20 January 2016 Presentation from Bus Éireann


Short Presentation to Joint Oireachtas Committee on Transport and

Communications – 20


January 2016

Mr Aidan Murphy, Chairman Bus Éireann

Mr Martin Nolan, CEO Bus Éireann

I want to thank the Chairman and the Members of the Transport and Communications

Committee for today’s invitation to provide an update on the company’s inter-urban and

Expressway services and the dovetailing of the rural transport services with the Expressway network.

Firstly, I want to re-iterate our commitment to serving rural Ireland and connecting the people in these communities with the wider network. As the biggest provider of rural transport in the country, almost 10,000 people help to deliver our services every day, and we are proud to be associated with the provision of jobs and services in the many cities, towns and villages we serve.

In a service industry, we are hugely reliant on our employees whose dedication and commitment to making better connections with our customers is among the very highest In

Ireland. We were very proud to be recognized by The Reputations Institute last year, in being regarded as having the 42 nd best reputation in the country, up from 84 th the previous year, among the Top 100 companies in Ireland. That is entirely down to the attitude, commitment and competence of our people, who again went to extraordinary lengths when the most unfortunate flooding impacted our country the most, to keep the travelling public connected in some of the most rural parts of Ireland. I want to publicly thank our staff for their extra endeavour during this difficult period, who strived to ensure the floods didn’t dampen the Christmas spirit for so many.



In 2015, Bus Éireann carried just over 37m Road passenger journeys in addition to carrying

112,000 children to school every day which demonstrates the critical role our organisation plays as part of the social and economic fabric of Ireland. We successfully completed the first year of a new 5 year Direct Award contract with the NTA and began a number of projects under that contract which will bring enhanced customer service standards and technology improvements to our business. We secured funding for 100 new eco-friendly vehicles which we launched last week which will bring higher capacity and comfort to our customers in 2016. These vehicles will help the growth agenda, but we will need more. Our network improvements and marketing helped to deliver 700,000 extra passenger journeys and across all of our products, we increased our focus on the customer, setting up a new customer care facility, beginning work on our Colbert station in Limerick and re-enforcing our commitment to Safety above all, through a new School Transport campaign.

All of these initiatives underpin our ambition to be recognized as progressive and deliver on our mission which is to succeed by providing an excellent service to the Irish public.

Bus Éireann’s Expressway network is a separate commercial service that receives no State funding. It comprises 23 inter-regional routes that operate across the country, linking cities and population hubs, and must generate its own funds for necessary investment in fleet, customer service, technology improvements and marketing.

The environment in which we operate these Expressway services has become an increasingly competitive one that comprises a significant number of private coach companies, which are licensed to compete in the same market. Customers from bigger population centres are demanding faster journey times with less stops, more use of the motorway network and more direct connections to larger population centres. New entrants have been applying for licences on these routes, and in the past year alone we have seen significant new licences granted on routes by the NTA and this issue is a matter of utmost concern for our Board at Bus Éireann.

The licence issuing, and connectivity of the network is no doubt a difficult role that the NTA now performs. We assist them when necessary, when routes are being designed or


realigned but ultimately, the responsibility for ensuring connectivity among all of the public transport alternatives now rests with the NTA, and not with Bus Éireann, since our legal roles changed in 2009.

As Bus Éireann operates over 300 city and stage carriage routes under public contract, we connect thousands of locations and customers on a daily basis, ensuring city and rural stage carriage services are dove-tailed with Expressway and other public transport services where it is possible to do so, providing a vast inter-connected bus and coach network across


Having addressed this Committee last March, we worked closely with the NTA and a solution was provided for the towns which were affected by our commercial decision to withdraw from Expressway Route 5 (Waterford –Dublin through Wicklow), and curtail our

Expressway Route 7 (originally Cork-Dublin through Clonmel). The network solution involved a re-design of our public service routes 132 in Wicklow and 245 in Cork, both of which are operated under subsidy as part of our Public Service Contract. These routes together with some integrated connections provided by LocalLink, which is the rural transport scheme licenced by the NTA and provided under subsidy, performed a role to ensure the people in those communities remain connected.

