Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


LIST OF MEMORANDA NOT INCLUDED IN THE MINUTES OF EVIDENCE

Supplementary Memorandum by First Group PLC (IT 50A)



1. GROWTH IN PASSENGER NUMBERS

(a) What assessment have you made of the likely future increase in the number of bus and rail passengers?

  All First Group's bus and rail subsidiary companies are required to produce three year business plans. Each includes a forecast of passenger numbers, the plans to generate and cater for increases in demand and an assessment of the reasons behind the changes.

(b) What Research is this assessment based upon?

  The results vary considerably between regions and are based on economic forecasts for the area, assumptions on growth, unemployment levels, new developments in employment, shopping and leisure facilities, etc.

  Additionally each bus company is required to specify specific projects to generate demand. These include, Twin Track initiatives developed under Quality Partnerships with the Local Authorities, new Bus Priority and Park & Ride developments, the exploitation of new buses on which some £100 million is being spent annually, new service initiatives, etc.

  The Rail subsidiaries have developed a programme of similar initiatives.

(c) Growth Expected

Rail

  Figures from three year plans:

    —  Great Western 11.7 per cent

    —  Great Eastern 8.8 per cent

    —  North Western Trains 10.0 per cent

Bus

  Overall growth over three years 5.43 per cent. See Appendix 1 for further details.

  It is not possible to provide meaningful figures splitting the difference between inter urban and intra urban on the Group's bus operations. Many services provide a dual role. In West Yorkshire for example the Group provides many services between Leeds and Bradford, Leeds and Halifax, Leeds and Huddersfield. Each service has a complex pattern of usage both inter urban and intra urban and the cost of research into which passengers fall into each category could not be justified by any consequential benefits.

  Similarly, the split between existing and new users is difficult to assess. However, on enhanced services we do undertake some market research to assist in developing passenger growth.

  For example, growth on the Leeds Superbus Guided Bus network is now running at 56 per cent as compared with three years ago. Of this approximately half, i.e., 28 per cent has come from people who have transferred from cars. This is made up of both peak-time commuters and shoppers off-peak who now consider the service to be good enough to avoid taking the car into the city centre.

  However, this partially stems from the fact that the Superbus operates into an area of high quality housing, many two car families and a lower propensity to use the bus. The next corridor in Leeds where we hope to introduce guided Superbus services will generate similar levels of growth, but as it is an area of more mixed housing and Council property, with lower car ownership levels, we are predicting the split between new users and existing users in the growth patterns to be significantly different, with greater generation from existing users travelling more often.

(d) Specific Plans to meet increasing demand

  Plans to meet specific demand on bus include:

    (i)   Twin Track initiatives in Quality Partnership with Local Authorities to introduce bus priority measures, park & ride, etc.

      This will enable more reliable, more frequent and attractive services to generate demand and will entail higher service frequencies and new top quality vehicles.
7

      The Group has offered to fund 50 per cent of the total costs of Twin Track schemes.

    (ii)  Maximum intake of new vehicles which are more environmentally and passenger friendly with low step floors for those not good on their feet, wheelchair and baby buggy accommodation, better heating and ventilation.

    (iii)  Close monitoring of demand service by service to ensure provision remains ahead of demand. On Superbus services in Leeds for example, the service has been augmented four times in the last three years to meet increased demand.

  On Rail, the Group is investing £140 million over the next three to four years in new trains for both Great Western and North Western Trains to augment and improve the quality of services.

  On Great Western this will be used to augment London Bristol and London Cardiff services up to half hourly all day to meet increased demand as envisaged in the Franchise Plan.

  On Great Eastern inner London services into Liverpool Street were doubled from most stations from May 1998 and fast Southend-London services increased from 2 to 3 per hour to meet demand. London-Ipswich services were substantially augmented. Similar new initiatives will be continued. New trains to replace all slam door stock will be introduced in 2001 to augment and improve the quality of services.

(e) Obstacles to meeting increases in demand.

  On bus:

    —  slow implementation of Twin Track initiatives due to lack of Government funding for Local Government elements of the schemes.

    —  traffic congestion hampering service reliability, more productive use of peak vehicles.

  On rail:

    —  lack of capacity at pinch points on the network.

    —  limitation of slots available from Railtrack at key times, i.e., into the London termini.

COMPANY EXAMPLE

GREAT WESTERN BUSINESS PLAN

What assessment have you made of likely future increase in rail passengers?

  Passenger forecasts for Great Western October 1998 business plan give the following growth assumptions.

