Supplementary memorandum submitted by
Arriva
1. Arriva provides this supplementary evidence
to expand on points made in our original submission to the Select
Committee's inquiry into bus services in the United Kingdom, to
answer specific points that were raised at Arriva's appearance
in front of the Committee and to answer questions that were raised
in the subsequent letter from the Committee.
2. During our appearance at the Committee, questions
were raised about Arriva's bus services on Merseyside. In addition,
comments were made at an earlier hearing about the number of changes
made to bus services in the Merseyside area with specific reference
to changes being introduced in July 2006. It was alleged that
75% of commercial buses are changed every year on Merseyside.
3. We are happy to reassure the Committee about
the positive changes being introduced to our services in the St
Helens area in July 2006. Our witness, Mike Cooper, was asked
about reductions in service frequencies. We comment on this below:
as an annex to this note, we have included a note about the registration
process and, in particular, how this impacts on passengers.
4. We carry almost 250,000 passengers a week
in St Helens and with 400 employees are the largest employer in
the area. Our review of the network highlighted that it had remained
largely unchanged for many years, despite industrial and residential
developments. The main network operated on a commercial basis
during the day, with evening and Sunday services provided by Merseyside
PTE (Merseytravel); in some cases, this had resulted in differences
in routes and route numbers between day and evening journeys and
timetables that were not easy to understand.
5. The new network offers more direct links
into and out of St Helens town centre and reduces the number of
route numbers from 21 to seven. Each of the six main corridors
will run commercially at least every 10 minutes during the day
and every 30 minutes in the evenings and on Sundays. These high
frequency services will encourage a "turn up and go"
approach to bus usage. We are increasing the resources used on
our St Helens network by 10%.
6. The new network has been developed using
the latest available demographic information, identifying car
ownership and age distribution. Current ridership patterns have
been taken from ticket machine data; general traffic flows, population
and bus stop locations have been considered in detail with the
help of aerial maps. In-service observations and local knowledge
have contributed to the review process
7. During the planning stage, discussions took
place with employee representatives (the TGWU) and with Merseytravel.
With Merseytravel we reviewed the impact of the proposed network
on journeys that Merseytravel supports financially. Where feasible,
we have absorbed subsidised journeys into the commercial network.
The consequence of this will be that Merseytravel will withdraw
journeys on eight services currently subsidised by the PTE.
8. We have printed 40,000 new timetable leaflets
detailing the new services and 94,000 area guides (which will
include maps and timetables) which will be distributed to 67,000
households affected by the changes. An Information Roadshow will
be held for four days in St Helens town centre for local people
to meet Arriva representatives who will explain the changes.
9. We refute the suggestion that 75% of our
commercial buses are changed every year on Merseyside. Our most
frequent services on Merseyside, promoted as Le bus, were introduced
with a five-year commitment to maintain frequencies. We are convinced
that we can build on the increase in patronage that we have managed
to deliver in Merseyside. This increase has been achieved against
a background of historic economic decline as well as new regeneration
opportunities that have often favoured greater car usage.
10. Even if there were changes to 75% of commercial
bus service registrations every year, this would not in any sense
affect 75% of journeys or passenger trips or of passengers. We
are aware that since Stagecoach acquired the virtually bankrupt
Glenvale business, that company has made a number of changes to
former routes. This may have the effect of increasing in the short
term the number of service changes that would be typical in an
area the size of Merseyside.
11. It is important not to confuse change and
instability; all networks change as passenger numbers and passenger
needs change. We have many routes and networks where passenger
numbers are increasing. There are also areas where passenger numbers
are falling as a result of population reductions, changes in local
economic activity, changes in land use and the like. Our business
is a mixture of such routes and networks.
12. Arriva companies are happy to restrict the
number of dates in a year on which services can change and to
agree those service change dates with local authorities. We have
such agreements in place in most urban areas; where there is no
such agreement, we aim to adopt published DfT guidelines. In all
cases, there may be occasions when services have to change on
other dates (for example, not all school terms have common dates).
