Profits earned by bus operators last year fell for the third year in a row, according to a survey of local bus companies around the country. Investment was slashed by almost 20%.
The fall came as passenger numbers continued to decline, prompting job cuts and reduced investment levels, according to the latest edition of our report Bus Industry Performance 2019. This analyses the accounts of 107 operators around the country for the 2017/18 financial year.
According to the 117-page report, operating profit was 7.5% lower, and operating margins fell back to 6.2% from last year’s 6.7%. This was the lowest level since 2006/07. We estimate that operators need to earn 8% or more in order to meet their financial obligations and invest for the future - the report shows you how we reach those figures. According to our analysis, fewer than a third of the companies in the latest survey reached that target.
Other headlines from the report include:
- A fall of almost 20% in capital investment outside the capital, down £80m to £332m
- A further 2% fall in employee numbers, meaning that 12,000 jobs have been lost since the start of the recession
- New market share estimates confirm that Stagecoach is still the market leader by turnover with 21.5%. Go-Ahead Group is now second with 15.4%, closely followed by Arriva on 15.3%. Outside London, Stagecoach has a share of almost 26%, with FirstGroup still second on 21%.
- Bus operators in the North East of England earned the highest level of profit in 2017/18 at 10.1%, followed by the West Midlands on 7.9%. Margins in the South West were the lowest in the country, on 2.6%.
The continuing decline in patronage is almost certainly due to economic and social changes (for example, the fall in high street footfall as shopping shifts online). We also highlight the continuing growth in congestion is a major concern, and the report shows that staff productivity fell again in 2017/18, another indicator of slower bus speeds. We once again highlight the importance of speed as a key determinant of bus industry costs.
However, we remain optimistic about the industry's long term future, as concerns about climate change are expected to lead to more people switching from private to public transport. As the report's editorial puts it, "It is easy to glimpse the possibility of a bright future for the bus in the UK – it is much more difficult, though, to plot a course towards reaching it."
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