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Problems facing small bus operators (Austin Blackburn)

MotCO

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Austin Blackburn from Go-Coach (and for a short while was associated with Hulleys) recently gave a very interesting talk to the Friends of LT Museum, https://www.youtube.com/live/gvjKScBbMz0?t=565s part of which centred on the difficulties facing small bus operators. For example:

  • staff retention - some companies are losing 60% of their staff each year, and the costs of advertising for jobs, recruitment, training etc are not inconsiderable
  • impact of diesel price increases on small operators who can't afford to hedge contracts - Go-Coach's diesel bill has soared from £12,000 per week at the start of the year to £20,000 per week now
  • the prohibitive cost of installing electric chargers for small companies - Austin quoted a cost of £1m per kilometre, and his depot is 1.2 Km from the nearest substation
  • the difficulties in recruiting potential managers - managers who 'grew' from drivers is less likely now since 18 year olds are not recruited as drivers since the insurance cost is too high. 18 year olds thus go and work in a different industry where they can progress
  • the lack of good small Solos on the second-hand market - there are no mini-buses available, and Solos stopped being made a few years back (except for a small batch for Stagecoach and others) Whjat will happen when the small Solos are time expired?

Do small operators have a future?
 
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Steve440

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He has a point regarding small buses, I have been on a few Mellor Sprinters of Transdev Team Pennine around Calderdale and Burnley when they ran the Pendle routes and they are absolutely terrible for passengers, solid suspension and a very rough ride, they surely cannot be the way forward. I hope I never have to travel on one again, but my local route in the Colne Valley is currently operated by Stott's using solos so what will happen with franchising is anybody's guess.
 

mattb7tl

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The problems he describes are real but they are symptoms, not causes. The root issue is structural as small operators have no route to wealth accumulation in a deregulated market that is effectively a monopoly in practice. They are largely trapped in a tender dependency cycle with wafer thin margins, no ability to hedge costs, no capital buffer for infrastructure like charging, and no pipeline for management talent. Every cost shock, diesel, insurance, recruitment, hits them disproportionately because nothing can absorb it.

I have thought they had no future for the best part of a decade, maybe two. A lot of them are already dead in any meaningful sense, they are just not buried yet. The structural problems predate the current cost pressures but those pressures have just accelerated the timeline. The question is not really "do they have a future" but rather how long the inevitable can be delayed, and what replaces them when it cannot be delayed.
 

DunsBus

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189 year olds thus go and work in a different industry where they can progress.
o_O

I knew that the government is gradually increasing the retirement age, but 189 years is perhaps taking it to extremes!

:lol:
 

markymark2000

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staff retention - some companies are losing 60% of their staff each year, and the costs of advertising for jobs, recruitment, training etc are not inconsiderable
It's worth saying that he does caveat that stat by saying that they are probably an extreme case and had a lot of 'clearing out to do after Hulleys'. While staff retention will be an issue, I think (and Austin acknowledges) that this is mostly an extreme case. And operator who is turning over 60% of it's staff each year, without another factor at play, needs to take a step back and really look into what is going on within the company.

Another thing to note is that while he didn't say who the drivers were lost to (incases where they left), it's worth noting that GoBus is in a very competitive area for drivers. You've got TFL operators offering ever higher wages both directly employed and agency areas. Plus you have just had GoAhead open up the Fastrack depot in Dartford too which has required a fresh set of staff.
 

37114

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  • the lack of good small Solos on the second-hand market - there are no mini-buses available, and Solos stopped being made a few years back (except for a small batch for Stagecoach and others) Whjat will happen when the small Solos are time expired?

Do small operators have a future?
It is a valid concern but there are alternatives eg the shortest Enviro 200s which is what my local operator (Faresaver)has been buying as they sell off Solos. Apparently ADL considered a Diesel version of the E100ev but deemed the market too small with the shift to electric.