13. The majority of changes to bus service registrations
are for minor changes to a departure time (which we define as
a movement in the departure time by not more than five minutes),
usually done to improve service punctuality. As might be expected,
most of these changes take place in urban areas. A very significant
number of changes in registrations occur at the request of local
authorities or as a result of factors that are outside our control
(such as changes in highway networks).
14. On Merseyside major changes to the road
network have been implemented, both in preparation for the proposed
Merseytram scheme and as part of the general rebuilding of Liverpool
city centre (known locally as "the Big Dig") and other
areas. This has resulted in service registration amendments as
routes have to adapt to road closures and other changes. Further
changes in Liverpool city centre are now being introduced, with
the City Council providing less notice than is normally necessary
for operators to give the necessary eight weeks' notice to the
Traffic Commissioner. Merseytravel and the City Council have written
to the Traffic Commissioner to outline the background to this
problem.
15. Outside London, there is a direct relationship
between the number of fare-paying passengers travelling and the
revenue we receive from them and a less direct link between the
number of passengers travelling at concessionary fares and the
revenue we receive. Our objective is to create the optimum balance
between the needs of passengers and potential passengers, the
scope and size of networks, frequencies and fares and costs and
revenue.
16. Concessionary fare schemes are built on
the principle of operators being neither better off nor worse
off as a result of a scheme—passengers who do not pay a
fare make more trips than they would do if they had to pay; operators
should receive what they would have been paid if fares were payable.
Each of the councils that operates a concessionary fare scheme
has to make a judgement about how to implement this objective
(which is part of both EU and British law). All concessionary
fare schemes reduce the payment per passenger to take account
of the generation of extra passengers from the existence of the
scheme itself. The reimbursement arrangements for concessionary
fares vary widely across the country.
17. In London, there is no link between the
number of passengers travelling on the services we operate under
contract to TfL and the revenue we receive. As TfL takes the revenue
risk, it is for TfL to decide on the balance of costs and revenue
in the light of the availability of public funds. TfL also has
to take constant note of changes in passenger needs; there are
changes to bus services in London every week of the year, which
is not unreasonable, given the very dynamic nature of the TfL
operating area.
18. The Committee asked about levels of profitability
in London and in the PTE areas. The following figures are based
on our statutory accounts and show the average level of profitability
before and after taxation over the past five years. As our operating
companies serve both PTE areas and adjoining shire and unitary
authority areas, the figures in this table do not represent only
PTE areas but include some services in adjoining authorities.
Our operating company in the North West serves both Greater Manchester
and Merseyside (along with adjoining counties) and the company
in Yorkshire serves both West and South Yorkshire PTEs and North
Yorkshire. Our operation in the West Midlands PTE area is largely
confined to routes to and from adjoining counties; we have not
therefore included figures for West Midlands in this table.
| Pre-tax margin |
Post-tax margin |
| London | 9.7% | 5.3%
|
| Tyne and Wear | 12.4% | 10.1%
|
| Greater Manchester and Merseyside | 9.6%
| 8.4% |
| West and South Yorkshire | 6.0%
| 3.9% |
| | |
19. The Committee also asked about the return on capital
employed in our UK bus operations. The return on capital employed
before taxation for each of the last five years is shown below:
| 2001 | 2002 |
2003 | 2004 | 2005
|
| 15.3% | 14.0% | 11.6%
| 12.2% | 12.4% |
| | |
| |
20. Turning to the issue of reliability and punctuality,
we note that a member of the Committee has suggested that DfT
figures attribute two thirds of delays to buses to matters in
the control of operators. We do not recognise that figure and
note that the Senior Traffic Commissioner himself did not support
it. Without sight of the actual comment made by the DfT we cannot
be sure of how this misunderstanding has arisen; however, we suggest
that it would be helpful to consider the two linked but separate
issues of bus service reliability and punctuality. Both are highly
valued by passengers and remain the two key themes of our evidence
to the Committee and our discussions with the DfT and local authorities
across the country.
