Memorandum submitted by Stagecoach Group
plc
INTRODUCTION
Stagecoach Group plc welcomes the opportunity
to submit its views to the Transport Committee as part of its
inquiry into "Bus Services across the UK". Buses are
the most important mode of public transport and are relied upon
by millions of people every day to access work, education, health,
shopping and leisure. Transport is also a key driver of economic
growth and social inclusion.
The environment in which buses operate is crucial
if they are to deliver the high quality of services that will
cut congestion by encouraging more people to switch from car use
to public transport. However, this is far more complex than the
regulatory regime governing bus services. There is a wide range
of local authority, operator, political, social and economic factors
which influence the success of bus services.
Stagecoach believes that if we are to fulfill
the huge potential of the bus, we need to seize the opportunity
to build on the success of deregulation and existing partnerships,
and learn from what works around the country.
Statutory quality partnerships and accompanying
quality partnership agreements, with binding targets, obligations
and rewards for both bus operators and local authorities, are
one part of the equation. Innovation, investment, strong marketing
and effective operational management are also key drivers. By
introducing this package of measures, we believe we can make bus
travel the mode of choice for the benefit of passengers, the environment
and the future economic prosperity of our towns and cities.
STAGECOACH UK BUS
Stagecoach connects communities in more than
100 towns and cities in the UK, running a fleet of over 8,000
buses and coaches that is one of the largest and most modern in
the country. We were independently judged Bus Operator of the
Year at the 2005 UK Bus Awards.
Two million passengers travel on Stagecoach
services every day, using a network stretching from south-west
England to the Highlands of Scotland. We serve major cities, including
London, Manchester, Liverpool, Newcastle, Sheffield, Hull, Oxford,
Cambridge and Exeter, as well as key shire towns and rural areas.
We operate a range of local scheduled services,
express coach networks, school bus operations and demand-responsive
transport. Most of our services are operated successfully on a
commercial basis in a deregulated environment. We also operate
contracts on behalf of local authorities and other organisations,
including Transport for London.
Stagecoach has invested more than £150
million in new state-of-the-art buses over the past three years.
This is part of a long-term commitment to ensure all our vehicles
are fully accessible to elderly passengers, people with disabilities
and families with young children.
All our new vehicles meet tough Euro III emissions
standards and ultra low sulphur diesel is used throughout the
fleet. As part of our strong commitment to the safety and security
of our passengers and our people, all our new vehicles are now
being fitted with digital CCTV systems.
Putting customers first is our priority. We
continue to focus closely on the recruitment and training of our
people, and we have one of the best records of any major operator
for social and vocational training among our frontline drivers
and engineers.
Our UK Bus division is also a major employer,
providing jobs for around 20,000 people at 20 regional companies.
FACTORS DRIVING
BUS PASSENGER
GROWTH
Stagecoach has had considerable success in generating
passenger growth at its provincial bus operations across the UK.
The company has recorded four years of consistent growth against
a general trend of decline. Independently-audited research compiled
by the Confederation of Passenger Transport UK in 2005 showed
that Stagecoach operated 11 of the top 15 fastest growing bus
networks in the UK.
The fastest-growing bus network in the UK, the
Stagecoach-operated Exeter Park and Ride, saw passenger volumes
jump 34% in just 12 months. Stagecoach also ran the second and
third fastest-growing networks—BrookesBus in Oxford (24%
growth in 2004, compared to the same period in 2003) and the Cwmbran
town network (20% growth). Bus networks operated by Stagecoach
in Bedford (+16%), Peterborough (+13%), rural Exeter (+13%), Basingstoke
(+13%), Lancaster and Morecambe (+12%), the City of Exeter (+12%),
Devon (+ 8%) and Cambridge (+8%), also featured in the Top 15
list.
Stagecoach believes its success proves there
are a number of key factors that contribute to the success and
growth of bus services across the UK. Our experience in the UK
suggests there are four key influencers—local authority
factors, operator factors, political factors, and social and economic
factors. All of Stagecoach's successful, high growth networks
have the following shared attributes:
Local Authority Factors
— There is a recognition that controlling
car demand is fundamental to sustaining the attractiveness of
their town centre and that retail sales are being fuelled, not
curtailed, by successful transport policies.
— All of these authorities have introduced
meaningful bus priority schemes, which has meant overruling small
retailers and committing scarce road space to help the bus flow
more freely. Bus priority works and enables journey time reductions
and consistency of trip times. The benefits are unlikely to be
significant where the priority is piecemeal, fails to address
the major delay hot spots, or enforcement is weak.
— Car parking is less convenient for
access to the shops than the main bus stops and, in every instance,
the pricing of the car parks is sufficiently high to ensure modal
shift to park and ride and the bus network.
— Park and ride services are growing
at exponential rates and this is undoubtedly one of the main drivers
of modal shift.
— Local authorities are very positive
about the Kickstart pump-priming concept to improve bus services
and understand the key objective of the funding mechanism is modal
shift.
