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

Supplementary Memorandum by National Express Group Plc (IT 158B)




  NEG's assessment of future passenger demand is based on the aggregation of data from external sources, such as population, GDP and forecast traffic growth and experience from the implementation of service improvement schemes.

  However any attempt to understand the future dynamics of transport demand must be based on a clear understanding of the factors that affect overall transport demand and, specifically, mode share.

  Two factors are crucial:

    —  The economic architecture of the operating industry—incentives, availability of capital, competitiveness, etc.

    —  The relationship of public transport to the other modes—specifically the role of price signals and the effects of traffic congestion.

The economic architecture

  For many years the transport industry suffered from a failure to focus on passengers and their needs. Privatisation, and the subsequent flotation of many transport groups, mean that operators are, for the first time in many years, financially incentivised to retain and grow passenger numbers. This was not necessarily the case under previous forms of ownership where companies either had access to operating subsidies or could operate on a break-even basis. In contrast, private investors and city institutions seek capital growth that is ultimately driven by growth in profits and passenger volumes.

  Competitive capital and operating markets sharpen these incentives: operators that do not provide high-quality services not only face the threat of competition but also possible take-over. There can therefore be no doubt that the necessary financial incentives for growth are now in place.

The effects of rising car ownership

  Rising car ownership, and its effects, are the major issues facing bus and coach operations. The dynamics of this process affect the bus and rail sectors in somewhat different ways.

  Car owners make fewer public transport trips. This, in itself, weakens the economics of bus and coach operation. Many parts of the population that are currently heavy bus users—for example the elderly—will in future have greater access to cars and driving licences as car ownership spreads in income and geographical terms. Moreover the taxation of motoring in the UK effectively penalises car ownership rather than car use. Once an individual has made the decision to purchase a car it is entirely rational for them to maximise the use they make of an expensive asset.

  Secondly, the growth in traffic levels experienced since the war has had huge, negative effects on bus operations:

    —  Bus journeys have become slower.

    —  Bus operating costs have been inflated by these time delays.

    —  Fare levels have had to be increased to meet rising costs.

    —  Services have become unreliable.

    —  Road improvements have increased the speed advantage of cars in relation to buses.

  Therefore worsening traffic congestion by itself, encourages further car use at the expense of bus travel. Conversely where congestion worsens beyond a certain point (particularly on radial and interurban routes), rail may actually benefit by virtue of its dedicated track and potential for speed and reliability advantage against the car.

  Therefore the first priority of any policy to encourage bus use must be to improve the speed and reliability of bus services through appropriate traffic management measures.

Urban dispersal and land use planning

  Sustained growth in car ownership over many years has also had other effects. Housing, shops, leisure and employment opportunities have dispersed from city centres into low-density developments that are very hard to serve efficiently by public transport. This has further encouraged car use.

  Any policy to encourage the use of public transport must discourage further urban dispersal and concentrate new developments at locations that can be effectively served by existing or potential public transport systems.

Parking Policy

  The availability and cost of parking spaces is a major determinant of mode choice. Commuters who have "free" parking spaces at work are more likely to travel by car.

  Shoppers may switch their allegiance from city centres to out-of-town locations with plentiful free parking.

  The availability and price of car parking spaces heavily affect the demand for bus and coach services.

  Three conclusions can be drawn from this situation:

    —  The fundamental factors influencing transport demand are outside the control of the operators.

    —  These factors are related to the overall transport market, not the regulatory regime for the public transport modes.

    —  The "do-nothing" scenario will result in a continuation of the underlying decline in ridership. Recent changes to this decline are primarily the effect of marketing and investment initiatives.

  All of these factors—rising car ownership, rising congestion, urban dispersal and parking policy—are deeply rooted in our post-war economy. The decline in ridership dates from at least 1951, although the trend has slowed significantly in recent years.

  The areas which have broken out of this spiral of decline—Oxford, Edinburgh, West Midlands, for example—are characterised by innovative transport operators working in partnership with local authorities committed to addressing the fundamentals of traffic management, land use planning and parking policy.

  National Express Ltd carries around 12 million coach passengers each year on its National Express, Express Shuttle and Flightlink services. Passenger volumes roughly doubled in the early 1980s and have continued to grow since 1994.

  The fastest growth has been achieved on the Express Shuttle and Flightlink services. Express Shuttle coaches provide high frequency services over fairly short routes, eg., Liverpool-Manchester-Leeds, London-Cambridge. Flightlink services provide links to airports, primarily Heathrow and Gatwick. The traditional long distance coach services have suffered some decline over the last two years, especially in the more rural areas.


  Although the operators cannot deal with these economic fundamentals on their own, they can take action to improve ridership. NEG's policies reflect work carried out by Transport 2000 on removing the carriers to public transport use. Our priorities are to:

  1. Improve the frequency of service to offer a more "car-like" operation, i.e., "turn up and go".

  Day time frequencies on all major TWM corridors are already high. Equally services operate up to midnight, with a night service on Fridays and Saturdays. A recent initiative has seen day time frequencies extended into the evening.

