First Group: General Discussion

[TheGrandWazoo]

Interesting similarity between the strategies on the two groups with happenings in Southampton. Whenever First give up a route in Southampton, GA take it up (seemingly regardless of loadings and hence profitability); seems like this is happening in Clacton too. GA are into volume; First seem to want each route to at least wash its face.

Which strategy is correct? Only time will tell but FWIW, the First approach seems much closer to Stagecoach than GA going for volume and hence spreading overheads (only works if the new route is at least break even on a marginal cost basis.

There’s probably work for one depot in Clacton but not two. Especially with Colchester now having spare capacity!

 

[overthewater]

Really?

What’s making you think that someone else is going to come in where Apollo feared to tread?

Simple, because and this was before the other news come out two bid had appeared, If one P.E was able to see something then surely the other could also see it as well. IF there's money to be made you dont hold back.

 

[TheGrandWazoo]

Simple, because and this was before the other news come out two bid had appeared, If one P.E was able to see something then surely the other could also see it as well. IF there's money to be made you dont hold back.

Conversely, Apollo didn’t feel suitably emboldened to table a full bid so perhaps it felt that aside from a highly conditional opportunistic offer didn’t realise value?

 

[overthewater]

Conversely, Apollo didn’t feel suitably emboldened to table a full bid so perhaps it felt that aside from a highly conditional opportunistic offer didn’t realise value?

It depends on a number factors surly?

* Can they asset strip the company quickly of the part it doesn't want?
* Does it bolt on to its current operations and assets?
* If there able to deal with the increase levels of debt?

Just because Apollo can't doesn't mean some other P.E Can't?

 

[Cesarcollie]

Interesting similarity between the strategies on the two groups with happenings in Southampton. Whenever First give up a route in Southampton, GA take it up (seemingly regardless of loadings and hence profitability); seems like this is happening in Clacton too. GA are into volume; First seem to want each route to at least wash its face.

Which strategy is correct? Only time will tell but FWIW, the First approach seems much closer to Stagecoach than GA going for volume and hence spreading overheads (only works if the new route is at least break even on a marginal cost basis.

An interesting strategy - Go South Coast is a successful and profitable business with a modern fleet which can 'absorb' the costs of loss-making competition to a degree. Hedingham is however a basket-case with the newest vehicle being circa 8 years old (and most much older), and remains heavily loss-making. It is surprising in many ways that the group appears to be prepared to accept the continual drain in group profits from Hedingham/Chambers which has amounted to many millions since their acquisition. Anglian Bus was eventually closed, and one can't help but think that eventually the Go Ahead Essex operations will eventually go the same way.

 

[TheGrandWazoo]

It depends on a number factors surly?

* Can they asset strip the company quickly of the part it doesn't want?
* Does it bolt on to its current operations and assets?
* If there able to deal with the increase levels of debt?

Just because Apollo can't doesn't mean some other P.E Can't?

Would a PE have complimentary operations? Surely all the other points are equally applicable and they did raise $24bn last year so the funds are there but perhaps not the value without the conditions.

 

[smtglasgow]

Just back from a few days down at Manchester Uni, so saw a lot of the buses on Oxford Road. Which got me thinking: why are First running from Rusholme? I know *why* they’re running (ie. they bought out EYMS), but what is unique about First’s offering and how do they intend to make money on such a busy corridor with low fares and a strong competitor? Am I missing something? Seemed like a lot of modern stock running around with poor loads.

Elsewhere, it’s not clear where they’re going wrong. Most of other city centre routes seemed busy. The Vantage services are doing very well – every bus I saw in the evening peak was rammed. The fleet looks middle-aged, but, from a Glaswegian perspective, I’m used to seeing 17 year old Tridents on prime cross-city routes, so things didn’t look dire. Presumably the real problems lie further out in the more depressed towns on the fringes of GM? Is there any word yet on when franchising might begin?

 

[Baxenden Bank]

Interesting similarity between the strategies on the two groups with happenings in Southampton. Whenever First give up a route in Southampton, GA take it up (seemingly regardless of loadings and hence profitability); seems like this is happening in Clacton too. GA are into volume; First seem to want each route to at least wash its face.

£35 per hour expected locally.

 

[Baxenden Bank]

Elsewhere, it’s not clear where they’re going wrong. Most of other city centre routes seemed busy. The Vantage services are doing very well – every bus I saw in the evening peak was rammed. The fleet looks middle-aged, but, from a Glaswegian perspective, I’m used to seeing 17 year old Tridents on prime cross-city routes, so things didn’t look dire. Presumably the real problems lie further out in the more depressed towns on the fringes of GM? Is there any word yet on when franchising might begin?

