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Bus fare increase explained

posted 23 Dec 2008, 07:19 by myEdinburgh Admin   [ updated 23 Dec 2008, 07:21 ]
Ian Craig, Managing DirectorLothian Buses' item (posted Thursday 18th December 2008)  shows the new fares from 18 January 2009.  But why are they making changes?  Lothian Buses' Managing Director, Ian Craig, explains.

I am sure that some of our customers will look at things like the very recent lowering of inflation rates and the price of fuel today and, perhaps understandably, express surprise (and dismay) that we are introducing price increases at this time.  The background to our decision to increase prices is more complicated than that and I would offer the following comments to explain our actions.

Like every other business, the prices we charge for our services must cover the cost of producing them and, if we are to continue to be a viable business, generate a modest surplus so that we can invest for the future and provide a return to our shareholders. Since the last comprehensive review of our fares and ticket prices in April 2007 every cost we incur in providing your bus service has risen considerably.

The operation of bus services is labour intensive and the cost of staff salaries is our largest single cost.  Agreements are in place which ensure that our labour costs will be stable and predictable until well into 2010.  The people who work for Lothian Buses are professional, dedicated and hard working. We endeavour to be an employer of choice and are very proud of the standard of service that our staff delivers to our customers for which they deserve to be properly remunerated.

Our second largest cost is the cost of fuel – we buy over 20 million litres of diesel per year.  While there has been some welcome respite in the last couple of months, your own experience of the cost of gas, electricity and fuel over the last 21 months will confirm the general trend.  Unlike airlines we aren’t able to levy a fuel surcharge on our ticket prices so we have had to absorb the damage to our financial health caused by the extreme movements in oil prices in 2007 and 2008.  Like most large transport operators we enter into long-term contracts with major oil companies so that we can have certainty of both price and supply during the life of these contracts.  An increase in income is essential to ensure that we are able to cope with future increases in fuel prices.

When the local economy comes under pressure so does the Lothian Buses business and the package of changes being introduced on 18th January also includes some reduction in service levels to cut costs.  However, a commercially healthy local public transport network is essential to the local economy.  To ensure that we remain commercially healthy we have to strike a balance between actions to cut costs and actions to increase revenue.  The various changes from 18th January are designed to achieve that aim.

How do we compare with other local bus networks?  Direct comparisons can be difficult but these increases will bring our prices into line with the general level of bus fares and ticket prices in other cities.  Even with the increase to £3 for an Adult, our unlimited travel Day Ticket remains among the cheapest of any British city.

May I assure that we are endeavouring to keep fares low and services levels high going forward and hope that our customers will respond positively by supporting their bus company not out of sympathy, rather as a result of us continuing to provide safe, reliable, accessible, quality public transport which remains relevant to the needs of the communities that we continue to serve.

Source: Lothian Buses