In this example, the transition from the non-commercial segments of Expressway to PSO services, has been successful and the subsidisation required, is now more prudently aligned with the customer demand required in these smaller towns and villages, and not left for our

Expressway business to shoulder unsustainably.

This change highlights the distinctive difference between our commercial Expressway services and PSO services. The ‘dovetailing’ of rural services with our Expressway network is a matter for the NTA but we welcome integration where it is provided and where supply of

PSO service is complimentary to the service we can afford to provide, without incurring financial losses.

Expressway cannot afford to endlessly provide service on routes which will never deliver a financial contribution. This is a fundamental tenet of being commercial on our inter-regional and inter-city services. As part of this decision making ethos in recent years, difficult


decisions were necessary and our Expressway services were withdrawn from approx. 20% of secondary locations where customer demand could not cover the costs of providing the

Expressway service. That said, by working with the NTA, we can assure the Committee that there has been no widespread loss of services to rural locations as a result of the decisions we have had to make. Bus Éireann is very much committed as a company to rural Ireland, and stand ready to provide the most relevant services, for ongoing connectivity, across our network.

We have previously advised this Committee that Bus Éireann has been in survival mode in recent years. The company worked its way out of the recession and remains committed to work with its stakeholders to deliver the best transport system possible, in an efficient and effective manner given the funds available.

The pace of economic recovery requires increased Public Transport levels and this will require support to foster social and economic inclusion. In relation to PSO services provided under contract to the NTA, we are pleased that there is recognition emerging that the PSO subvention to operate the levels of PSO service requires more funding. In 2015, we made substantial progress this year in developing our services in conjunction with the NTA and we have seen substantial growth in passenger numbers in the services we provide. We have recently received an additional allocation for 2015 which has ensured that the service cost has been fully covered which is very welcome. We have been advised that the level of funding in 2016 will match our costs, which again is very welcome but we await final confirmation from the NTA. We will of course be submitting our own application for the

10% of our services being tendered as part of the PSO market opening later this year.

I shared our concerns regarding the impact of the motorways on smaller towns and villages during our visits to this forum in 2008, 2009, 2012 and 2015. I also advised that changes to a number of our commercial Expressway inter-city routes were required to ensure their survival. Nothing has changed in this regard, and in fact competition on Expressway routes has increased with the latest licence issued and implemented just before Christmas.


Competition in the inter-city market has increased, with many more operators on the roads, which poses a considerable difficulty for the Expressway business. The reversal of the 18 month cost saving agreement with our staff has also affected the bottom line and the work stoppage in May had a very serious impact on our profitability from which we have yet to recover. Expressway broke even in 2014. Despite savings achieved through various initiatives this year, losses are now forecast however in 2015, which adds very tangible financial pressure to the situation.

Together with the Board and the management team, we are committed to examine ways in which to reduce costs, so as to deliver the profitability necessary to secure a viable future for Expressway. This business requires investment in customer service, fleet investment, marketing and innovation and we must create an efficient and cost effective cost model to position the business to be able to compete. The alternative is to exit the market. The matter was discussed at the recent Bus Éireann board meeting, and the management team have been tasked to bring a comprehensive strategic plan for Expressway to the Board as quickly as possible and to keep the Board appraised of progress.

As a company, if we do not make changes and lose the flexibility to respond to the licensing environment which continues to unfold unabated, Expressway will go out of business and jobs will be lost, both within Bus Éireann and among the wide range of suppliers that depend on Bus Éireann across the country. While this could result in increased costs to the

State, we cannot trade recklessly and continue to incur losses. Expressway has to make a commercial return on its Expressway routes to enable fleet replacement to take place as it does not receive any funding for buses or coaches on these routes.

I would like to re-iterate that Bus Éireann is very much committed as a company to rural

Ireland, and stands ready to provide the most relevant services, for ongoing connectivity, across our network, given the financial resources available.