Re your last point it is certainly harder for smaller operators but most of the big ones started as a small operator eg Stagecoach.
 

mangad

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Re your last point it is certainly harder for smaller operators but most of the big ones started as a small operator eg Stagecoach.
That was in a very different era though. A time when nationalised companies were being sold off, and where there were no longer any national operators. Where incumbent operators were having to adapt to deregulation whilst new entrants to the market sought to eat away at their market share.

Now we have four big national groups dominating most of the big markets. Smaller operators can't easily pop up and start trying to cream off passengers on a major Stagecoach route for example. It's hard to imagine any current small operator ever growing to something like the size of First or Go Ahead.
 

RT4038

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Austin Blackburn from Go-Coach (and for a short while was associated with Hulleys) recently gave a very interesting talk to the Friends of LT Museum, https://www.youtube.com/live/gvjKScBbMz0?t=565s part of which centred on the difficulties facing small bus operators. For example:

  • staff retention - some companies are losing 60% of their staff each year, and the costs of advertising for jobs, recruitment, training etc are not inconsiderable

Which probably means that they are not paying enough, or that their terms and conditions are not good enough. Which may well be indicative that 'low cost' is not really. (This is not a problem solely found by smaller operators though - the large companies have similar costs)

  • impact of diesel price increases on small operators who can't afford to hedge contracts - Go-Coach's diesel bill has soared from £12,000 per week at the start of the year to £20,000 per week now

This does affect small operators immediately, but as you point out hedging contracts cost money and can work the other way too - I worked for a large operator that had fuel hedged and then the price went down - for nearly a year it would have been cheaper to buy the fuel at forecourt prices!

  • the prohibitive cost of installing electric chargers for small companies - Austin quoted a cost of £1m per kilometre, and his depot is 1.2 Km from the nearest substation

Like the large companies, the small operators will have to compete for the Government funding of such things. Not many large companies installing expensive charging equipment entirely at their own expense. At this stage it is really only an issue for registered local bus service work, which for a myriad of reasons is not really small operator territory anymore.

  • the difficulties in recruiting potential managers - managers who 'grew' from drivers is less likely now since 18 year olds are not recruited as drivers since the insurance cost is too high. 18 year olds thus go and work in a different industry where they can progress.
I think this is a bit of a red herring - the shortage of potential managers is more aligned with the facets of the industry - there is no decent money in it , the hours are arduous, the product is not appreciated by large swathes of society, the need for consistency and reliability too great. How often do we hear that a small operator is closing / being sold because none of the younger members of the family want to be involved? Says a lot really.

[*]the lack of good small Solos on the second-hand market - there are no mini-buses available, and Solos stopped being made a few years back (except for a small batch for Stagecoach and others) Whjat will happen when the small Solos are time expired?
[/LIST]

This rather suggests that there is no commercial place for small operators in the registered local bus service market - if they are having to rely on second hand vehicles that are no longer produced; no longer required by mainstream operators. The only hope is to win a tender which will pay for whatever new vehicle is required - if the tender spec is for a bus that doesn't exist then the tendering authority will have to think again....

That was in a very different era though. A time when nationalised companies were being sold off, and where there were no longer any national operators. Where incumbent operators were having to adapt to deregulation whilst new entrants to the market sought to eat away at their market share.

Now we have four big national groups dominating most of the big markets. Smaller operators can't easily pop up and start trying to cream off passengers on a major Stagecoach route for example. It's hard to imagine any current small operator ever growing to something like the size of First or Go Ahead.

I don't think the 'creaming off' model works any more - the Authorities and public generally don't want this to happen (so the funding, legislative and operating models are reflecting that), and anyway there is an evershrinking amount of cream to be had. 'Low cost' models are often being found not to be quite as sustainable as the owners hope - in my county of residence both 'low cost' registered local bus service operators have closed down; both on account of having bid too low for tendered work (in order to win it from large operators) and taken on commercial mileage that wasn't. Running mainstream registered local bus services is hard work and administration - yes, some small operators are doing the work to run them properly and reliably, but it takes a certain mindset, knowledge and experience to do so. Relying on cast off buses and cast off staff for a 'low cost' operation is rarely a long term business.