21. "Reliability" is whether we run the buses that
we advertise in our timetables; "punctuality" is how
closely those buses operate to the timetable. We monitor both
the reliability and punctuality of our services. Reliability is
largely a matter for operators; punctuality is affected both by
the robustness of operator timetables and—crucially—by
traffic congestion and highway management. As the Senior Traffic
Commissioner has said "if you want a transport system that
enables buses to run on time, let the buses through. If you do
not let them through you will not get anywhere and you will continue
to lose passengers' (Uncorrected transcript, 21 June evidence).
22. The third, related, concept is "predictability"—whether
the bus will always take the same amount of time (at any given
time of the day) to complete the journey that a passenger wants
to make. Predictability is behind our efforts to secure traffic
management that does not simply increase the speed of operation
of buses but also reduces the variability between speeds across
the day.
23. We have a good record for reliability. We operate well
over 98% of our scheduled mileage across the UK. Reliability can
be affected by weather conditions, by unexpected problems (such
as motorway closures leading to extreme traffic conditions through
adjoining towns) or by other highway problems, such as planned
or unplanned roadworks, meaning that a bus may arrive at a terminus
too late to start its next trip, irrespective of the time allowance
that will have been provided to take account of normal operating
experience.
24. Reliability can be affected by engineering issues; although
we aim to maintain our buses to a high standard of safety and
reliability, there may be engineering failures either in service
or before a bus leaves its depot.
25. The Committee asked a specific question about engineering
issues in Arriva Yorkshire. In August 2004, VOSA inspectors visited
Dewsbury and Heckmondwike depots; they examined 20 vehicles and
issued five immediate and five delayed prohibition notices; six
of those prohibitions were removed following repairs on the day.
The inspectors also examined vehicle records and found them to
be complete and satisfactory; they noted an issue of oil leaks
where leaks had been logged for "cleaning and observation"
rather than being repaired.
26. The VOSA inspector noted that "some of the defects
indicate a lack of attention to detail . . . in that a vehicle
was found to have seats contaminated with chewing gum yet had
just been cleaned . . . [Arriva] has taken the fleet check very
seriously and its national audit team has instigated a 100% audit
[of maintenance record and procedures] . . . it is my opinion
that [Arriva] is trying very hard to ensure standards have been
met and have all the necessary procedures and facilities available.
They have identified shortcomings within their own systems and
are taking action to address these".
27. At the subsequent Traffic Commissioner inquiry, the Managing
Director of Arriva Yorkshire outlined that three long-serving
employees had left in March 2004 along with the Dewsbury Engineering
Manager; initially, we employed engineering contractors to cover
the departure of staff. All replacement staff were in post by
the time of the Traffic Commissioner inquiry at the beginning
of December 2004. Engineering staff were reminded that logging
and monitoring oil leaks "for cleaning and observation"
was not an acceptable practice; the policy is to record and repair.
28. Having considered the evidence at the inquiry and the
way in which engineering arrangements are subject to continuous
review and improvement, the Traffic Commissioner decided to take
no action against Arriva but to issue a formal warning based on
the undertakings given at the hearing. She noted "it is regrettable
that the loss of experienced fitters earlier in 2004 caused the
improvements which were in the process of taking place to be interrupted";
she noted the undertakings given about engineering procedures
and the use of Arriva's national engineering audit team; she noted
also that "further staff changes and re-organisation took
place after [the VOSA inspector's] visit in August 2004 and his
whole report and evidence was very positive". She recorded
that she was "satisfied that [Arriva] does appreciate the
seriousness of the issues which have been raised and is doing
its best to address them . . . a programme [of improvements] has
been in effect for about a year and it is now a question of fine
tuning".
29. Arriva aims to learn from past experience and has used
this inquiry as part of its constant review of engineering standards
and procedures. The availability of properly maintained buses
is a key factor in our efforts to secure good service reliability.
Problems can and do occur during the working day and there are
processes in place to record and rectify problems in a systematic
and structured way so as to maintain our commitment to the safety
of passengers and employees.
