame as well.

But the simple fact is BE were caught asleep at the wheel, not developing services enough, trying to not offend anyone, when their competitors were more ruthless in their execution of commercial routes, giving the vast majority of customers what they wanted even if that meant leaving a very small number of customers in the lurch, with a far lower cost base and flexible workforce.

The Regulator issued a statement saying much the same:
https://www.nationaltransport.ie/new...l-communities/

Last edited by F Great Eastern; 12th February 2017 at 17:49.
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Old 12th February 2017, 17:51   #8
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At the moment BE staff are looking for a 20% pay rise as well.

Quote:
Originally Posted by radamfi View Post
London/Copenhagen style route by route tendering looks sensible for Dublin and perhaps we can have Dutch style area wide tendering for the countryside.
This is what is planned however the unions are trying to prevent it.

Last edited by F Great Eastern; 12th February 2017 at 17:53.
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Old 12th February 2017, 19:17   #9
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I know that there's only circa 2 million people outside Dublin, but nevertheless, is Bus Eireann too big? Could it be that Bus Eireann becomes just the operator of expressway, with the local, city outside Dublin, and country bus routes being handed over to new regional companies within CIE?
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Old 12th February 2017, 20:01   #10
F Great Eastern
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Originally Posted by robertclark125 View Post
I know that there's only circa 2 million people outside Dublin, but nevertheless, is Bus Eireann too big? Could it be that Bus Eireann becomes just the operator of expressway, with the local, city outside Dublin, and country bus routes being handed over to new regional companies within CIE?
The local and city services do not lose money as their losses are subsidized by the state and this year they expended such services and were given increased PSO. All of such services are protected from competition. No commercial service may run in direct competition with a PSO funded route. For these routes they have buses paid for by the Government.

All inner city and local services are subsidized. According to Bus Eireann and Dublin Bus there is not a route within any city that makes money, so all are deemed as being socially necessary but unviable so every route requires taxpayer support. The only exceptions are city tour and airport services which are pretty much all commercial so commercial rules apply.

The problem is the cost of employment in BE is far higher than other companies, this isn't such a problem on PSO services because there is no competition (which is why the regulator wants to bring in tendering) but in the commercial marketplace this is really where they are coming undone. The average pay in BE is much higher because of the way bonuses and perks are paid and other allowances.

See:
http://www.irishtimes.com/business/t...eann-1.2802281

For example overtime is where a lot of drivers make up their money. There is such a thing as "scheduled overtime." which is essentially means that all drivers are contracted for say 7.5 hours a day, even though many of them may spend every working day for a full year working 8.5 hours a day. The 1 hour is counted as overtime every day they work which attracts very good rates. In a private company the staff would be offered a contract for 8.5 hours a day at normal rate,

But in BE the drivers as a bargaining force would rather be contracted for less hours, in the knowledge that they would be needed for more hours, so the additional hours they work could be counted as overtime, therefore increasing their earnings. This is why you see the unions arguing that cuts to non core pay and overtime will effect their members take home pay so much, essentially all these extras are of a huge increase to the cost base because they have been structured in a way that are currently in favour of max benefit employee rather than a viable way for the employer.

Expressway is the very route of the problem in BE and it's pretty much an ongoing battle between the unions, the regulator, management and the public over who really runs the transport sector in Ireland, the end game for the unions according to what they have been saying in the media is for private operators to be withdrawn from several key corridors and licenses to be handed to BE.

The reason a regulator of the sector was formed in recent years and has been given even sharper teeth is because it was widely believed that all the subdivisions of CIE and general public transport as a whole were running things in their own interests and there was no one speaking up for the majority of users.

The regulator has tried to work on integrating transport and bringing everything together in a proper system, London style where a TFL style organisation is the overarching authority for transport in Ireland however they have felt considerable resistance from the CIE companies and unions who many believe have no interest in an overall public transport industry, merely just looking after themselves.

The issue is though when unions have so much power over a company and in turn that company has so much power over transport in the country where they can bring transport to a complete halt, it's very difficult to force through any real change and what the union are counting on in this dispute appears to be that an all out strike will cause so much chaos that a minority government will change the rules in order to save their own skins.

Last edited by F Great Eastern; 12th February 2017 at 20:04.
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Old 12th February 2017, 20:39   #11
robertclark125
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I maybe didn't make it clear in my previous post what I was suggesting; that CIE adopts an NBC style set up, with Bus eireann the long distance operator, which contracts out the work to firms, and the subsidised regional bus services that BE currently operates, being taken on by new regional companies, e.g west Ireland buses, Cork bus etc. These firms would remain owned by CIE, and would operate semi independently of each other, like how NBC firms used to operate.

But from reading what F Great Eastern has said, one massive issue has to be the fact that Expressway journeys are serving all sorts of places en route, when a local service, acting as a feeder into the expressway network, doing two jobs in one, would be a more efficient use of resources.