And a rammed bus is precisely the problem. An unwillingness to invest / expand where there is clear demand. Speculate and accumulate or suck that golden goose dry. How many BMW's (other executive cars are available) carry standing passengers?

 

[Dentonian]

Presumably the real problems lie further out in the more depressed towns on the fringes of GM? Is there any word yet on when franchising might begin?

The Vantage (Guided Busway) has indeed been a runaway success, but it is interesting that you noted good loadings on other "city" routes. I'm sure it depends on times of day/week, but my off-peak observations suggest many services, including the 17, are poorly loaded. The busiest services are the inter-town routes such as 409 (Ashton-Rochdale) & 471 (Rochdale-Bolton). Also, interesting you mention 17 yo Tridents. Whilst in the Lever Street area just off Piccadilly Gardens last Saturday, I saw no less than 4 17/18 yo B7TLs in barely 10 minutes on services run from Oldham (via wildly differing routes).

As regards franchising; It has never been certain it would happen, with three options (Franchising, EQPs or "Do next to nothing") being considered by TFGM/GMCA before a recommendation is put to Andy Burnham later this year. However, as the Manchester Evening News hinted earlier this week, it is increasingly unlikely anything will happen before the next Mayoral elections (May 2020) because Stagecoach are mounting legal challenges and withholding data.

 

[Cesarcollie]

£35 per hour expected locally.

Sorry - £35 per hour expected by GA or First? And in Southampton or Clacton?

 

[Volvodart]

If First, it must be different in Aberdeen, as they have a minimum number of passengers per hour as their benchmark.

 

[Cesarcollie]

If First, it must be different in Aberdeen, as they have a minimum number of passengers per hour as their benchmark.

That's a little odd, since a route carrying a large number of concessionary pass holders will need a much larger number of passengers to achieve a similar level of income/profitability.....

 

[Volvodart]

Depends how they count the large numbers of passengers not paying cash now.

 

[TheGrandWazoo]

That's a little odd, since a route carrying a large number of concessionary pass holders will need a much larger number of passengers to achieve a similar level of income/profitability.....

I find it a little odd too as the measure has to be financial? The figure quoted of £35 per hour (based on a standard 11/12 hour day) seems about right.

IIRC, Phil Stockley (previously of BlueStar and then running his own Velvet operation) quoted a figure a few years ago of c.£30 per hour though that was about 5/6 years ago.

 

[TheGrandWazoo]

And a rammed bus is precisely the problem. An unwillingness to invest / expand where there is clear demand. Speculate and accumulate or suck that golden goose dry. How many BMW's (other executive cars are available) carry standing passengers?

The challenge, as always, is to create that sufficient peak capacity to meet that peak demand but how do you then avoid having buses stood during the day. Especially when so much off peak travel is ENCTS so the ability to make more money is now constrained!

 

[Volvodart]

With the Aberdeen fare structure, unless you are going for a return journey of up to 6 stops maximum, or just one single journey per day, it is always going to be cheaper buying a day ticket. That makes it all right at the start of the day but late in the day you have a problem to make £x per hour.

 

[oldman]

That makes it all right at the start of the day but late in the day you have a problem to make £x per hour.

Surely they have a way of attributing season, day and concession revenues to the journeys to which they apply.

 

[johnnychips]

Apologies for my ignorance, but has all the group adopted the system for FSY whereby the day ticket has a barcode which you scan when boarding? On the other hand if I’m using a multi-operator pass (for example, issued to me by a Stagecoach bus), the driver usually just checks the date and waves me on. Not sure if he/she presses a button on the ticket machine to acknowledge this.

 

[Baxenden Bank]

Sorry - £35 per hour expected by GA or First? And in Southampton or Clacton?

Sorry for the lack of clarity. The figure refers to First in the Potteries.

 

[Baxenden Bank]

Surely they have a way of attributing season, day and concession revenues to the journeys to which they apply.

I don't know the answer to how they allocate the revenue. Drivers often moaned 'been on this bus all night, only took £5', which misses the point as they don't mention all the return tickets, day tickets, seasons, ENCTS etc. Hopefully people making decisions on service levels have a better grasp of travel patterns, but sometimes I do wonder just how much data they have and how accurate it is. Locally, even cash tickets had random origins and destinations on them (prior to the introduction of Ticketer machines).

 

[route101]

Noticed this other week , the First Glasgow 31 SPT runs on Sunday after 8pm other days have different fares . £3.30 vs £2.30 single , have they always enforced these fares or just recently implemented them?