Is there a future for small operators - yes, of course. Running School buses, contracts, private hires, rail replacement etc. Registered Local bus services for the hardy, and hats off for those who do.
 
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Steve440

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I don't think the 'creaming off' model works any more - the Authorities and public generally don't want this to happen
Has anyone told Lonsdale Buses this (between Carnforth and Morecambe 5 minutes ahead of long established Stagecoach service)
 

MotCO

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Ensignbus seem to be selling more Optare Solos than any other type of single deck bus at the moment - https://www.ensignbus.com/single-deckers.html

There's no shortage of them available with this dealer either - https://drewwilson.co.uk/vehicle-type/bus/?_dw_vehicles_body=solo

There are currently three for sale here - https://www.chartwellbussales.co.uk/buses_for_sale
I think Austin was referring to the very small Solos - I think he has a handful, with a 59 reg, which presumably are up for renewal, but there aren't any on the second hand market.
 

N1

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the prohibitive cost of installing electric chargers for small companies - Austin quoted a cost of £1m per kilometre, and his depot is 1.2 Km from the nearest substation
£1m per km is well above normal costs for DNO or ICP 11kV connections. For Go-Coach, the cost is being driven by either a heavily constrained local grid earning significant upstream reinforcements (this is an issue with how upgrades required to deliver new connections are paid for by customers) or it will be local issues. The Go-coach depot being sandwiched between rail lines and M25 means the costs are likely due to having to install new cables crossing one of these.

Now I would agree that electricity connection upgrades are prohibitively expensive for most small operators, just saying £1m per km is not a representative cost for all new connections. It is very much luck of the draw. (An example is an office building in City of London I am looking at, that has had its capacity cut in covid and now wants it increased again by multiple MWs, they can do so at no cost from the DNO as there is spare capacity in the existing 11kV network).

Obviously this favours large bus companies with multiple depots, as they can pick the easy depots to electrify first and leave hard ones to later.
 

MotCO

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£1m per km is well above normal costs for DNO or ICP 11kV connections. For Go-Coach, the cost is being driven by either a heavily constrained local grid earning significant upstream reinforcements (this is an issue with how upgrades required to deliver new connections are paid for by customers) or it will be local issues. The Go-coach depot being sandwiched between rail lines and M25 means the costs are likely due to having to install new cables crossing one of these.

Now I would agree that electricity connection upgrades are prohibitively expensive for most small operators, just saying £1m per km is not a representative cost for all new connections. It is very much luck of the draw. (An example is an office building in City of London I am looking at, that has had its capacity cut in covid and now wants it increased again by multiple MWs, they can do so at no cost from the DNO as there is spare capacity in the existing 11kV network).

Obviously this favours large bus companies with multiple depots, as they can pick the easy depots to electrify first and leave hard ones to later.

The substation is apparently under (!) the local Asda store - maybe that added to the costs. However, whatever the situation, this small operator cannot afford to electrify its depot.
 

Tetchytyke

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The Solo SR and the Streetlite WF have both fallen by the wayside because they are really neither one thing nor the other. The market has shrunk for these buses because its been squeezed from both ends; for smaller capacities it is cheaper to buy and run a breadvan, and for bigger capacities you may as well get one of the shorter E200MMCs and have done with it.

There's still plenty of Solo and Solo SR buses available on the used market, but they are getting older and will require more work than they used to.

Otherwise, the option is to go and buy a Mercedes Sprinter City 45 or something similar. They seat 15-25 people, are low-floor, and parts are plentiful because they're based on a common van model. Yes, they have all the suspension travel of a lump of concrete, but they are perfect for rural or housing estate routes.

Now we have four big national groups dominating most of the big markets. Smaller operators can't easily pop up and start trying to cream off passengers on a major Stagecoach route for example.
They never could, especially not against Stagecoach!

This rather suggests that there is no commercial place for small operators in the registered local bus service market - if they are having to rely on second hand vehicles that are no longer produced; no longer required by mainstream operators.
I disagree, I think it is a natural consequence of the fact that smaller operators will generally be operating the sorts of rural and housing estate routes which are most suited to a Solo/Solo SR or a Streetlite WF. But, as above, the market has gone for those buses.

