[PaulLothian]

First Scotland East has announced its intention to withdraw routes in East Lothian and northeast Midlothian, leaving several communities without bus links. A rescue package is being considered - http://www.scotsman.com/news/council...utes-1-2214145

Lothian Buses could see opportunities...

[sonic2009]

I don't have a major knowledge of the Scottish Bus network but i'm sure another operator will come in a take over the old First routes.

[Schnellzug]

i wouldn't be surprised if this followed North Devon in the whole thing being sold off before long.

[Greenback]

First Bus seem to be contracting at the moment My own view, based on a chat I had a while back with an insider, is that the decision to withdraw routes does not mean that they are unprofitable, it may only mean that are insufficiently profitable to maintain share prices.

First will seek to maintain and improve the share price. The price is dependent on financial results which are revelaed at various time sduring the year. Should profits be slightly lower then expected, then in order for investor confidence to remain high, the company needs to be seen to be taking action to address this.

One of the ways they can do this is to pull out from any routes that do not provide a certain percentage of return on capital. my contact declared this to be 8%, but did not know whether this was merely a local figure or one that applied nationally, However, I am convinced that the principle is correct whatebver the actual % amount might be.

Another bus operator, perhaps one that is not constarined by the same external pressures as a company on the stock market, may well be happy with a route that is profitable with a 3 or 4% return on investment. On the othe rhand, if the routes are not making any money it's difficult to see how any other company will step in on a commercial basis.

Isn't it great having transport that is subject to the whims of market forces!

[Schnellzug]

I notice that according to the First Bus Company,
First Bus, Britain’s leading bus operator, has appointed a new Regional Commercial Director for its Scottish operations. Kevin Belfield will join the company at the end of April from Midlands based, The Wellglade Group.
http://www.firstgroup.com/ukbus/latest_news/?id=008221
Maybe they've been taking a look and tidying up before he starts in the job.

[bluenoxid]

Originally Posted by Greenback

Another bus operator, perhaps one that is not constarined by the same external pressures as a company on the stock market, may well be happy with a route that is profitable with a 3 or 4% return on investment. On the othe rhand, if the routes are not making any money it's difficult to see how any other company will step in on a commercial basis.

Isn't it great having transport that is subject to the whims of market forces!

Sorry, just going to be a bit pedantic here

Any route makes money as soon as a passenger gets on board. It is just that some routes can be operated slightly differently (older buses, cheaper workforce, small diversions) that can increase that to above a point that makes it feasible. In addition, it is not just the actual service but the services that a route connects into. If you lose the schools contract, the 0930 to 1430 bus you run between to make best use of resources can prove crippling.

[tbtc]

Originally Posted by Greenback

the decision to withdraw routes does not mean that they are unprofitable, it may only mean that are insufficiently profitable to maintain share prices

That's the problem.

First have a pretty high profit margin (partly due to the need to keep feeding money to shareholders to keep their investment), meaning they have had to pull a number of routes that were previously profitable for the operator that they took over.

Odd that they are going for a scorched earth policy in East Lothian/ Midlothian rather than trying to flog it to *anyone*, but I guess the market isn't there for anyone to just jump in and take over.

Good news for Lothian Buses, and their superior product, who cover almost all of the busier routes that are being withdrawn, but it does make me wonder what other areas of First will get the chop (if ten minute urban services like the 44 and 86 aren't doing well enough then what chance some of the rural operations?)

[Greenback]

Originally Posted by bluenoxid

Sorry, just going to be a bit pedantic here

Any route makes money as soon as a passenger gets on board. It is just that some routes can be operated slightly differently (older buses, cheaper workforce, small diversions) that can increase that to above a point that makes it feasible. In addition, it is not just the actual service but the services that a route connects into. If you lose the schools contract, the 0930 to 1430 bus you run between to make best use of resources can prove crippling.

Perhaps I should have used the term making a profit instead of making any money! I'm sure everyone knows that any company will need to cover its costs to make running a route worthwhile without any subsidy.

The main point with First is that the bean counters will prefer to move their assets around to more profitable routes/areas or sell them off rather than see their proft margins fall.

Originally Posted by tbtc

That's the problem.

First have a pretty high profit margin (partly due to the need to keep feeding money to shareholders to keep their investment), meaning they have had to pull a number of routes that were previously profitable for the operator that they took over.

Odd that they are going for a scorched earth policy in East Lothian/ Midlothian rather than trying to flog it to *anyone*, but I guess the market isn't there for anyone to just jump in and take over.

Good news for Lothian Buses, and their superior product, who cover almost all of the busier routes that are being withdrawn, but it does make me wonder what other areas of First will get the chop (if ten minute urban services like the 44 and 86 aren't doing well enough then what chance some of the rural operations?)

