I Wanna Ride The Bus!

Sunday, March 19, 2006

Regulated Buses

I would like to thank Rail Temp once again for offering to write something about buses in London. He has written a very long and in depth article about how regulated buses work in London, and has even compared some elements of bus travel in Greater Manchester.

His post goes way above what I was expecting. So I'll shut up now, and hand over to Rail Temp.

Given I'm writing this for GM Traveller, this wee article is solely going to cover what Transport for London do with regards to London's bus services.

London Buses Limited is a wholly owned subsidiary of Transport for London, and is responsible for planning routes, specifying service levels, monitoring service quality, managing bus stations, bus stops and other support services and, most importantly, awarding contracts to private operators to run the buses.

It is at this point that we need to go back in time to 1985, when bus services outside London were deregulated. In simple terms, this meant that any operator could apply to run a new route even if another company already ran a service along the same roads. A classic example of this can be found on the Wilmslow Road "corridor" in Manchester, where you have no less than six operators running buses over the "core" section of route (Manchester City Centre to East Didsbury), all using the same route number, but none accepting each other's tickets. If you want an "interavailable" ticket, you either have to buy a DaySaver (at a cost of £3.20 off-peak, £3.50 peak, for buses only), or a Bus Saver (only available in 7 Day, 28 Day and Annual versions).

Originally, it was intended that London's buses should also be deregulated once they had become less dependent on Government funding and steps had been taken to encourage greater competition between operators.

In preparation for this, London Regional Transport set up London Buses Limited to run its bus services, and simultaneously set up the Tendered Bus Division to begin the process of competitive tendering, requiring LBL to compete against private sector operators for the opportunity to run individual routes on behalf of LRT.

The routes were awarded to the operator which could run the best service at the most cost-effective price, and several of the initial routes went to private companies. Another change being the introduction of vehicles in new liveries, rather than the traditional red.

With deregulation still on the cards, LBL created 12 local subsidiaries, namely Centrewest, East London, Leaside, London Central, London Forest, London General, London Northern, London United, Metroline, Selkent, South London, Westlink. London Forest failed to reach sale in 1994/5, so was broken up and split between Leaside (now Arriva London North) and East London (now Stagecoach East London).

In December 1992, the Government announced that the LBL subsidiaries would be privatised ahead of deregulation. A year later, however, they decided that deregulation would be postponed until after the General Election in May 1997.

Following the election of a Labour Government at that election, all thoughts of deregulation were swept away, and London Regional Transport was replaced by a new body, called Transport for London, which is part of the Greater London Authority, headed by London Mayor Ken Livingstone.

The net result of all this is that London's bus network is being used by more passengers than at any time since the 1960s. It's also one of the largest in the world, with some 8000 buses, on 700 routes, carrying more than 6 million passengers a day. It's not really surprising, therefore, that a joint report by the Audit Commission and National Audit Office last year found London's bus network was "leading the way in the UK".

The first contracts were, as now, let on a gross cost basis. However, from the mid 1990s, net cost contracts were introduced. These involved bus operators retaining the cash revenue paid to the driver as well as a proportion of travelcard revenue received by London Transport.

Under these "net cost" contracts, operators tendered on the basis of the lowest subsidy required, with the anticipation that there would be a strong incentive for operators to improve the quality of service provided to increase patronage and, therefore, profitability.

Unfortunately, such contracts don't take into account the "turn up and go" nature of the demand on bus networks, and operators would often add a premium to cover the risk of losing revenue due to circumstances outside their control, such as long term roadworks. Another disadvantage was that operators' revenues were directly affected by any changes London Transport made to the bus network, which also resulted in operators' contracts being constantly adjusted to take account of the changes.

In the late 1990s, London Transport decided to switch back to gross cost contracts, meaning they kept all of the revenue, and paid the commercial operators a fixed amount for running the route.

