ALBUM soundbites

Gareth Evans reports on this year’s conference by the Association of Local Bus Managers hosted by McGill’s in Glasgow

Glasgow-based independent operator McGill’s welcomed delegates to the ALBUM Conference in its home city last week. Held at the Marriott hotel in the centre of Scotland’s second city, the theme of this year’s event was ‘Driving Stability out of Uncertainty.’ [wlm_nonmember][…]

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Fewer speakers created space in the programme for greater opportunities to visit suppliers in the exhibition space and to network with fellow industry professionals. An evening barbeque was held in delightful surroundings on the shore of Loch Lomond, with delegates transported in Mercedes-Benz Tourismo demonstrator coaches operated by Gibson Direct.

Welcoming delegates, McGill’s MD Ralph Roberts said: “Over 75% of the pressures that are pushing costs up in the bus industry are external factors that we cannot control, so we’re constantly trying to manage the 25% that we can. That’s not a good mix, so we’ve got to be ever more detailed in our approaches – hence the importance of attending events like this one.”

Speakers

Colin Robertson

Alexander Dennis’ (ADL) CEO talked about manufacturing in uncertain times. He said the UK remains the bedrock of the business – with a consistent 45% market share over the last six years. Political uncertainty can turn the world upside down. Therefore, ADL has been internationalising its business.

“If we hadn’t done that, I don’t know where we would be,” Colin said. “As it is, the UK market is down 25% in the year to date.”

He added that the UK market is for 3-4,000 buses per annum, but it’s 24% below the level it needs to be. Operators’ capital expenditure budgets have been impacted by factors that include concessionary fares reimbursement, uncertainty around the clean air agenda and funding cuts. Previous volume fluctuations in the 1980s and 1990s led to industry consolidation – and there are now three UK bus manufacturers left.

As for Brexit, Colin said: “Two and a half years ago, the exchange rate was 1.45 to the pound – today it’s 1.13. We buy engines, transmissions, steering systems, axles and so on in Euros. Suddenly our costs are up £10,000 per bus and customers don’t take kindly to that. More financial uncertainty adds to the pressure.”

“From every adversity comes opportunity,” he stressed. “I feel the UK leads the world in terms of niche right-hand drive double-deckers and midi bus products. We’re taking those products and successfully selling them in export markets. We’ve tried to spread our research and development costs across our international products. A big run for us is five or 10 buses.

“UK manufacturers can be more agile in responding to operators’ needs. With the level of customisation UK customers expect, there is reduced appetite for international manufacturers to enter the market.”

With the clean air zones adding to the political uncertainty, he said he would welcome a scrappage scheme.

“The scariest thing for me is that nobody knows the future and doesn’t do anything for two years,” he said.

“An electric bus will be 80 to 100% more expensive, plus the time spent charging per day.

“You would probably expect me to push clean diesel. If you go to Germany, they’re still largely operating diesel buses and in North America the fleet remains 60 to 70% diesel.”

Asked about competition from low-cost countries, Colin replied: “As long as our customers want bespoke vehicles, we have a business.”

James Backhouse

According to the well-known transport legal specialist, the best example of franchising in the UK bus industry can be found in London. “It’s essentially route by route,” said James.

“Big brands operating on a franchise basis include Costa, McDonald’s and Subway

It’s about brand identities with a private sector model.

“The bus model as envisaged is not really franchising – it’s a monopoly market. McDonald’s doesn’t have a monopoly on people buying burgers, but bus franchising does.

“The appeal of control is single branding. Manchester is currently at the information gathering stage. Other areas will be able to apply to implement franchising in due course but there are additional hurdles to jump through.

hy? The practical answer is government guidance sets out significant financial risks – and Mayoral combined authorities have the funding for that in a way other local authorities do not.

“The first part of the process is for an authority to develop the business case in its area – the initial stage is to gather information from operators. We at Backhouse Jones have assisted operators in the North West of England.

“The big stick is if the authority is not satisfied with the information provided, it can report operators to the traffic commissioner, who in turn can impose sanctions.”

The next stage is the business case, which will be examined by a local authority independent auditor.

“It’s a lengthy process,” continued James. “If a judicial review is held, it will probably be around value for money.

“The next stage is consultation and engagement. The list of consultees is enormous – it includes current operators and staff representatives. It’s a very important part of the scheme. If a small operator loses the bid for the area they currently run, it’s unlikely they’ll return to the market.

“Mayoral areas have said they will maintain leases on premises. A parallel is the largescale UK logistics market. You’ve all heard about the high-profile issues with the KFC contract change – but the problems are not typical.

taff tend to consider they work for the brand rather than the contractor.

“This will be no different to winning or losing contracts such as schoolwork – except it could be an operator’s whole business at risk.”

James advised: “Make your bids credible, but the model will of course, be different if you get 20 or five contracts due to economies of scale.”

Offering his thoughts, James said: “In the event of failure, significant hurdles have to be passed through to de-franchise – the stakes are high.

“I believe there is appetite for franchising in the regions, but the issue is political. Many are watching Greater Manchester Mayor Andy Burnham with interest to see whether franchising goes ahead or he gets his fingers burnt.

