Friday, 16 January 2015

Cheaper petrol, but bus fares go up!

Motorists have benefited from a recent cut in the price of petrol, now approaching £1 a litre, compared to around £1.30 a litre in August.

Many bus passengers are wondering when they will benefit. Stagecoach and First have told the Manchester Evening News that they can't cut fares because they buy their petrol in bulk in advance at set prices in order to avoid price fluctuations.

I'm sure that's true. But if the petrol being used by their buses now was bought a couple of years ago at a higher price, surely their buyers will be buying petrol at today's low prices for use on the buses in a couple of years time. If they aren't, they're not very business-minded. So lower fuel prices will trickle down to the bus companies sooner or later.

Any car owners comparing the cost of driving or taking the bus will have seen the petrol cost of a journey come down some 30% in the last few months, while bus fares have generally risen. The bus business needs to address this if it is serious about appealing to anyone who has a real choice.

The Chancellor of the Exchequer agrees and has been telling the Express and Star about it.

So, when can fare-payers expect to see some of the benefits of lower fuel prices? Bus companies, it's over to you.


  1. It has been stated elsewhere that fuel is 15% of running costs, so these cuts only relate to 1 or 2% overall which doesn't leave much margin for what some are suggesting.

    Also there is rarely any mention of the 20% cut in fuel tax rebate that operators were required to 'swallow' a couple of years ago.

    At the same time local authorities are pressing for contract prices/costs to be reduced (to rates less than they were five years ago), and reimbursement rates for bus passes and school travel passes are being squeezed for ever downwards.

    This gives me great concern for those smaller operators on the urban margins, in small towns and rural areas. A number have already given up the struggle against the odds.

  2. With fuel prices falling, wages static and overall inflation at 0.5% it will be interesting to see what excuses bus companies come up with for this year's gates increases.

  3. Will never happen. Best we can hope for are fare freezes IMHO.

  4. As stated fuel costs only make up about 20% of bus operator costs, the largest is wages which I think accounts for over 50% of costs and that is going up at many operators along with many other costs like insurance (not to mention the cost of buying vehicles in the first place thanks to the added complexity of euro VI which many operators can't defer due to the looming DDA deadlines). On top of that income is being squeezed by local authority cuts to funding (concessionary fares reimbursement is being cut each year and reductions in supported services mean the overheads have to be covered by less routes) and looking to the future most of the industry is assuming that BSOG (the last remnants of the Fuel Duty Rebate) will be cut or removed after the election. Whilst people appear to expect operators to immediately cut fares when fuel prices drop they are less accepting of it happening when fuel prices go up so most operators have been trying to hold prices as much as possible so the fares didn't go up anywhere near as much as they should have as the fuel prices shot up, the wholesale price that operators pay - i.e: before the duty rebate is factored in - had doubled over the last 8 years which hasn't been reflected in most operators fare increases (and that doesn't include the huge cut in the rebate resulting in a huge increase in the duty paid) so most operators are still trying to catch up with this. The recent TAS report into the bus industry finances still finds most operators are making insufficient profit to be able to properly fund on-going operations so most operators aren't yet in a position to offer cuts at this time.


Note: only a member of this blog may post a comment.