Discussion: Options for Competitive Bus Tendering

[#Metro]

Arriva (a Deutsche Bahn Company) has some information about bus contracting on their website:
http://www.arriva.co.uk/transport-leader/partner-of-choice/business-models

Types of contract
There are two main types of contracted arrangement: gross cost and net cost.

With gross cost contracts, the tendering authority pays an operator to provide services, retaining the passenger revenue and often setting the routes and specifying the types of vehicles. Some of our rail operations in Sweden as well as our bus contracts in Denmark, Hungary, Sweden and Spain are gross cost contracts.

With net cost contracts, the operator takes on both the income risk and the cost risk but retains all passenger revenue. Arriva operates net cost contracts across Europe, including the UK rail, Swedish bus, Polish rail and Italian bus markets.

I'm very much against the idea of net cost contracts. People do not catch the bus because of the great customer service or the operators' smile, they catch it because they need to be somewhere and do something. That somewhere and something is outside of the company's control.

Gross contracting works well in SEQ and should be retained.

I'm not sure if the gross contracts specify routes or "monopoly areas" exactly, but was thinking along the lines of the transit agency paying for a set block of route km (service). That would allow routes to be altered at will and different operators to overlap in areas where multiple operators run on a common corridor. Not sure if this is the case now.

There is a possibility that if competitive contracting is brought in, one operator could work both the buses and trains in Brisbane.

[SurfRail]

One thing that they probably need to do in future is ensure that each Brisbane Transport operating region is under its own contract and has its own routes and buses allocated.  The way it is set up now seems destined to fail when it comes to any major network reform because the whole thing is too integrated to unpick properly.

[#Metro]

I am thinking of just having one operator, running both BCC buses and QR trains.

Newcastle is doing this, but I think all planning functions should rest with Translink.

[achiruel]

I am thinking of just having one operator, running both BCC buses and QR trains.

Newcastle is doing this, but I think all planning functions should rest with Translink.

Have I missed something? NSW TrainLink is now operating Newcastle buses???

[#Metro]

Have I missed something? NSW TrainLink is now operating Newcastle buses???

Introducing Newcastle Transport.

https://www.newcastletransport.info/

Newcastle Transport is the integrated transport provider for Newcastle, and is responsible for running buses, ferries, the future light rail and the multi-modal Newcastle Interchange. Keolis Downer has been awarded a 10 year contract to design and run Newcastle Transport services across all modes of travel.

We are listening to the community and have worked to optimise the network to better meet the needs of our customers.

We will continue reviewing the network in line with customer feedback. Over the 10-year contract, we will continue to consult with the community and monitor the network to ensure we are delivering a transport solution locals want.

Newcastle Transport is part of Revitalising Newcastle, a NSW Government program focused on activating the city to attract people, new enterprises and tourism to Newcastle.

Ideally, in QLD, the planning and operations would still be kept separate, with gov't doing the planning (TransLink) and a single unified operator providing the actual operations (vehicles and staff on the ground).

There are public versions of single operator multi-modal systems, Toronto Transit Commission is one, they run buses, trains, and trams.

[SurfRail]

Why does it have to be one?

[#Metro]

Why does it have to be one?

It doesn't have to be one, but then again, it doesn't have to be many, either.

Newcastle is using one operator. Most overseas private operators do multimodal in multiple countries. They aren't a 'bus' company or a

'tram' company. They are public transport companies who are happy to drive whatever PT vehicle they are paid to drive.

Single tender, single tender cost, single point of contact, single entity to negotiate with are advantages.

In Brisbane doing this may finally integrate the buses and trains together - something not achieved by TransLink since it was created in 2004 (13 years ago).

[SurfRail]

Newcastle isn't using one operator at all.  It's a very strange setup TBH.  NT both timetables and operates the former government bus fleet (around 170 buses), 2 ferries and eventually their dinky little 2 and a bit km tram line.  It doesn't have anything to do with trains, or with the other bus services which operate in the area which are all governed by separate Outer Metropolitan Bus Service Contracts (Hunter Valley Buses, Port Stephens Coaches, Rover Motors etc).  It has also done an incredibly cack-handed job since taking over by all accounts, to the point where their major network restructure is already being rereviewed.