This switch was intended as an interim measure, to halt the award of net cost contracts, during the development of new "Quality Incentive" contracts. This was of little comfort to passengers and operators, however, as performance got worse, and although the contracts took inflation into account, they didn't adequately cover the rising costs of fuel and staff, leaving operators making substantial losses, which pushed up the cost of newly tendered contracts by a considerable amount.

Ultimately, this approach led to one operator, Harris Bus, going into administration, and as no other operator was willing to take over their routes, London Buses was left with the unenviable task of creating a new subsidiary, East Thames Buses, to operate the routes, initially from Ash Grove Garage in Hackney, and now from a garage in Mandela Way (just off the Old Kent Road, near the Bricklayer's Arms roundabout) and from an industrial unit in Belvedere Industrial Estate, near the River Thames.

Quality Incentive Contracts (QICs) were finally introduced in Autumn 2001 in response to the rising costs and declining performance of the previous contract regimes. They were also intended to help achieve the Mayor's stated aim of increasing bus ridership by 40% by 2011, to renew the fleet and improve reliability.

The QICs are a form of gross cost contract where payment is linked to reliability in terms of bus arrivals at stops. London Buses sets a standard for each route, and operators can lose up to 10% of the contract price, or get a bonus of up to 15%, depending on how well they measure against the standard.

In addition, the contract can be extended from 5 to 7 years, depending on performance of both reliability and mystery traveller surveys, the latter assessing things like vehicle condition, cleanliness, visibility of bus blinds, and ride quality.

When an Invitation to Tender (ITT) is issued, it includes a specification of the routeing, frequencies and vehicle type required. It also specifies the reliability and proportion of operated kilometres that are expected to be achieved.

Operators then submit their bids, taking into account all of the elements for which they are responsible, such as the cost of drivers, fuel, vehicles, service control, garage and office premises, engineering support, insurance, etc.

On average, each route receives three tenders, which London Buses then evaluate on value for money, taking into account the cost and anticipated performance of the operator during the life of the contract.

In most cases, the operator with the lowest tender will win, but there are a few examples where a more expensive bid is chosen, such as an operator bidding for a group of complimentary routes.

Another big difference between London and the rest of the country is that fares are set by London Buses, rather than the individual operators. As a result, a single fare on a bus anywhere in London will currently cost you £1.50 in cash, or either £1 or 80p if you have a Pay As You Go Oystercard, which works much the same way as PAYG Mobile Phones, in that you "load" the card with a certain amount of money, then use that instead of cash when you travel, saving money in the process. And if you only travel by bus on a given day, you'll pay no more than £3, as your expenditure is automatically capped.

Finally, London Buses also monitor the performance of the operators. In addition to those required for the QIC checks, they perform Driver Quality Monitoring (undertaken by the Driving Standards Agency on behalf of LBL), Inspections of vehicle quality (undertaken by the Freight Transport Association), Wheelchair Ramp Avaliability checks and customer satisfaction surveys.

Bus and coach services operating within London, but outside of the London Buses network, have to have a London service permit. This does not, however, apply to rail replacement bus services, express services carrying fare-paying passengers for more than 15 miles, or services that are provided free of charge.

Examples of services operating under LSPs are the "Hotel Hoppa" services operated by National Express in the Heathrow Area; the various National Express long distance services that call at Heathrow Airport or Golders Green; Sightseeing Tours; certain commuter coaches and various school services.

As well as London Service Permits and tendered routes, London Buses have negotiated with a number of commercial operators to accept TfL passes and permits on sections of their routes within the Greater London Area, under a London Local Service Agreement. Examples of these include Arriva Kent & Sussex route 402 (Bromley North - Royal Tunbridge Wells), Arriva Kent Thameside routes 370 and 373 (Romford - Grays), Metrobus route 409 (Croydon - East Grinstead) and Metroline route 84 (New Barnet - St Albans).

Thanks for this really interesting and useful post - im doing an essay on UK public transport and this explained london buses for me in a simple and easy to digest manner
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