Operator Factors
— In each area of high growth the bus
company has dealt with its staff shortage problems by paying a
small premium to the market rate and implementing a set of humane
schedules that people want to work. Units where we have the best
growth are where we consistently run all of our mileage.
— Networks have been reviewed and simplified
to understandable new frequent service patterns, with peripheral
services tailored to meet demand and resources refocused into
the areas where we know there is latent demand. Growth is driven
more by frequency of service and modal shift, rather than by penetration.
Political pressure to operate buses in areas where people say
they want to see them but do not in reality use them generally
leads to higher fares and lower frequencies in areas of low incomes.
— Bus company marketing spend has increased
sharply and a co-ordinated marketing campaign launched where we
change the network or put new buses in place. New ideas such as
direct telesales and high profile competitions are combined with
traditional household leaflet drops to get maximum impact.
— There has been substantial investment
in suitable low-floor vehicles and the recognition that we need
to tailor the type of vehicle to the type of route.
Political Factors
— In the Shire counties there are less
layers of officers and the Shire also has principal responsibility
for the road network. Control of the road network is fundamental
to making progress.
— There is very little backward-looking
political thinking and pressure to return to an outdated and high-cost
regulatory regime that did not produce passenger growth. Even
where there are coalitions, we find that we can get consensus.
— We have had no re-regulation debates
in any of these locations and the authorities are committed to
making the present arrangements work in partnership.
Social and Economic Factors
— Very strong retail growth and a good
mix of safe shopping environments and diversified leisure activities,
such as desirable restaurants, specialist shops and amenity areas,
with limited dispersal of economic activity to peripheral locations.
— Many of these towns would be described
as heritage towns where congestion has been choking visitor demand
for many years and has become a disincentive for shoppers and
visitors.
— Residents in these areas are intellectually
convinced of the need to protect the environment and the importance
of the role of public transport. They convert easily to becoming
new users and bus travel has been largely de-stigmatised in these
successful networks.
PASSENGER GROWTH
IN METROPOLITAN
AREAS
Figures from the Department for Transport's
regular surveys of bus use in the UK indicate that the decline
in bus patronage has been greatest in the metropolitan areas.
Stagecoach believes this has been for the following reasons:
— The links in the chain of command
are too long and there are too many officers with specific responsibilities
for only parts of the agenda.
— Control of the highways remains with
the District Authorities. Therefore, the Passenger Transport Executive
is powerless to deliver road priority schemes without district
council consent, which is frequently withheld. These areas are
often dominated by councillors in favour of re-regulation and,
at a local level, they are prepared to oppose a bus lane because
of local traders' representations.
— Authorities and Executives have often
devoted most of their energies to developing and promoting tram
schemes—which have subsequently been unable to be funded—to
the exclusion of deliverable bus-based schemes to meet their transport
objectives.
— Bus travel remains stigmatised in
most of the metropolitan areas with higher than average incidents
of violence and crime. While London also has high levels of violence
and crime, there is a greater commitment from the authorities
to support bus operators in addressing this issue.
— There are no significant bus park
and ride schemes in any metropolitan area.
— Congestion is progressively destroying
bus services. In Manchester, for example, the mileage operated
by Stagecoach buses over the past 10 years has reduced by 10%.
The company has operated the same number of buses, but these services
have become slower and more expensive to operate. With significant
bus priority, we could restore that 10% mileage for minimal cost
and generate more modal shift. Despite these challenges, Stagecoach
has consistently generated adult passenger growth in South Manchester.
The number of full fare paying adults using our services between
1996 and 2005 increased by 25%. In contrast, the number of concessionary
fare paying passengers in Manchester was in decline before the
introduction of the Government's free scheme.
— Adult fares in the Metropolitan areas
where Stagecoach operates are generally lower than they would
be under a regulated regime. Indeed, fares could be lower if concerted
measures were taken to tackle congestion and ensure concessionary
fares schemes are adequately funded with fair reimbursement for
operators.
— Authorities are often suspicious
of the Kickstart pump-priming concept and prefer to use it for
social inclusion objectives rather than to generate modal shift.
GROWTH THROUGH
INNOVATION
Developing new ideas on how to deliver bus services
has been central to Stagecoach's success and is an important factor
in revitalising public transport. Just two examples of our innovative
ideas are:
— megabus.com, the UK's market-leading
inter-city bus service, has created a new market by offering fares
from just £1. In less than three years, the service has expanded
from just one pilot route to incorporate a network of services
covering more than 40 locations in the UK and carrying around
two million passengers a year.
— Growth in Stagecoach's provincial
and city networks has been driven by the company's focus on service
delivery, customer profiling research and targeted marketing.
A telemarketing unit at Stagecoach's headquarters in Perth discusses
prospective passengers' current travel choices, their satisfaction
with existing bus services and offers seven days' free travel
to encourage them to try the bus. Results show an average conversion
rate of more than 25%—nearly four times the success rate
for normal telemarketing campaigns. Stagecoach is targeting up
to 20% of its bus networks using the telemarketing approach, with
a major focus on mothers and commuters.
