Saturday, 19 December 2009

EYMS Changes: Why they are hapenning

So far I have mostly posted about the impact and details of EYMS's February changes. But why are they happening? EYMS's press release explain's their reasons.

Firstly the issue of the national free concessionary travel scheme. A fantastic idea in principle, but there have been considerable funding issues. The idea is for bus companies to be 'no better no worse' off than in the days of half-price concessionary travel. Bus companies used to get the half price adult fare the concession paid, plus a contribution from local councils (reimbursement). Now bus companies get an increased contribution from local councils, but this is often less than the total of the previous half price fare plus smaller council contribution. So bus operators loose out.

Some would argue that increased passenger levels make up for this. But the increase in passenger levels needed for bus companies to be 'revenue neutral' is often very, unrealistically, high. Furthermore, as EYMS have faced, in some cases there is no spare capacity for increased concessionary travel, and with the reimbursement rate being low, it is not worthwhile investing in extra capacity. This can lead to unhappy full fare paying passengers, not wanting to stand, switching to other forms of transport such as the car or train.

EYMS quote an example from North Yorkshire where another operator receives £1.48 for a concessionary traveller compared to the full adult fare of £5.50. They also note that even full buses can be unprofitable when most passengers are concessions. Not hard to imagine with such low levels of reimbursement.

So the concessionary travel scheme has these underlying problems that have been around for a while. For EYMS, the 'straw that has broken the camel's back' seems to have been the decision of Hull City Council to reduce their reimbursement by £160,000 a year. This comes after a £350,000 annual decrease in reimbursement from councils in North Yorkshire. It should be noted that council's are allocated money by Central Government to pay for concessionary travel, and thus it is the government underfunding the scheme nationally that causes councils to make cuts.

Secondly EYMS have been hit by the loss of the profitable Priory Park Park and Ride contract in Hull. Profits from this and other services have been 'cross-subsidising' other loss making services.

So overall a tricky time for EYMS. With the large budget deficit in the UK, increased funding for concessionary travel at a national level seems very unlikely so no easy solutions any time soon. But this may ignite the row over the award of the Priory Park contract to CT Plus. EYMS's explanation would imply that had they kept the contract the service cuts may be less severe.

1 comment:

Anonymous said...

I agree in part with EYMS's assessment of concessionary fares, but if you push them on the following two points, they'd almost certainly admit that the concessionary fare scheme has done them a favour:

1. Pre-free travel for concessions, a bus that ran half-empty with a mixture of adults and half-fare paying concessions saw a financial return far less than a full one now, even if the 50% increase is exclusively OAPs.

2. Since reimbursement rates are based on a percentage of the number of adult single and return fares an operator issues over a month (the formula, once calculated, is multiplied by the number of concessionary tickets issued), those travelling ONE STOP in, say, Bridlington, will net EYMS exactly the same as someone travelling from Hull to Scarborough.

The latter point is also overlooked. Drivers may complain about OAPs simply travelling from one end of the street to the other, but to the operator, they receive the same amount from that passenger as if they'd travelled the full route length.

Personally, operators are talking rubbish when they claim they are worse off. There are some routes that could generate less cash now (such as those already full of OAPs), but there are thousands of routes that were already profitable before the free scheme and now those routes see further OAP patronage now the free scheme is implemented.

Most operators' beef is regarding the varying reimbursement rate. With local authorities holding the purse strings, unlike in Scotland and Wales were the respective devolved assemblies issue a set percentage per free trip, based on the adult single fare, those anti-bus authorities, generally Conservative-led, pay rates less than 50%. On the Isle of Wight, I understand the council there pay something ridiculous like 34%.

Despite this, you don't see Southern Vectis calling in the receivers, do you? Clearly they're continuing to make a profit, just not as much as they'd like!