“I believe once Transport for Greater Manchester has the full data, it will see bus operation is nowhere near as lucrative as it is thought.”

James Carney

Picking up on his presentation at last year’s conference, Blackpool Transport’s (BTS) Finance & Commercial Director showed a second video of the operator’s engagement work with sixth form students from Blackpool College.

“In 1992, 48% of people aged between 17 and 20 held a driving licence – now it’s only 29%. This is due to a combination of macroeconomic factors,” explained James.

“BTS is working on the assumption that if we can get the product right, we will get a bigger percentage of young people’s travel budgets. BTS will get a reliable medium-term return on its investment.”

Patronage has grown 2% over the past 12 months at the stop outside the college which is served by a Palladium service. Commuters will be the next stakeholder group to be approached via their employers.

Conceding that some of the improvements called for by students such as litter bins were easy wins, James said other enhancements have proved more challenging: “Our bus app has probably been the most complex software introduction I’ve been involved with. This is the scary bit – if you have an app, you’re expected to introduce a new feature every six months. Our next update will show a diagrammatic progress report for real-time information to provide additional reassurance.”

John Clarfelt

Ticketer’s ever-friendly MD gave an upbeat and engaging presentation about the future of fare collection.

“I believe your competitors are new players from outside the industry, not other bus operators,” John said.

“We should work together as an industry. I see competition from the likes of Uber and Lyft as an opportunity – seize that. Travel should be seamless for passengers. Ticketing should be as simple as possible. We should be selling bus tickets on Google maps – Uber and mytaxi are there now. It should be as easy as possible. It’s a positive circle – increased bus use leads to reduced levels of congestion, benefitting everyone.

Citing the introduction of Demand Responsive Travel (DRT) in areas that include Oxford and Bristol, John said: “For areas where traditional scheduled bus services are uneconomic, should we let competitors come in or should we do something about it? Let’s run DRT to feed people into core services. Classic DRT required booking 24hrs in advance, but the latest incarnations can be pre-booked in as little as 15 minutes.

“Knowledge is key – use data generated by ticketing systems. We’re investing in business intelligence to give you even more detailed data. Operators need the same back office systems for both DRT and scheduled services.

“Hybrid DRT allows pre-booked users to be picked up as well as other passengers to board, thereby using spare capacity on the vehicle and maximising efficiency. The DRT and scheduled route systems talk to each other, so connections are made and people aren’t left stranded.

“If you don’t innovate, competitors will take over. For example, do a deal with cycle-sharing platform Mobike to allow users to cycle to a core route.”

Looking to the future, John enthused: “Anything’s possible. As operators, you must promote the fact you’re more environmentally-friendly than competitors. You’re trusted too – remember Transport Focus’ high satisfaction levels. You’re also inclusive – users don’t need a bank account to travel by bus.”

Referring to the provisions of the Bus Services Act, John concluded: “I believe passionately in open data – give people the information to make their choices and they’ll travel.”

Andy Eastlake

“Policy makers need good information – part of our job is to bring that together,” the MD of the Low Carbon Vehicle Partnership (LowCVP) enthused, as he began his presentation about Low Emission Zones (LEZ).

“LowCVP was created by government 16 years ago. If we have key people round the table with the same objective, we can hopefully develop robust solutions that work for local authorities and government.”

“Transport is now the largest contributor to emissions and that’s increasing, but it’s not all doom and gloom,” he stressed.

“You won’t hear about this in the mainstream media but PM and NOx are improving – Euro VI in the bus sector is delivering. It’s heavy duty and works. It’s improving but it’s got to move faster.

“We have a great UK bus manufacturing industry. If we get it right, this is a great opportunity for the UK to export.

“A challenge for me has been to attempt to reduce the focus on certain technologies. For example, electric can be great in cities but it’s impractical for rural areas. The sustainability of the transition is key – there’s no point in Government putting bus operators out of business to comply with air quality regulations.

“Euro VI works for buses – you’ve got to keep banging that home. NOx in Euro VI is 97% better than Euro V. It works and it’s clean. Clean Air Zones (CAZ) give the bus sector the opportunity to try to encourage local authorities of the merits of restricting other modes from roads in city centres in order to help improve air quality. Our advice to the bus industry is to be bold, i.e. offer to invest in greener vehicles and enhanced services if for example, bus priority measures and Park & Ride are introduced.”

Stating retrofit is a key opportunity, he warned of the need to ensure an accredited system is used: “We’re working with Defra on a database to allow a compliant retrofit vehicle into all CAZs, but beware of snake oil salesmen. Operators can contact LowCVP who will help.”

Looking to the future, Andy said: “If you’re looking at bus purchases, try to buy a bus with zero emission capability as zero emission zones will be coming. Buses are critical to all air quality plans. Talk to us too – let’s work together and embrace these LEZs to be the transport of the future.”

Asked by a delegate if well-to-wheel analysis includes the disposal of batteries, he replied: “No – zero emission is only tailpipe. Manufacturing batteries uses loads of energy – lifecycle analysis is an interesting area. We’ve started a piece of work to open that Pandora’s box. For example, we may not want to see a bus with 1,000 KwH as that might be worse than a diesel bus.”

