The transport industry is well and truly on its knees. Bus and rail patronage is down by anything between 90 and 95%, while airlines have grounded entire fleets. There is almost no part of the transport industry that has been untouched by coronavirus – from public transport and coach operators, to airlines and airports, to road haulage companies.
What’s been interesting is how the Government has responded to pleas for help from the different sectors of the industry. One comparison is rail and bus. The Government responded very quickly on rail, putting all rail franchises onto management contracts so that the government, not the operators, now takes all revenue and cost risk with the operators simply getting a small fee for running the trains. But for bus operators, the Government’s response has been much slower. Some assistance was provided quickly, for example allowing certain subsidy payments to continue to flow despite the collapse in bus travel.
But the Treasury has been much slower, even reluctant, to respond to the call for a larger financial bailout for the bus operators, and while a package of support has just been announced, it has been much tougher – and longer – getting there.
This is undoubtedly partly due to the different operational and contractual environments in which rail and bus companies operate. Train companies can only operate under the terms of stringent contracts agreed with the Department for Transport, while bus companies function in a deregulated market (outside London) and are, broadly, free to run whatever services they wish. They are genuine private companies in a way that the train companies, in truth, aren’t really.
There are some interesting lessons to be had here. Over the years, the bus industry has had a relatively low profile politically speaking, although that’s now changing rapidly given the Prime Minister’s own personal interest in the industry, and the significant amount of funding for new buses and other measures the government committed to before the pandemic hit us. But this low profile has inevitably meant that MPs have little visibility of the issues that influence bus operations and, aside from when they get constituents complaining about a poor service, bus issues have historically not been topics that keep MPs awake at night. This may explain why they have been slow to support the industry’s call for help.
Now also look at the aviation industry which has a very high political profile, perhaps because it’s an altogether more exciting industry compared to the humble bus. So we have seen MPs of all political persuasions rally to the industry’s cause when the Chancellor’s initial reaction was to refuse to help, saying only that all other avenues should be tried first before the Government stepped in. This pressure will only increase as the politicians continue to lobby the Government on the industry’s behalf.
There’s an obvious lesson here: even in good times the need to engage with your constituency MPs and others in the policy and political environment is an important, even business critical, requirement. It’s an important investment for when you need their help.
by Stephen Bramall, Director and Group Head of Transport