1999-20002000-01 2001-022002-032003-04 2004-052005-06

Passenger journeys (million)17.0 17.518.519.0 19.419.820.2
Annual growth (per cent)2.0 3.55.83.6 2.42.42.4
Cumulative (per cent)2.0 5.611.715.7 18.521.424.2


What research is this based on?

  Underlying growth forecasts are based on a detailed econometric study by Leeds University commissioned by Great Western Trains. Underlying demand is sensitive to GDP growth forecasts (and commuting is sensitive to Central London Employment). Train service improvements are assessed using MOIRA: the recognised industry model. Pricing resistance is based on Rail industry elasticity research assumptions.

  Great Western trains services cater almost exclusively for inter urban passenger transport markets.

What specific plans do you have for meeting any increases in demand?

  Capacity to carry the additional passengers is to be achieved by the introduction of new build class 180 rolling stock. An initial build of 40 vehicles to be introduced by Autumn 2000 will be augmented by a further build of 32 vehicles.

What obstacles are there to meeting any increases in demand?

  Deployment of new and existing rolling stock to meet passenger growth so as to avoid overcrowding will be critically dependent upon Railtrack providing the necessary train slots, especially during peak periods.


2. CAR HIRE FROM RAILWAY STATIONS

(a) Great Western

  (i) Great Western has a partnership with Avis to offer Great Western customers a special RailDrive package. This "Meet and Greet" service is available from the following Great Western stations:

    Reading

    Bristol Temple Meads

    Swindon

    Exeter St Davids

    Plymouth

    Swansea

    Taunton

    Tiverton Parkway

    Bristol Parkway

  Avis car hire is available at any time from these stations or Great Western customers can use the "Meet and Greet" service where they are met by an Avis representative during Avis office hours of 0800-1800 Mondays to Fridays and 0800-1200/1300 on Saturdays. Special discounted rates have been negotiated with Avis for Great Western customers and members of Great Western's Merlin Executive Travel Club can obtain complimentary car upgrades.

  Delivery of cars is provided free during Avis office hours (as detailed above). Outside office hours a £20 collection/delivery charge applies and car keys are left for customers at the ticket office, travel centre or other safe area depending on the individual station. Customers are advised of the details at the time of booking.

  Booking with Avis is through Avis Central reservations on 0990 900500.

  (ii) Usage of the RailDrive product has been monitored by Great Western since its introduction in October 1997. On going reviews of the RailDrive product and other Great Western products are conducted to analyse potential for further development, in this instance, it is not proposed that RailDrive is extended to involve other stations. Current rentals over the last 12 months are approximately 50, which represents a very low response to the product offering.

  Potential growth of the car hire market has been monitored by Great Western through usage analysis and our relationship with Avis. Avis expect an industry growth of between 3-5 per cent over the next 12 months, although growth is expected to be towards the lower level.

  (iii) The RailDrive product is reviewed with Avis on a six monthly basis which involves the provision of car hire facilities at Great Western stations. As part of the refurbishment of Great Western stations, car park facilities and station security is being improved to high customer standard levels. This will impact on those stations with RailDrive facilities allowing clear signage and collection facilities for car rentals. Estate management of Great Western stations is handled by Waters and Company.

  (iv) No specific research has been undertaken to determine the size of the car rental market from Great Western stations. However, as part of our product development programme research has been undertaken to determine the likely usage of the RailDrive product with the key target market for the product.

  Research of Great Western's Merlin Executive Travel Club, which comprises 14,000 First Class business customers, those people for whom the RailDrive product has been developed and targeted at, has recently been undertaken (September 1998).

  Analysis of this research shows that car rental offers are of high interest to 20 per cent of respondents, with 40 per cent showing some interest. These figures indicate that over two thirds of our target market have shown an interest in car rental products and can therefore, be targeted for future promotions and product development.

(b) North Western Trains

  Though currently there are no stations operated by First North Western where it is possible to hire a car, the network served by First North Western is well provided with such facilities sponsored by both Virgin and Railtrack.

  All the main stations within the operating area have car hire facilities adjacent, the two Manchester stations and Lime Street being the major ones.

  For First North Western this kind of activity is low on the list of priorities for our customers who are predominantly commuters, shoppers and day trippers. In the North West Virgin have undertaken a number of initiatives with hire/taxi companies which is much more appropriate to their customer base.

(c) Great Eastern Trains

  There are no car hire facilities at Great Eastern stations. These were tried at a number of locations during the 1980s and were dropped due to lack of demand which generated substantial losses. The vast bulk of passengers using Great Eastern services are regular daily commuters and therefore not a market which is envisaged to generate demand for car hire facilities.


 
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Prepared 28 April 1999