First Cymru has certainly seen some retrenchment in the last couple of years, which was one of the things that led to the conversation I referred to earlier. South Wales Transport (Neath) and some small West Wales operators have stepped in or taken over in some places, presumably because they are happier than First with smaller profit margins.

I'm not sure, but the profits on some rural routes may actually be better than urban ones. The fares may be higher, and operating costs actually lower in terms of fuel consumption and wear and tear due to the different driving conditions. Loading smay also be better if the bus is the only real public transport available, as opposed to urban areas where there may be competition from other routes, companies and taxis.

[anthony263]

Originally Posted by Greenback

Perhaps I should have used the term making a profit instead of making any money! I'm sure everyone knows that any company will need to cover its costs to make running a route worthwhile without any subsidy.

The main point with First is that the bean counters will prefer to move their assets around to more profitable routes/areas or sell them off rather than see their proft margins fall.



First Cymru has certainly seen some retrenchment in the last couple of years, which was one of the things that led to the conversation I referred to earlier. South Wales Transport (Neath) and some small West Wales operators have stepped in or taken over in some places, presumably because they are happier than First with smaller profit margins.

I'm not sure, but the profits on some rural routes may actually be better than urban ones. The fares may be higher, and operating costs actually lower in terms of fuel consumption and wear and tear due to the different driving conditions. Loading smay also be better if the bus is the only real public transport available, as opposed to urban areas where there may be competition from other routes, companies and taxis.

Yes you are correct Greenback and a certain other major group is casting its eyes towards Swansea and West Wales.

SWT too be honest have done very well in Neath especially with First reducing frequencies (The Neath - Cimla route is one such corridor where SWT have pulled off a upset against First which not many were expecting.)

Select Coaches are another operator who are due to launch a few new routes later this month and First have withdrawn their local bus routes operated out of the cardiff depot although I have wondered if they could have used a bus to extend the Bristol - Newport route to Cardiff however I doubt that would be profitable now.

I am waiting til this summer where Powys council have a few tenders for some major routes up for grabs the X63 Swansea - Brecon service being an example.

[317 forever]

Add to this, and First have announced that they are looking to divest around 10% of their portfolio. So, London Northumberland Park and Devon & Cornwall Barnstaple are evidently the thin end of the wedge.

http://www.scotsman.com/the-scotsman...ezed-1-2204595

[Schnellzug]

I do wonder if that might include the local branch around this way, which is completely isolated from the main part of Hampshire & Dorset. It would be nice to think that it might be sold to Stagecoach, although the other contender might be Go Ahead, which might be less desirable. Still, it's all hypothetical anyway.

[Polarbear]

I would like to see First divest themselves of their operations in & around Chester. I'm sure some agreement could be reached with Arriva to take over these operations.

[Blindtraveler]

much as this is sad news for the staff affected one of who I know well and also for the pax in areas now being cut off. On the other hand First have done many in this area a diservice for years and to have rid of them in some places may be a blessing.

Lothian could I think take over the gaps in the 44 including to Pencatland and Haddington and although they dont like Circles could easily run the 15 and 15a as circles extending from the QMU Campus to white craig, Dalkeith and on to Penicuik to join existing route.

As for the new ELT, a similas example D and G buses exists care of Dumfries and Galloway council so hope they learn from them. Its still a tall order though to get the company up and running before June. Wonder what they wil do vehicle wise?

[bluenoxid]

Originally Posted by Blindtraveler

much as this is sad news for the staff affected one of who I know well and also for the pax in areas now being cut off. On the other hand First have done many in this area a diservice for years and to have rid of them in some places may be a blessing.

Lothian could I think take over the gaps in the 44 including to Pencatland and Haddington and although they dont like Circles could easily run the 15 and 15a as circles extending from the QMU Campus to white craig, Dalkeith and on to Penicuik to join existing route.

As for the new ELT, a similas example D and G buses exists care of Dumfries and Galloway council so hope they learn from them. Its still a tall order though to get the company up and running before June. Wonder what they wil do vehicle wise?

How quick could they spin up a leasing deal? I assume that with a bit of poaching of managers and open advertising, they could get drivers. Just a depot to consider.

[Schnellzug]

I would imagine that someone taking over from an existing operator would have no trouble signing up enough drivers from the current operator; i wouldn't expect that having just had the rug pulled from under their feet, they'd harbour too many feelings of loyalty to the First Bus. Likewise, I expect that they could lease enough reasonably modern vehicles (albeit almost certainly Solos, I expect ) virtually overnight.