The coronavirus has put the future of our bus operators at risk: the current downturn in demand is causing real damage and is likely to get worse and to last for several months. Chris argues that steps need to be taken to ensure that the buses keep running.
It has become a bit of a cliché, but there is the famous story of Harold Macmillan who, when asked what his greatest fear was during his six years as Prime Minister, replied “Events, dear boy, events.”
I am sure that, this weekend, everybody in both business and government knows what he meant. There we were, coasting along in our post-election, post-Brexit haze, with rhe worst thing we were having to cope with was the weather, which we are at least used to (though it’s bad enough for those affected, of course). Then suddenly, along comes this new virus and within weeks the economy is grinding to a halt and billions have been wiped off the share price of companies around the world. Businesses from once mighty airlines to small neighbourhood bars find their very existence threatened by an outside cause about which they can do absolutely nothing.
In the transport business, we’ve already seen one early victim of the crisis, as the ailing short-haul airline Flybe went to the wall. Rather like the unfortunate victims of coronavirus itself, Flybe had a serious underlying condition and in the end its demise surprised few. But when major players like IAG, owners of British Airways, or Go-Ahead Group, start warning of an existential crisis, then things become serious.
Anecdotally, ground passenger transport operators are experiencing a sharp and unexpected drop in patronage – 15 to 20 per cent seems the norm so far, but some are saying up to 25%. According to media reports, this is already sufficient for train operators to warn of insolvency – with government apparently poised to step in to keep services running, albeit on a reduced level. But nobody has so far mentioned the bus industry – the poor relation, as ever. Yet the bus is likely to play a crucial role in providing services for essential workers in the coming weeks and months, and those local journeys are likely to be more important and more numerous than those by rail, especially outside the capital.
No industry can survive downturns in revenue that severe for very long – the bus industry least of all in its current weakened state. As somebody once remarked, you can continue to post book losses for ever, but you can only run out of cash once. Meanwhile, perhaps the most difficult aspect of the our current situation is that we don’t know how long it’s going to last.
We have clues – cases in the UK are expected to peak in mid to late May. The government’s latest move, to warn people over 70 that they may face up to four months’ quarantine, also gives us an illustration of how long this thing is going to last. This is bound to mean a sustained fall in demand for travel by older people – and we know that up to 40% of all passenger journeys are taken by concessionary pass holders.
The big question then will be how many people will ever come back, and how quickly: new shopping habits, psychological effects such as fear or loss of confidence and other changes could mean that the virus has a long-lasting effect on the way we live our lives. Previous experience suggests that bus patronage lost as a result of such changes rarely returns.
In the short term, steps should be taken to ensure that financial assistance is available. We should aim to keep all local bus services registered at, say, 1 March 2020 running for the duration of the emergency. This needs to be in the form of a revenue guarantee or enhanced grant – perhaps paid through the BSOG mechanism. Loans would be no good – nothing will be achieved by loading operators with debts that they could neither service nor repay in future.
I hope that people in the Department for Transport, the devolved governments and local authorities around the country are giving this some thought. Buses provide an essential service that is at the heart of our local communities – we need both to keep them running and to ensure that the industry has a clear path to a sustainable and prosperous future when the present crisis has passed.