Stagecoach getting Switch to reopen the production line for 100+ Solo SR buses was unusual, and was probably related to the specific operating territory that Stagecoach wanted them for. Even the other big operators have largely gone for breadvans for their smaller routes in recent years.

I don't think the 'creaming off' model works any more - the Authorities and public generally don't want this to happen (so the funding, legislative and operating models are reflecting that), and anyway there is an evershrinking amount of cream to be had.
Sort of. Not deliberately though.

If you look at somewhere like West Yorkshire, the small operator TLC Travel largely exists by mopping up the early morning, late evening, and Sunday work on tenders for the routes which the big operator only wants to run during the daytime. There are loads of examples in West Yorkshire of First, in particular, running the main service 7am-7pm Monday to Saturday and TLC picking up the stuff outside of those times.

Now the whole point of franchising is to prevent that issue where the big operator creams off the profit during the day and leaves the taxpayer to pick up the tab for the rest. Sadly, the consequence of that is that the whole route will be franchised in one go, first bus to last bus seven days a week. So where does that leave the indy running the Sunday tender?
 

TheGrandWazoo

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Is there a future for small operators - yes, of course. Running School buses, contracts, private hires, rail replacement etc. Registered Local bus services for the hardy, and hats off for those who do.
I think there probably is but it's at the margins, both geographically and commercially.

As we've seen with many large operators, they've drawn their horns and retreated from lower margin routes and more rural areas e.g. First Eastern Counties are now confined to the Excel route, and their Norwich/Gt Yarmouth/Lowestoft bases and have incrementally ceded territory to other firms. That has opened up opportunities for independents and you can see that in other places too e.g. north and mid Wales, Co Durham, etc.

However, in the more urban areas, then the opportunities simply aren't there. Dominant operators want to preserve market share and protect their more lucrative operations. In franchise areas, they simply don't want smaller operators, despite the focus on having more SMEs as government suppliers. Take Merseyside... they were going to have large packages and then some SME route packages....then they decided it was more cost efficient to roll up all services in larger packages that were obviously only going to be won by the big players. The justification was that the SMEs would be able to secure schools work instead.... so Tower Transit owned HTL Buses has just been awarded 94 schools routes. In Greater Manchester, who won the small packages... First, Go Ahead and Rotala with (I think) the only SME being Vision Bus who got a bit of schools work, and instead have expanded north into Lancashire.
 

Tetchytyke

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In Greater Manchester, who won the small packages... First, Go Ahead and Rotala with (I think) the only SME being Vision Bus who got a bit of schools work, and instead have expanded north into Lancashire.
I think the big boys wanting the schools work caught TfGM out a bit, I think they genuinely were expecting it all to go to the SMEs.

You mention HTL in Merseyside, they were an SME and were probably the sort of operator the LCRA were thinking would go for those contracts. But then, as you say, Tower Transit bought them in February 2025, so they're more of a big boy now.

Similar in West Yorkshire with Go-Ahead buying the SME Fourways Coaches, seemingly with the intention of being there when WYCA dish out the contracts.
 

Tetchytyke

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What do these stand for?
Sorry.

SME - Small and Medium-sized Enterprise, a type of company which is defined in UK procurement law.

LCRA - Liverpool City Region Authority

WYCA - West Yorkshire Combined Authority

TfGM - Transport for Greater Manchester
 

Killingworth

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Sorry.

SME - Small and Medium-sized Enterprise, a type of company which is defined in UK procurement law.

LCRA - Liverpool City Region Authority

WYCA - West Yorkshire Combined Authority

TfGM - Transport for Greater Manchester
Have we not got a Forum glossary of useful acronyms?

They crop up in all sorts of threads where they'll be well known to most ranging to those known only to a small number of specialists in their own field or geographic area.

SYMCA (South Yorkshire Mayoral Combined Authority - like the old French car, Simca) is second nature to me, as was its predecessor for transport SYPTE.
 