 

[Dai Corner]

I don't know the answer to how they allocate the revenue. Drivers often moaned 'been on this bus all night, only took £5', which misses the point as they don't mention all the return tickets, day tickets, seasons, ENCTS etc. Hopefully people making decisions on service levels have a better grasp of travel patterns, but sometimes I do wonder just how much data they have and how accurate it is. Locally, even cash tickets had random origins and destinations on them (prior to the introduction of Ticketer machines).

I'd imagine it doesn't mean that every bus should take £35 every hour, but that the total for a route or a fleet should be £35 per bus-hour. If you had, say, 10 buses operating a route for 15 hours a day your total takings would need to be 10 x 15 x £35 = £5250.

Or a fleet of 100 buses working 90 hours a week each would need to take 100 x 90 x £35 = £315,000.

 

[DragonEast]

An interesting strategy - Go South Coast is a successful and profitable business with a modern fleet which can 'absorb' the costs of loss-making competition to a degree. Hedingham is however a basket-case with the newest vehicle being circa 8 years old (and most much older), and remains heavily loss-making. It is surprising in many ways that the group appears to be prepared to accept the continual drain in group profits from Hedingham/Chambers which has amounted to many millions since their acquisition. Anglian Bus was eventually closed, and one can't help but think that eventually the Go Ahead Essex operations will eventually go the same way.

I know in some quarters that it's popular to rubbish the competition on principle, but while everyone quotes Anglian when talking of Go-Ahead 's eastern operations, what about Konnect? And using profits as the measure First Essex aren't anything to write home about with their £400k loss on a turnover of, what was it, something in the order of £50M turnover, surely? If 8 year old buses are the measure of a basket case, then every op must be a basket case.
The only surprising thing to me was not that the pig couldn't fly, but that First Essex spent 5 years, or longer, trying. However having got rid of the main opposition I can see the sense in Hedingham being in a stronger position to rationalise Clacton ops, and lever in more County money (as even FEx did with the 47 in Chelmsford), harder if there is the prospect of competition to come to the rescue. As to the wider East Anglia, where apparently Go-Ahead failed in an approach to Ipswich Buses (but no is never for ever) and there is Arriva's isolated Colchester island. Neither would be tempted to sell at a price Go-Ahead would expect to pay, at the moment. But either could change the dynamics. And that's the point, things change. Often it's the change that matters, as much if not more than the past history. As with whoever gets the planning gain subsidies to serve the new towns proposed either side of Colchester. Of course First Essex will want (even need) to talk down the prospects of Hedingham (and a sore head won't help), but I am not sure "basket case" describes the whole story.
What is First Essex's business plan, by the way? OK they're tackling reliability it seems with some success, but at the cost of losing passengers (particularly of the full-fare paying variety). It's hard to see how that helps profits. Clacton continues their tradition of running away when the opposition calls: I could also mention the 59 and 133 with Arriva and Stephenson's 38 (who appear to make a £2m profit on services run with County subsidy, not known for being generous, and a portfolio of routes that First deemed unviable). I can't immediately recall a commercial service in recent times where FEx have outmaneuvered the competition (exception perhaps the 25, with Arriva). Admittedly FEC seem to have a rather better track record in that regard. FEx do seem though to run an awful lot of buses to serve few passengers, witness Chelmsford where every estate seems to be served by 3 different services - all historically unreliable, taking slightly different routes so intending passengers have plenty of choice with no idea what to do (except walk, cycle - well, not often, or use the car, anything but stand and wait for the bus while there may be one on the other route around the corner!). And given that half the Clacton routes were, I believe, County contracts which First won taking on a greater commercial fare risk (whatever that means) does that have implications for the success, or not, of that strategy which First Essex used to win the largest share of County contracts elsewhere in their operating area, especially if their commercial network isn't generating profits?

Addendum: what's this post doing in the general thread? Well, if First can't make profits or compete in Essex, some of the best bus territory outside the top mets and affluent, and without the political complications, then can they anywhere?

 

[Dentonian]

I'd imagine it doesn't mean that every bus should take £35 every hour, but that the total for a route or a fleet should be £35 per bus-hour. If you had, say, 10 buses operating a route for 15 hours a day your total takings would need to be 10 x 15 x £35 = £5250.

Or a fleet of 100 buses working 90 hours a week each would need to take 100 x 90 x £35 = £315,000.

Seems very general, given every journey is a cost centre and should make an Operating profit.

 

[Dentonian]

Noticed this other week , the First Glasgow 31 SPT runs on Sunday after 8pm other days have different fares . £3.30 vs £2.30 single , have they always enforced these fares or just recently implemented them?