  2. Offer a range of value-for-money fares.

  TWM offers an extensive range of single, day and season tickets and participates in all multi-operator and multi-mode tickets available for use in the West Midlands. For example it is possible to buy a day ticket on a TWM bus which is valid for travel on any other bus operator or any rail operator's services throughout the West Midlands.

  3. Improve the comfort and physical accessibility of our vehicles, through a programme of continuous fleet investment. All new buses, including minibuses, are now low floor, wheel chair accessible.

  4. Continuously improve levels of customer information about services and fares. Distinctive route branding and simplified "tube" style maps are being introduced to make the network more understandable to the occasional user.

  5. Improve customer care through careful selection and training of staff and by deployment of more staff in "front-line", customer-interface, and roles.

  6. Improve integration with other operators and modes (including directly competitive ones) through collaborative marketing activities.

  7. Improve the speed and reliability of services through Quality Partnerships with local authorities. The initial "Showcase" routes have shown what can be achieved, but many more bus priority measures are required.

    Quality Partnerships vs Quality Contracts

    Quality Partnerships between operators and local authorities are essentially designed to link two complementary elements:

    —  Improvements to bus services that can be undertaken by operators—frequency enhancements, new vehicles, better information, etc;


    —  Traffic management to improve the speed and reliability of bus services.

    They therefore provide a coherent means of improving the overall service offer to passengers with the objective of increasing ridership. Practical experience of Quality Partnerships has shown their effectiveness in improving ridership levels quite substantially over short timescales.

    Quality Contracts, in their accepted sense, simply shift responsibility for service planning from operators to local authorities and then contract-out the operation of services through some sort of tendering exercise. They therefore blunt the current financial incentives to meet passenger needs and fail to address the fundamental traffic management issues that explain declines in demand.

Experience from Quality Improvements

  Through the co-ordination of these programmes and improvements TWM has been able to stem the historic decline in bus patronage and achieve organic growth.

  Overall growth of up to 2 per cent per annum appears to be practical through operator initiatives alone. Much more can be achieved when these initiatives are combined with effect bus priorities. TWM believes that growth rates of 5-10 per cent per annum are possible in the medium term if there appropriate changes in traffic management and car parking pricing policy.


  TWM is spending between £20-£30 million a year on capital expenditure, principally new vehicles, but also on new depots. The ultimate aim is to stimulate demand through significant improvements in the quality of service offered.

  These service improvements will include increases in frequency, better information and customer care, backed up by an enhanced advertising campaign designed to show the potential passenger how buses have changed since they last used them. TWM constantly assess ridership and has the physical resources necessary to increase frequencies, introduce new services within a three month period.

  Coach patronage levels are constantly monitored on a day by day basis and NEL has the almost unique ability to increase services very quickly to meet demand. For example extra journeys can be added at peak times such as Christmas. Equally permanent increases in frequencies/services can be achieved within a few weeks.


Traffic Management and Bus Priorities

  The fundamental barrier to increased demand for bus and coach services is the progressive worsening of traffic congestion. Although considerable progress had been made with up-grading vehicle fleets, improving the overall and marketing of bus services, the extension of bus priority schemes simply hasn't kept up with the rising tide of traffic congestion.

  There appears to be a lack of political will at the local level to implement traffic management schemes that will positively discriminate in favour of buses and coaches. In fact for coaches one of the obstacles to improving services is often the legal prohibitions which prevent coaches making full use of bus lanes and other pro-public transport traffic management measures.


  This lack of political will has been compounded by the lack of funding for relatively cheap measures, which produce returns within one or two years. Too much money has been allocated to small number of big schemes, e.g., LRT and major road schemes.

Space Restraints

  Increasing pedestrianisation, whilst of merit in itself, is having the effect of severely restricting kerb spaces for buses and waiting passengers in cities and town centres. Too often passengers are being forced to wait in hostile, exposed and poorly lit areas on inner ring or circulatory roads and buses are unable to reach the kerb due to lack of space, thus negating any easy access facilities on the pavement or in the bus.

  The situation is little better in bus and coach stations where lack of space is limiting the number of departures from designated stands. This is limiting service growth in the West Midlands and is also a problem at Victoria Coach Station in London at peak times.

Disability Discrimination Act and Easy Access

  Bus operators have been at the forefront of purchasing new easy access low floor vehicles that will meet the requirements of the Disability Discrimination Act. However there is no pressure on local authorities to improve bus stops and access to bus stops to maximise the benefits from easy access buses.

  In fact it appears that local authorities can avoid many of the requirements of the DDA as they apply to transport.


  Many improvements can be achieved through partnerships between operators, local authorities and other interested parties. Partnerships which will often involve co-operation between operators. In the past this co-operation has not been approved by the regulatory authorities (OFT, MMC).

Staff Availability

  The bus and coach industry has been experiencing a staff shortage, which has been temporarily exacerbated by the lengthening in time of the training requirements. TWM has implemented a major training programme to considerably increase the number of drivers been changed, not only to cater for normal staff turnover but also to allow for expansion in services.

Role of Express Coaches in an Integrated Transport Strategy

  There appears to be a lack of recognition at the local and national political level of the potential role of scheduled coach services in providing the customer with effective choice of public transport mode for medium and long distance journeys. This means that coaches are often not included in developing transport and traffic management plans.

December 1998

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