More of us are now hopping on the bus

Sep 3 2008 by Karen Dent, The Journal

High fuel prices, the growing strength of the green lobby and modernised, more reliable services are giving a boost to Britain’s public-transport sector. Karen Dent investigates how the industry is expanding in a cold economic climate.

WE may be living in an era where nearly eight in every 10 households has access to one and more than a quarter of homes has two, but Britain’s love affair with the car appears to be souring slightly.

High fuel prices and the escalating cost of living, plus a greater awareness of green issues and fears about our carbon footprint are pushing increasing numbers of commuters on to buses and trains.

More than half of drivers quizzed by the AA last month said the cost of motoring had cut the number of trips they made by car and Government figures show that the amount of car traffic on the roads fell by 2% in the second quarter of this year compared to 2007.

AA president Edmund King said: “The high fuel prices have had a significant effect on reducing traffic.

“Despite what we hear about people being wedded to their cars, 40% of motorists also use public transport on a fairly regular basis – it’s not so much an unwillingness to use public transport, but is more a question of whether suitable networks exist and if it’s practical in terms of journey time.”

Although the picture looks pretty healthy for the public-transport sector, analyst Joe Thomas from Investec Securities says the economic slowdown is likely to have both pros and cons for the industry.

“The strength is in the bus industry with the weaker economy,” he said. “The marginal car users, students for example, will be trading down to the bus. Services are also improving on inter-city trains.”

But he take a more cautious view for commuter rail services, which could suffer if the downturn continues and leads to widespread job losses that would shrink the pool of passengers.

Financially, however, public transport companies are surfing a wave of success with North East groups like bus and train giant Arriva recently reporting a 40% increase in half-year profits.

The Sunderland company, which runs more than 16,000 buses and trains in the UK and Europe, drove its interim pre-tax profits up to £66.3m from £47.3m a year earlier and in 2007, recorded full-year pre-tax profits of £115.8m.

Arriva North East’s managing director Jonathan May is not complacent: “The higher fuel prices and the tougher economic situation prove as much of a challenge to us as they do to everybody else. We need to try to make our services as attractive as possible. The industry as a whole has invested millions right the way through the UK.”

The famous Margaret Thatcher quote labelling a man over the age of 25 who goes to work on the bus as a failure is now very wide of the mark, he says. But he admits that attracting new public- transport users is a never-ending task and the industry must work to give customers what they want.

“It’s all about getting bums on seats. There’s this ‘maybe’ club – they may use the bus if the times were convenient, they may if the quality was good enough and the price was right. There is not this one-size-fits-all solution.”

However, he believes people are paying more than lip service to green issues, and that is persuading new customers to consider public transport.

Jim Boyd, corporate affairs director with Newcastle-based Go-Ahead, agrees that soaring petrol prices are not the only reason people are quitting their cars.

“We believe we are seeing a modal shift,” said Mr Boyd, whose group is forecast to report pre-tax profits in the region of £118m on Friday.

“Increasing reliability, punctuality and general satisfaction levels are also playing a part.

“The investment in public transport and the quality of service has been a key driver for the last 10 years among private operators. It’s an industry-wide view.”

Go-Ahead, which runs both buses and trains in the UK, carries more than 900 million passengers annually. Like Arriva, Mr Boyd believes Go-Ahead is benefiting from changing views. We don’t have anything that is conclusive. But we’ve got a lot of information that’s building a picture,” he said. “We are seeing an awful lot of factors.”

Stagecoach, which operates buses and trains in the UK, Canada and the US, echoes the view that a number of factors are behind the shift. In the four months to mid-August it saw an almost 5% increase in bus passenger numbers compared to the same period last year. The business made pre-tax profits of £196m this year and they are forecast to rise to £215.5m in 2009.

“We’ve got a very positive environment for public transport at the moment,” said spokesman Steven Stewart.

“We have recently surveyed commuters in the UK – 10% of the sample had shifted mode from car to another form of transport in the last three years.”

Although high fuel prices are pushing people out of their cars, he says Stagecoach’s growth has been consistent and is also related to concerns about climate change and healthy lifestyles.

“People are shifting to walking and cycling as part of integrated journeys that involve public transport,” he said.

The Perth-based business, which operates around 7,000 buses, is running pilot schemes offering discounted bus travel to people recycling goods and is working in partnerships with local councils to promote the bus as a green alternative.

“We are starting to see a fundamental shift in people’s travel habits and there are large opportunities to attract even more people,” Mr Stewart added.

The concessionary travel scheme providing free travel to pensioners in England was introduced in April and the ageing population means this pool of potential users will only increase.

Despite what we hear about people being wedded to their cars, 40% of motorists also use public transport on a regular basis