As an indication of some of the difficulties facing Expressway, a friend of mine visiting Ireland a few weeks ago, told me he and his wife were two of just three passengers for most of an expressway journey from Dublin, to Galway.
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Old 12th February 2017, 21:01   #12
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he told me he and his wife were two of just three passengers for most of an expressway journey from Dublin, to Galway.
Any reason why he chose the Expressway service rather than a private operator?
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Old 12th February 2017, 21:25   #13
robertclark125
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He didn't book the tickets, it was his wife who done that. Must've done a web search, and expressway was the first to come out on the search?
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Old 12th February 2017, 21:46   #14
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Quote:
Originally Posted by robertclark125 View Post
But from reading what F Great Eastern has said, one massive issue has to be the fact that Expressway journeys are serving all sorts of places en route, when a local service, acting as a feeder into the expressway network, doing two jobs in one, would be a more efficient use of resources.
The problem is in most avenue that option is no longer open to them because they were slow off the starting blocks and more proactive operators have beat them to it, which has meant they are left with the choices of pretty much running the route as is or nothing on some corridors because of their own lack of service development in the past.

Express commercial services and multistop commercial services are considered as different routes, so for example on Dublin to Cork, there would be two licenses allowed for non stop and two licenses for multi-stop services, all are operate on a first come first served basis and once the two slots are gone no more services will be permitted.

Dublin to Cork is a good example to use here.

At one point there were two multi-stop operators for Dublin to Cork, First Aircoach, operating eight times daily and Bus Eireann operating six times daily in each direction. Because of this nobody else could operate services on such route because of the fact that both licenses were taken up, however operators were free to apply for express versions of this route, but nobody chose to do so.

In late 2011, Aircoach applied for Dublin to Cork non stop operating 17 times per day and were granted a license, and in early 2012, Gobus also applied for a license and were granted one. This meant that both available express licenses were taken and BE were locked out of being able to get their own license for this corridor, and were left with a stopping service previously contained a mixture of end to end customers and those from intermediate Towns, which lost pretty much all of it's end to end customers.

Some months later, Aircoach relinquished their multi-stop licenses, feeling there was far more value in just operating a non stop service, freeing a multi-stop license up, which Dublin Coach later took themselves, serving a different route via different towns/cities between Dublin and Cork than the multi-stop service which was offered by Bus Eireann.

The end result is that BE are left with a service that can no longer attract customers between Dublin and Cork, who have a better, faster and more regular service available to them, and are solely dependent on traffic to/from the intermediate Towns which is not enough for the service to break even. In a lot of cases BE want to cut services like these back to make them more financially viable, however the unions are resistant to this since it will cost jobs.

The problem is that BE in a lot of cases, have gone from being first in a lot of corridors to being third, because other operators have got in non stop or express licenses before BE, and by the time BE applies for a license it is too late since the licenses are already gone. They then lose customers to the new express operators, which has a serious impact on the services viability, but they are unable to restructure the services by reducing frequency as the union will not tolerate any job losses under any circumstances.

Even on the few services where they DO have a good position license wise and have been pro-active in developing their services they are also losing the battle (by a smaller margin) because their salaries are approx 25% higher than the competition so the privates are able to undercut them by a few euro per trip, and again the unions will not tolerate a pay cut or any reduction in terms and conditions of their workers.

Basically there is no one party totally to blame here, it is management who have not developed services at the pace required in the fear of upsetting someone, which has seen more commercially savvy operators spot a niche and exploit this whilst BE are sitting back on their heels, whilst at the same time when that has happened, management have not been able to cut the services back or adjust costs to the new operating environment, through fear of strikes from the union every time service cuts or pay reductions are mentioned.

There has even been some suggestions from unions that Expressway should be granted special dispensation to run services on all routes where they currently don't have one of the two licenses and the company should be given special status, however that will almost certainly result in a legal challenge from the privates, since it is essentially akin to allowing full deregulation for BE services but requiring regulation on private services, which would discourage in any investment from the private sector.
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Old 12th February 2017, 21:58   #15
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He didn't book the tickets, it was his wife who done that. Must've done a web search, and expressway was the first to come out on the search?
There are a lot of people who believe that BE are the only operator a lot of this is to do with various reasons, such as the generic branding, the many millions BE spend on advertising each year when privates rely on word of mouth mostly and most people believe that Expressway means express, but a lot of Expressway services are the slowest of any operator on their corridor.

There is also the generic branding that exists throughout Ireland promoting that theory, for example CIE run a ticket desk at Dublin Airport saying "All Travel Information." when in fact it is a commercial sales desk for the CIE group who will quite happily send you on a long trek through the city with multiple changes or a very indirect route as long as it's with their services rather than the competition.

You also have the fact that the privates are not allowed to use state funded Bus Stations within the country unless they build their own and the fact that generally the CIE operators will object to any integration literature or mapping services in places like airports by the regulator that mentions any private operator.
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