Sorry, if I'm misunderstanding what you are saying - I assume you mean service 31 is subsidised by Strathclyde PTE on Sunday evenings and a particular journey costs £2.30 at those times, but £3.30 on the commercial journeys the rest of the week.
A similar thing occurs in Gtr. Manchester as TFGM (and GMPTE before them) have maximum single fares on subsidised journeys, which are sometimes cheaper than on parallel commercial services, due to commercial fares going up way beyond inflation. For instance, where I live, the 1.3 mile journey to the nearest large Supermarket costs £2.50 on the commercial route but only £2 on the TFGM contracted route. NB. This 1.3 mile stretch is the only parrallel section of routes and the contracted route links us to two major hospitals, as well as many local journeys not provided for commercially. Oh! and both are run by Stagecoach, so no serious abstraction, as such.

 

[Cesarcollie]

Sorry for the lack of clarity. The figure refers to First in the Potteries.

Thanks

 

[Dai Corner]

Seems very general, given every journey is a cost centre and should make an Operating profit.

I'm far from convinced that every journey (or even every vehicle) is treated as a cost centre by many (or any) operators. Apologies if you work for one that does gather and use such detailed management information. I would if I did.

 

[Cesarcollie]

I know in some quarters that it's popular to rubbish the competition on principle, but while everyone quotes Anglian when talking of Go-Ahead 's eastern operations, what about Konnect? And using profits as the measure First Essex aren't anything to write home about with their £400k loss on a turnover of, what was it, something in the order of £50M turnover, surely? If 8 year old buses are the measure of a basket case, then every op must be a basket case.
The only surprising thing to me was not that the pig couldn't fly, but that First Essex spent 5 years, or longer, trying. However having got rid of the main opposition I can see the sense in Hedingham being in a stronger position to rationalise Clacton ops, and lever in more County money (as even FEx did with the 47 in Chelmsford), harder if there is the prospect of competition to come to the rescue. As to the wider East Anglia, where apparently Go-Ahead failed in an approach to Ipswich Buses (but no is never for ever) and there is Arriva's isolated Colchester island. Neither would be tempted to sell at a price Go-Ahead would expect to pay, at the moment. But either could change the dynamics. And that's the point, things change. Often it's the change that matters, as much if not more than the past history. As with whoever gets the planning gain subsidies to serve the new towns proposed either side of Colchester. Of course First Essex will want (even need) to talk down the prospects of Hedingham (and a sore head won't help), but I am not sure "basket case" describes the whole story.
What is First Essex's business plan, by the way? OK they're tackling reliability it seems with some success, but at the cost of losing passengers (particularly of the full-fare paying variety). It's hard to see how that helps profits. Clacton continues their tradition of running away when the opposition calls: I could also mention the 59 and 133 with Arriva and Stephenson's 38 (who appear to make a £2m profit on services run with County subsidy, not known for being generous, and a portfolio of routes that First deemed unviable). I can't immediately recall a commercial service in recent times where FEx have outmaneuvered the competition (exception perhaps the 25, with Arriva). Admittedly FEC seem to have a rather better track record in that regard. FEx do seem though to run an awful lot of buses to serve few passengers, witness Chelmsford where every estate seems to be served by 3 different services - all historically unreliable, taking slightly different routes so intending passengers have plenty of choice with no idea what to do (except walk, cycle - well, not often, or use the car, anything but stand and wait for the bus while there may be one on the other route around the corner!). And given that half the Clacton routes were, I believe, County contracts which First won taking on a greater commercial fare risk (whatever that means) does that have implications for the success, or not, of that strategy which First Essex used to win the largest share of County contracts elsewhere in their operating area, especially if their commercial network isn't generating profits?

Many good points. I'm not sure what you're trying to say about Konect - that does have a very modern fleet, but now makes very little money (or didn't in the 2016/17 accounts). The fact that First Essex financial performance is poor cannot really be contested - it is diabolical, though of course it wasn't always that bad. My point about Hedingham is that adding First services 3,4,5,6 in Clacton at current frequency would be a PVR of 10. But it's unlikely that would make money for Hedingham either - local services in most small towns, particularly with high levels of ENCTS use and a declining local economy (= Clacton) are becoming problematic. But even if Clacton could make a small profit for Hedingham, very little elsewhere does!! ECC have no more money and at the next big tender round in 2020 I think most evening and Sunday sponsored services will go, along with the deeper rural ones.


Planning gain money is a different kettle of fish, but is usually only for a short period(typically 5 years) and other than the very largest developments, the service isn't sustainable and is withdrawn when the funding dries up!!

 

[overthewater]

I doubt Hedingham will add ten extra buses, it will most likely look for the cheapest option to combine the two networks.