Dwarfer1979

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The Solo SR and the Streetlite WF have both fallen by the wayside because they are really neither one thing nor the other. The market has shrunk for these buses because its been squeezed from both ends; for smaller capacities it is cheaper to buy and run a breadvan, and for bigger capacities you may as well get one of the shorter E200MMCs and have done with it.

I disagree, I think it is a natural consequence of the fact that smaller operators will generally be operating the sorts of rural and housing estate routes which are most suited to a Solo/Solo SR or a Streetlite WF. But, as above, the market has gone for those buses.

Stagecoach getting Switch to reopen the production line for 100+ Solo SR buses was unusual, and was probably related to the specific operating territory that Stagecoach wanted them for. Even the other big operators have largely gone for breadvans for their smaller routes in recent years.
It isn't that clear cut and the core of both those markets still exists and is being covered by the short E200MMC (which is 8.9m same length as the original Solo and shorter version of the WF) at some volume. Demand for Merc Sprinters isn't that strong though it has eaten in to the bottom of the market, they aren't that cheap to buy (but they are to run) and they probably won't last as long, and except for DRT work most of the big groups haven't switched to them really but they do have a much smaller proportion of their work that supports smaller vehicles. Stagecoach bought one big batch to try high-frequency minibuses in Ashford which didn't work which is why they drove the relaunch of the Solo, Arriva were the biggest volume and they haven't really bought any in several years, First only bought a single batch for Mousehole (but haven't had many small buses of any type for several years) whilst Go-Ahead I think have bought a few recently they still aren't that significant a share.

The Streetlite WF suffered from the poor reputation Wright built up for reliability and support during their struggles 10 or more years ago and the business was long more focussed on big group sales (who prefer the bigger models) rather than the small operators (who drove sales for smaller models) so they never rebuilt that reputation at that end of the market so sales died.

For the Solo it was more mismanagment by Switch, they decided to only offer electric models at a point when the only thing they were selling in volume were diesel Solos cutting off the market they were supplying without having a range people wanted to buy instead. The fact that they sold over 100 Solos that easily and quickly shows there is still demand in that market, as do the sales for the short E200MMC, and if they were still offering Solos they would find plenty of customers. I know my employers, who did buy late batches after the Stagecoach order restarted production, would have been very happy to order more if production had remained as they were perfect for a lot of the work (commercial & tendered) that we do.

These smaller models, Solos/Streetlites/short E200MMCs are perfect for a lot of council contracts and more rural work all of which still exists. They have enough capacity in total to deal with peak demands (like schools) that the Merc based vehicles don't always have whilst being small enough for the roads (and again the longest Merc Sprinter based models that can match the seating have quite long wheelbases which can be an issue).
 

stevieinselby

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Another option for operators looking for a small bus is the Mellor Strata, which offers more capacity and flexibility than a standard Sprinter City but is both shorter and narrower than an Enviro 200.
While the Big Four haven't really gone for it in huge numbers (Go-ahead have 20, First 15, Stagecoach 4 and Arriva just 2), it has found a bit more favour with some mid-sized groups, including Rotala (23), Transdev (33) and McGills (17), along with smaller independents.
 

Hophead

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I'm not sure that Go-Coach are entirely typical of smaller operators. Their base is on the edge of London where higher wages will be available, not just for bus drivers and engineers but for many types of semi-skilled manual labour. If you want to drive a bus, London may have traffic and some unsavoury passengers, but you'll never have to handle cash. Coach & Bus Week recently featured Faresaver of Somerset who say they have no vacancies and a good staff retention rate.
 

Steve440

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Another option for operators looking for a small bus is the Mellor Strata, which offers more capacity and flexibility than a standard Sprinter City but is both shorter and narrower than an Enviro 200.
While the Big Four haven't really gone for it in huge numbers (Go-ahead have 20, First 15, Stagecoach 4 and Arriva just 2), it has found a bit more favour with some mid-sized groups, including Rotala (23), Transdev (33) and McGills (17), along with smaller independents.
They may be an option for operators but they are definitely a sure way of alienating passengers. They are horrendous to travel on for more than 5 or 10 minutes.
 

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