As for a Euro V retrofit for coaches, Andy said: “We’re trying to get a system certified as fast as possible – CPT is helping us with the recent coach survey. We’re confident we can get coach solutions quickly.”

Mark Prowting

‘Insurance in a changing environment’ was the theme of a talk given by Willis Towers Watson’s Account Director.

Insurers fear Brexit could lead to extra layers of expense, which will be passed on to operators. There are also concerns over driver shortages due to staff returning to their native Eastern Europe.

The number and value of claims from cyclists and pedestrians is perceived to be on the rise due to an increase in risky moves resulting from slower traffic in congestion.

There is also a worry that the increase in costs arising from the drive towards alternative fuels will be diverted away from risk management.

Another fear is franchising – it may lead to lack of investment. There is however, hope that greater external regulation may be positive and lead to operators’ performance improving.

Many insurers have stopped writing the motor business and others have pulled out of sub-sectors such as haulage or self-drive hire.

Referring to the changes to whiplash and the Ogden rules, Mark said: “Effectively in one fell swoop what was already an underperforming sector fell into turmoil. The good news is that the rate could change but it’s still going to have an impact on the insurance market. Government has also agreed to review rates more often – rather than leave it 10-15 years.

“A positive move is that it will be harder to prove smaller claims of £3-4,000. Fraudulent claims are moving away from motor to travel illness – I pity you if you run tours.”

QBE remains the main insurer for the bus industry – the market for coaches is better than for bus.

As for the future, Mark said: “Times are changing. Some London operators are having very large claims now. The worry is that there are insufficient funds in the pot.

“The latest development in programme design for UK bus operators currently involves the introduction of so-called ‘loss corridors’ to provide an additional layer of protection for insurers against individual losses which breach the policy deductible.”

He urged operators to raise the issue of insurance when talking to government –and he called for ALBUM to follow CPT and establish a claims and insurance group.

Trade exhibitors

The conference was supported by a healthy number of traders – with many viewing the event’s paid-for attendance as a means to filter out non-decision-makers.

Traffilog’s Howard Young enthused: “We’re here to promote our connected bus and new product, Fatigue Monitoring that was well received at the recent CV Show. We’re also here after our success with ALBUM member customers that include Blackpool Transport, McGill’s and Avon Buses.”

Debuting at ALBUM was Cambridge-based telecommunications business Fältcom UK. The firm’s Neil McArthur told CBW: “We’ve done a lot of work in the coach industry. We’ve started gaining an increasing number of bus enquiries and we’re keen to have more.”

Alfatronix launched a new product – the IP65 USB charger designed for installation into more harsh environments where dust and moisture ingress prove to be a problem. Martyn Savage, Sales Manager explained: “In the sidewall of a vehicle, you get a lot of moisture and dust. The IP65 is a fully potted product, which means ingress protection. It’s as close as you can get to water proof.

“Also new is a USB WPOD wall mounted pod for retrofit. You can cable it from inside.”

Proudly representing uniform supplier First Corporate was John Dodd, who told CBW: “We have a growing number of ALBUM member operators. Last year’s launch of Blackpool Transport Services’ new uniform led to fresh opportunities for us from within the ALBUM group.”

Another firm debuting at ALBUM was Five bars. “The key for us is to be in front of decision makers,” enthused Martin Murphy. “Operators are aware passengers expect free WiFi but it can cost a lot. We provide a box and data for one monthly fee upfront. Many operators already have WiFi but we can save them money. We saved one operator 40% and for another, we managed to save £4,500 per month. We get better deals on the networks.”

Read Commercials’ Craig Read was present with a section of refurbished bus flooring and seats: “We’re here to promote our bus refurbishments. We’re especially keen on publicising our recently opened trim shop.”

Respected fabrics supplier Camira was again present. “We’re promoting the service we offer from design to installation,” said Nigel Vickers. “We hosted the ALBUM engineers’ meeting this year. Camira as a brand is proud to be British but we are also a worldwide business.”

Another supplier making its ALBUM debut was Datik. “We offer integrated services for operators – from basic telematics to ticketing and WiFi,” explained Mikel Aguirre. “We can connect all systems to one core device to save operators money and increase efficiency. We’re already established in Spain and South America – we now want to grow our UK presence.”

James Bailey and Amanda Howell were present from SURE CCTV. “We’ve launched a new range of AHD CCTV, offering higher definition with built-in WiFi, GPS and 4G, instant download and alert,” James told CBW.

Reflecting the interest in emissions systems, HJS made its inaugural appearance at ALBUM. “We’ve enjoyed being here,” enthused Mark Cooper. “The turnout has been quite high – we’ve met a good mix of people from across the UK.”

Darren Maher and Mike Sixsmith represented 21st Century Technology. “We’re promoting our connected system, especially our recent project with Omniserve at Gatwick,” explained Darren.

“All the on-board technology is fitted to ITxPT standards. It includes next-stop infotainment, automatic passenger counting, WiFi and dynamic RTI which is based on the movements of the bus needed to serve a Park & Ride site where different car park zones are shut off.”

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