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Thursday, 21 April 2011

Under the Surface

So, back in UK and two days into the new job of Managing Director, Surface Transport at Transport for London.

Well I see on my return that items from this blog and from TfL's own "Upfront" Magazine are already in the trade press so my news and intentions are already in wide circulation.

So perhaps this is a good place, having left the private sector, to make some observations on the non-London market thatI have left behind and which is delivered under quite different legislation.

There is no doubt the industry is in some turbulent times. Significant reductions in local authority income affecting tendered bus volumes and concessionary fares income; the imminent arrival of the preliminary findings of the Competition Commission; tough economic times affecting fares revenue; high fuel costs; and now less than 12 months to go to the significant reduction in BSOG. The financial challenges for the foreseeable future are significant. Notwithstanding all these issues, fleet investment must continue as the DDA deadlines are looming, and the prospect of further requirements from the EU always are on the horizon.

At the same time the industry is adjusting to the progressive retirement of its founders - now only Brian Souter at Stagecoach remains amongst the big groups and equally amongst the smaller companies a succession plan must be being prepared for those who either bought their nationalised businesses or something else instead. Simultaneously investors are promoting change at National Express, rumouring other activity at Stagecoach, are watching the changes at First, DB/Arriva and the effect of new stewardship at Go-Ahead.

And finally this market, and that of rail, looks attractive to the foreign companies from Europe.

For the non-London market it still feels as if the industry is stuck in the halfway house between being a utility and a retailer. British Airways, BP, BT, and the energy companies have long since shaken off their postwar history. Yet in the meantime the bus industry still doesn't make the big leap forwards nor embraces the consequences of any step backwards. It still seeks external funding for its street furniture, ticket machines, investment needs even though any use of public money must by definition bring with it an element of control.

We wouldn't see any of the major retailers asking the local authority to pay for its signage or new tills.

A problem remains that the industry is far from "deregulated". In fact it is significantly regulated - the Traffic Commissioner, VOSA, HSE etc. But there are regulatory forces in play inside telecommunications, aviation and energy as well.

The big issue therefore is - does the bus industry want to be a proper retailer? if it does, it has to behave like one and boldly make the step. Otherwise, if it only is half-in and half-out, it will have to accept significant influence from the local authorities and other stakeholders who will be providing some of the funding.

Increased devolution of power and responsibilities to local authorities is bringing with it a stronger demand for control as well.

A real crossroads for the industry, new dynamics in play and new players as well.

I am watching with great interest, from my Central London vantage point...........

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