THE REGULATORY
ENVIRONMENT
Stagecoach is working hard to increase the quality,
reliability and frequency of bus services to offer car users a
realistic transport alternative and help cut congestion. Partnership
with local authorities and other stakeholders is key to achieving
that objective and our local management teams have built up excellent
relationships.
Before deregulation in the mid-1980s, bus use
across the UK at the regulated public sector bus companies was
falling rapidly at a time when car ownership was still relatively
low. Operations were inefficient, management overheads were too
high, the average of age of vehicles was increasing, marketing
of buses was almost non-existent and service to customers was
poor.
Against this background, the number of people
using buses today is greater than it would have otherwise been.
Buses are more attractive due to significant investment by operators
in new vehicles, safety measures and maintenance. Services are
also coordinated with other modes where there is significant passenger
demand. While overall bus use has continued to decline, the rate
has stabilised and competition from the private car has increased
by significantly more than patronage has declined. This is a key
reason why sustained patronage growth is taking place in deregulated
areas where there is traffic demand management (eg Oxford, Cambridge,
York, Brighton).
The main issue for passengers is reliability
and, to a large extent, this varies according to the degree of
congestion and priority given to buses in different places. Whether
or not the Highway Authority is taking measures to make buses
run faster and more consistently is a greater driver than the
regulatory environment.
Stagecoach does not believe Quality Contracts
represent best value. They will eliminate the marketing expertise
and flexibility of bus operators, both of which are major factors
in driving growth. Political expediency rather than good transport
practice will drive decision-making. Without meaningful demand
management, quality contracts will require substantially more
revenue support if they are to deliver significantly more services
and/or significantly lower fares. However, with meaningful demand
management the same benefits could be delivered through partnership,
as operators will be able to invest more to serve a growing market.
An important element of the regulatory regime
covering buses is the network of Traffic Commissioners across
the country. They have powers to penalise operators who fail to
deliver reliable and punctual services. However, they have no
powers to compel Highway Authorities to attend their public inquiries
or to require them to deliver the operating conditions for reliable
and punctual bus services. If a Highway Authority chooses to,
it can ignore the Commissioners. We believe the Traffic Commissioners
should have access to more Vehicle and Operator Services Agency
(VOSA) resource to monitor and target low-quality bus operators.
Stagecoach welcomes the Government's move to
consider allowing greater co-operation between bus operators over
integrated ticketing and timetabling. The competition regime to
date has been a barrier to developing bus services and we look
forward to co-operation in this respect from the Office of Fair
Trading.
London is often mistakenly put forward as a
model for the rest of the UK. While we support the pro-bus measures
introduced by the Mayor, we believe London is unique. The traffic
conditions, parking availability, and high level of long distance
commuting are not replicated anywhere else in the UK. Bold decisions
on congestion charging, car restraint, enforcement, fares subsidy
and investment have driven growth in London, not the regulatory
regime. London is also a very expensive regime and we believe
that growth can be achieved in provincial locations at a lower
cost per passenger without moving to a London franchising system.
Stagecoach believes the way forward for buses
is to put the successful partnership approach for commercial bus
services on a statutory footing. This will ensure a balanced system
of risk and reward is in place for both bus operators and local
authorities. Bus operators will commit to service standards, levels
of investment and network development, while local authorities
will be accountable for introducing appropriate bus priority measures,
infrastructure improvements, demand management systems and improved
average bus speeds. A system of penalties and incentives should
be built into the system. This contractual arrangement will reward
high quality operators and proactive local transport authorities,
improving the quality of bus services for passengers, increasing
bus use, reducing congestion and ensuring central government transport
targets are achieved. By the same token, it will ensure low quality
bus operators do not undermine confidence in bus services and
poor performing local authorities will be penalised for failure
to meet the needs of their constituents. In the Metropolitan areas,
we believe the Passenger Transport Executives need to be given
highway powers to ensure they can fairly become part of this contractual
system and also to address the issue of a number of highway authorities
with different agendas causing a policy log-jam. Decisions on
whether to operate socially necessary services, which are unable
to be provided on a commercial basis, should remain with local
authorities. They are best placed to decide local priorities based
on limited budgets and other social needs in their areas.
CONCESSIONARY FARES
We believe concessionary fares schemes are an
effective method of improving social inclusion in our communities
and encouraging the use of public transport amongst an important
and growing proportion of the nation's population. However, the
structure of such schemes, which are a subsidy to the bus passenger,
is crucial. The current concessionary fares scheme in England,
introduced from 1 April 2006, has produced a patchwork of benefits
with a number of inconsistencies that are confusing for passengers
and drivers. A nationwide scheme—which the Government has
pledged to introduce from 2008—should remove these problems,
although how this scheme will be administered has yet to be confirmed
by the Department for Transport. The current arrangements, with
locally negotiated reimbursement settlements, are very time consuming.
There is also a risk that the funds allocated for concessionary
travel are put to other non-transport uses, leading to appeals
to the Secretary of State. A single nationwide scheme should be
negotiated across the country to ensure the same consistent approach
as applies in Scotland and Wales. Whether countrywide concessionary
travel is appropriate and other transport modes should be included
are political decisions for the Government.
May 2006
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