A change in approach

So today's post is something of a backtrack in our global plans. 

Previously, we've discussed the improvement overall of our fleet and the new vehicle investment which has taken place during 2021. We thought things might improve in the medium to longer term with local buses and with private hire work, and this was the foundation, if you like, of the investment we were making. 

The signs are not encouraging. The county council where we operate has submitted what is a 'very ambitious' BSIP bid for £160m and then some. The chances of that being awarded in full are somewhat slim given their historic disinterest in supporting a bus network in the county. 

The modern bus and coach world makes extensive use of finance for new vehicles. It is the only reasonable way you can get in large numbers of vehicles to meet the various 'requirements' of operating in the modern world. There are a few operators sufficiently rich enough to write cheques when they buy new vehicles, so they're asset rich.  Us model fleet operators of course don't finance our fleets, we're cash purchasers. But it's an important distinction to make. 

So 2021 for Southwestbus has seen the arrival of a lot of new vehicles on 'finance'. Typically, we go for 5 year agreements rather than 7, and also typically we purchase the vehicle at the end and run it through the fleet onto differing work types. In the case of coaches, we have a lot of Irizar i6 triaxles - all acquired new from 2017 onwards. Some of these are coming to the end of their finance terms, so by 2023 we'll own outright a number of i6 triaxles alongside the PB triaxles we've bought in since 2013. 

The only problem with a long triaxle coach is the length. It's not an 11m/12m vehicle and we do operate contracts down some very narrow lanes! So cascading them through the fleet poses a problem given their length.  Coaches, for us are a little easier to handle in that they can undertake different work types, whereas a bus is a bus. You can't really use them as a coach.

We're a little odder in that we've also bought in a lot of new buses this year alongside coaches. 

The buses have been purchased for operation on our commercial local bus network rather than HPC (which uses Borisbuses). A number of ADL Enviro 400 MMCs have arrived with some very short Optare Solo SR buses which have been targeted on town services in Taunton and Yeovil. 

These operate self contained vehicle workings and on the whole, the bus network of around 45 vehicles is marginally profitable. 

It is therefore vulnerable to fluctuations in use. A great deal of the service network has all day workings but the 'peaks' are provided with as few vehicles as possible - offpeak we enhance frequency to target concessionary travellers. 

The difficulties have arisen with the peaks in that people aren't commuting like they were prior to the first lockdown. We have workings which did require double decks which now manage quite happily with low floor Dart sized vehicles. The overall reduction is around 20%, so we're carrying 80% of what we were prior to 2020 when we were all stuck at home. 

Our assumption was that passenger numbers would return to those levels, if not increase. Unlike when the industry first introduced low floor vehicles in the late 1990s/early to mid 2000s you don't get the increases in custom that you did from moving away from step entrance vehicles. An oddity of the modern bus industry is it's expectation that a new bus generates growth on the service it operates, rather than the more sensible convention that the new bus replaces an economically life expired one!

A similar phenomenon in the railways was known as the 'sparks effect' - where introduction of electric trains increased passenger journeys made on the lines concerned. There's no sparks effect from replacing one low floor vehicle with a brand new low floor vehicle. 

You do gain in other ways, lower maintenance costs being one and the need to have less spare vehicles being another, but you also lose out financially when it comes to paying for the vehicles. 

Ultimately, what the customer wants in not necessarily a 'new bus'. When I was doing my dissertation at University way back in 2006 I learned that frequency was what drove customer behaviour and it was followed by reliability of the service. 

A frequent and reliable service was what encouraged customers to travel, rather than the age of the vehicle. My surveying was undertaken on a fleet of refurbished vehicles ranging from 4 through to 15 years of age at the time - the refurbishment brought the vehicles to modern standards without the costs of a 'modern' fleet.

Returning to the 'finance' element. We'll conservatively assume a new double deck bus costs £250,000. Now, across 5 years that is £5,000 a month going out, though the figure will be lower thanks to the balloon payment at the end of the term. 

That finance cost is met whether or not the bus moves, carries 20% less passengers than normal or whether the bus by just being there generates new passenger journeys. 

Compare that to the cost of a 10 year old vehicle, available for around £25/30,000 and you begin to see the financial advantages in not running expensive new kit on commercially marginal routes. 

Said vehicle looks just as modern as it's new sibling, but is depreciated over 5/6 years. 

Many operators do the same with a 3 year schools contract and purchase specifically for it - in my current work I'm in the world of minibuses where contracts are retendered annually and vehicles costing £25,000 are an extravagance. 

So we have parted company with a number of new vehicles this last month and going forwards, we're going to purchase well maintained secondhand vehicles with which to operate our commercial bus network. These have been refurbished to modern standards and given, like most of the fleet dateless number plates, as people infer that a vehicle is old and in some way inferior in standard.

We don't provide 'tendered' contracts here, but there are a number of de-minimis services we operate for the county council. For those who aren't aware of the term, a tendering authority can subsidise a service to a certain level (£25,000 last time I checked) without the need to put it out to competitive tender. Typically, these are evening/Sunday operations, but there is a tiny number of peak journeys (such as the 19) which operate under this arrangement, with us retaining all on bus revenues on top. 

This new approach has seen the arrival of a number of East Lancs Myllennium double decks in the post 2000 Blackburn Transport livery. It's close enough to our livery to warrant not needing to repaint vehicles - though we also operate a number of MPD Darts and the ultimate low cost vehicle, the Wright Renown bodied Volvo B10BLE (built between 1998 and 2002!). 

Blazefield in particular bought a lot of these around 2001/2 and they've been long serving members of that fleet. They represent a crossroads in modern vehicles before they became very technical, but they're low floor and still look modern. Perhaps it's being dragged kicking and screaming towards middle age that makes me dislike 'modern things' but most modern bus and coach designs don't look attractive compared to what they're replacing. 

We operate three types of low floor bus, which are in the same livery. However, each of the types is made by a different diecast manufacturer. The MPD Darts are Creative Master, the Wrights are EFE and the Mylenniums are Corgi OOC. I noticed on Saturday just gone, at an MBF meeting where I'd taken three with me to display underneath bright strobe lighting that each manufacturer has different ideas on the shades of cream, the dark greens and the yellow. 

So these vehicles will propel us into the future, where no doubt something new will replace them in a few years time, whatever that is. The finances of playing 'model buses' are such now that you spend £45/50 a time on 'new vehicles' so if you're running a fleet of thousands the sums become eye watering. 

Perversely, the cheapest model bus you can buy is the toy version of the Corgi Borisbus - slightly overscaled from 1/76h but can be found for between £6 and 10 in most places. However a 'real life' fleet of the things commands a £100k premium over a conventional diesel vehicle for each one you purchase.  Although the first examples of them are approaching 7/8 years of age now which is the end of their battery life. So perhaps there's an avenue there...