30. We make regular and substantial investment in the Arriva
fleet. The Committee has asked about the average age of buses:
this is set out below. Figures for buses outside London include
vehicles operated on contracts to local authorities (particularly
for transport to and from schools) where the average age is generally
higher than our main network. As the Committee knows, Transport
for London has paid for new buses to be included in most of its
recent contracts, particularly the substantial purchase of articulated
buses:
| Great Britain | 7.4 years |
| London | 3.9 years |
| Midlands | 9 years |
| North East | 8.9 years |
| North West England and Wales | 8.3 years
|
| South East | 8 years |
| Yorkshire | 9 years |
| Scotland | 9.6 years |
| |
31. A key determinant of bus service reliability is, of course,
the availability of drivers; although we make strenuous efforts
to ensure that there is a driver allocated to every bus journey
every day there can be problems with last minute sickness absence,
the very human failure of lateness for work, family emergencies,
traffic hold-ups and the like. It is part of our obligation to
passengers to manage these problems. All professional operators
ensure that they have some level of additional resource available
to cover for last-minute failures; there can, however be occasions
when the careful judgement of how many spare drivers may be necessary
proves to be wrong. Arriva operates well over 98% of its scheduled
mileage. We can accept that about two thirds of the very small
percentage of mileage that is not operated over a year (that is,
slightly over 1% of total scheduled mileage) may be lost for what
we can characterise as internal operator reasons, as outlined
in this paragraph.
32. Our aim is to mitigate the impact of reliability problems
on passengers; this could include making a choice to cancel a
trip on a frequent service rather than on a less-well used but
more infrequent route. The impact on passengers on the frequent
service is that a specific bus may be busier than usual—as
one trip in the cycle may have been cancelled—whereas the
effect on a less-frequent service would be much more acute, albeit
for a smaller number of people.
33. Punctuality is a different matter and is the most common
problem for passengers; a bus that runs late has still run but,
from the point of view of the passenger, this is unsatisfactory.
Worse, if a bus is scheduled to run every 15 minutes and one trip
is delayed by 20 minutes, the passenger will see this as an issue
of reliability rather than punctuality; the bus did not appear
to run and the fact that it is five minutes behind the bus that
the passenger did take is, quite rightly, of no value to the passenger.
The key factor for bus service punctuality is traffic congestion.
34. We do not believe that DfT figures show that "late
running" comes in the main from matters within an operator's
control. In our report "Arriva's vision for buses on Merseyside"
(copies of which can be provided to the Committee), we describe
some of the obstacles that we encounter—like traffic delays,
congestion and road network capacity—in trying to deliver
a punctual and reliable service. We are working to overcome these
obstacles through measures like satellite tracking technology
covering every journey that our buses make in Merseyside; we can
analyse every trip to help identify problems and seek solutions.
35. We proposed last year the creation of a Merseyside Bus
Board, bringing together bus operators committed to quality improvements,
Merseytravel and the metropolitan district councils. The aim was
to have a focus for the organisations that can deliver a vision
of a high quality bus network at the heart of local transport
on Merseyside. We saw this as a way of identifying and prioritising
problems, developing solutions and overseeing their implementation.
In particular, we see the need to match the investment by Arriva
in buses, facilities, training and employee development and by
Merseytravel in improvements at bus stations, stops and in publicity
with policies to manage the highway to the benefit of bus users.
We remain committed to this approach.
36. In our report on Arriva's vision for Merseyside, we commented
about the standards of vehicles and operators being used on some
local authority-supported services. The Committee raised questions
about the number of bids submitted for "tendered services";
we do not submit bids for all tenders that are issued by authorities.
Our decision whether to submit a bid or not is based on the result
of an analysis of factors such as:
(a) Whether a bid is likely to be successful or not based
on the price being paid for the current contract and our assessment
of whether such a price would be commercially viable for Arriva,
particularly given that our driver costs are based on properly
negotiated wage rates, holiday and other leave allowances, pensions,
etc.
(b) Whether we have an appropriate vehicle in our fleet:
this will often be based on whether an authority wishes to specify
a type or age of bus. Where no age is specified on school buses—or
where other bidders offer lower prices with older buses—we
often cannot compete on price.
