For a contracts in London, the price operators put in can be 2-3x more PER BUS than a normal local contract. This is even higher when a company is almost guaranteed to win a tender. Commercial routes cost councils..... Nothing! Tendered routes cost in the region of £100,000 per year, per bus. The costs are significantly lower and they don't have to fund as much.
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Without getting into the London regulated versus outside London deregulated debate, there are many reasons why costs are considerably higher in London. In no particular order:
1. Quite often, though not exclusively, bids are based on brand new buses.
2. Those buses are to a unique London specification which makes them more expensive.
3. That same specification makes them less use outside London, so coupled with a 5(+2) year life, at best extended by another contract term, the annual depreciation charge is much higher (but see 4)
4. Because of (3), many companies choose to acquire vehicles on operating lease rather than purchase or HP. This means the residual value risk and interest on capital lies with the leasing company- but they pass that on, plus a profit, so overall annual costs are higher (though predictable).
5. London services run long days typically 18 hours and 24 in some cases, usually 7 days a week. So each buses will need 3 or more drivers per day, without sickness, holiday cover etc
6. The labour market means London wage rates (for drivers but also engineers, support staff etc) are higher than probably anywhere else in the UK. Similarly, recruitment and training will be a continual churn, so large fleets of training buses plus instructors have to be funded, along with HR resource to deal with both this, and TUPE when contracts change hands.
7. Rent, rates etc are higher so garages are much more expensive.
8. The TfL performance regime means a large number of supervisors/managers (relative to elsewhere) have to be paid and costed in.
9. Teams of people have to schedule, prepare and cost tender bids. Only a proportion will be successful, but the costs of the team have to be recovered through tender prices.
10. Congestion and idling means mpg is poor.
11. Traffic levels and passenger volumes mean insurance costs are very high relative to elsewhere,
12. I could go on......
I’m not commenting on whether all the above is good or bad. Just that the high price of tenders in London relative to elsewhere in explainable.....!,