(c) Whether we have drivers or administrative personnel
available; if a journey starts or finishes outside our normal
hours of operation, it is unlikely that we would be able to offer
a winning price if this had to include the cost of providing the
additional administrative cover in addition to the operating costs
of the journeys themselves.
(d) Whether, at the time that the bid is submitted, we
have drivers available to cover the work; Arriva will not take
on commitments to operate additional work that will risk damaging
the reliability of our main network, as this affects many more
people and our core commercial revenue.
(e) Whether the administrative process of dealing with
the tender documents themselves are likely to be worth the effort
when balanced against the risk that the bid will not be successful.
We do not wish to divert management attention away from our core
network to seek speculative new work of limited benefit; this
will be a local judgement based on the work being offered and
the likelihood or otherwise of success.
37. Arriva commissions a major research project each year
using NOP to interview approximately 18,000 users across our bus
operating companies outside London. The research helps to identify
those aspects of our operation that are most important to customers
and those where we or our partners in local authorities need to
concentrate the greatest effort to match our customers" expectations.
Passenger opinions about our employees are particularly positive,
with over 90% of those interviewed saying that they were fairly,
very or extremely satisfied with the appearance and behaviour
of our drivers.
38. We also measure and record complaints. Where necessary
and appropriate—and after proper investigation—this
may result in remedial action with an individual driver. The latest
figures for which we can provide statistics are set out below.
The figures record all complaints made, irrespective of where
fault or blame lay after investigation. Although the categories
within which we record complaints do not exactly match those requested
by the Committee, we have attempted to provide figures that should
help the Committee's understanding of the issues raised with us.
39. We have considered how best to present the figures in
a way that will also give the Committee an idea of scale; we show
therefore the number of complaints per hundred thousand passenger
trips:
| Complaints per 100,000 passenger journeys
|
| Driving Standards | 0.76 |
| Staff Attitude | 1.37 |
| Staff Actions | 2.46 |
| |
40. Safety and security is an important issue for us.
Closed-circuit television is included on all buses that Arriva
is now buying. In many areas, matched funding arrangements have
accelerated the process of equipping existing buses with CCTV
under joint Arriva-local authority initiatives. We are proud of
our work on CCTV and of the benefits that it has brought both
to passengers and to employees. We would be pleased to provide
more information on this topic or to offer the Committee an opportunity
to inspect the work directly.
41. All our CCTV works on the basis of being digitally
recorded rather than monitored. In some areas, we are working
on proposals to link CCTV images to the police or other agencies
in situations where a driver asks for assistance. In London, TfL
has paid for the whole fleet of buses operating on its contacts
to be equipped with CCTV. These figures show the percentage of
our operating fleet equipped with CCTV:
| Great Britain | 49% |
| London | 100% |
| Midlands | 30% |
| North East | 36% |
| North West England and Wales | 41%
|
| South East | 20% |
| Yorkshire | 52% |
| Scotland | 1% |
| |
42. We have been asked to comment about buses that are "accessible
to people with disabilities"; our most recent passenger studies
show that the percentage of passengers travelling with us who
indicate that they have a physical disability is the same both
in areas where all buses are low-floor and in those areas where
only a proportion of the fleet is of this design.
43. We have taken the Committee's question as being one that
is related to the issue of access for people using wheelchairs;
our figures show the percentage of the operating fleet that is
low floor. Figures for buses outside London include vehicles operated
on contracts to local authorities for transport to and from schools,
where low floor buses are not usually specified. The Committee
will know that all Transport for London contracts include the
cost of providing low-floor buses:
| Great Britain | 60% |
| London | 100% |
| Midlands | 47% |
| North East | 34% |
| North West England and Wales | 52%
|
| South East | 53% |
| Yorkshire | 56% |
| Scotland | 4% |
| |
44. We have sought in this note to provide additional information
that should help the Committee in its inquiry. We understand the
Committee's wish to present its report as soon as is practicable
and have therefore attempted to answer the Committee's questions
promptly and to provide additional information in a way that should
assist the Committee's consideration of the issues.
July 2006
| 