It is better when the operators are given a rigidly defined bit of turf and don't get their tendrils into the inner workings of the system so they can't be dislodged if needed.  Planning timetables and rosters that rely on high levels of interconnectivity between different depots and routes is one reason BT is not a model to emulate.  There is no way Region 6 in Sydney could have been franchised out if STA had only a single contract instead of 4.

Not sure what's come over you, the PTA would never agree with what you are suggesting!

[#Metro]

It is better when the operators are given a rigidly defined bit of turf and don't get their tendrils into the inner workings of the system so they can't be dislodged if needed.  Planning timetables and rosters that rely on high levels of interconnectivity between different depots and routes is one reason BT is not a model to emulate.  There is no way Region 6 in Sydney could have been franchised out if STA had only a single contract instead of 4.

Not sure what's come over you, the PTA would never agree with what you are suggesting!

Saying that it is better doesn't make it so. We should consider a single operator for both train (SEQ), and buses in the BCC area.

It would put an end to the BCC / State Government silo operation that even TransLink has not been able to resolve.

Single operator would take the focus off modes (bus, train, ferry, tram) and put it on providing public transport service generally.

tendrils into the inner workings of the system so they can't be dislodged if needed.

^ This comment is so vague, I don't actually know what it means. TransLink would continue to do the planning as it does now.

The operations (e.g. driving vehicles) would be done by the selected operator.

[SurfRail]

I'm not playing your Gish Gallop game again.  I'm implacably opposed to the idea of a one operator network and I doubt I'm the only one.

The Perth model is the best one in the Australian context and you haven't made any case for why a single operator would save us any money or deliver better operational outcomes.

[#Metro]

Toronto manages just fine, SurfRail.

As will Newcastle, I expect.

[red dragin]

So, Mr Metro, your proposal is

• a planning department/company for rostering, timetabling etc
• one company handling maintenance, vehicle ownership, staffing

is that correct?

My opinion is that the second company would be too large to control, like Brisbane Transport is now. Remember what they did with the bus review, now give them trains, ferries and more buses to hold to ransom! You'd be better off with bus companies that are just big enough that if you pull their contract it will hurt them (carrot & stick method) and small enough that they can't hold you to ransom and are easy to replace. You don't want companies that are as big or bigger than the government they are working for in control.

Perhaps taking your idea slightly, you could move the vehicle ownership and maintenance to the roster/timetable organisation, then have the actual ground operations portion handle driver management. Split that into smaller portions to maintain control.

[#Metro]

Planning and scheduling remains with Translink.

The entire government gets fired every three years, they run health, education, justice, planning, roads, etc. They also run bus and train to boot.

So dealing with single operator is well within their control and experience IMHO.

With a single operator, barriers to integrating bus and rail will be much lower I expect.

TTC Toronto staff run buses, trains, and trams. We could do something similar.

[SurfRail]

As will Newcastle, I expect.

With all due respect, you do not know what you are talking about by bringing them up.  Go and do some reading on that particular topic. 

- Hybrid model involving scheduling and operation, so nothing like what we are dealing with
- Only covers one part of Newcastle using the former government bus fleet and ferries
- Patronage only around 6 million per annum in no small part due to the idiotic way the previous network was run for decades and the general economic malaise in inner Newcastle dating back to the earthquake
- Widespread faults in their new network design which are currently being revised

Giving one operator the keys to the entire system creates enormous levels of risk and exposure for the state, ranging from industrial problems, the solvency or desire of the operator to keep going if it isn't government, lowering of effective competition when it comes to tendering, making cosy supply arrangements with their own suppliers (used to price the contract) etc.  All of this tends to suggest that nobody is going to run with this idea.  Having separate contracts compartmentalises things, the same way we don't interline every single bus route with every other bus route, and the way we have operating sectors on the rail network.  From a management perspective it is exactly the same reason - to minimise disruption and contain problems.  Let's leave aside the fact that the TransLink operating region is huge - are you suggesting the same operator should be running buses in Noosa, New Farm and Nerang?

[#Metro]

Disagree.

How is there a lowering of competition? There isn't *any* competition in the *current* model, bar the CityCat. And that's with private bus contractors everywhere in SEQ outside BCC.

If a public organisation such as the TTC can operate multiple modes and vehicles directly, why can't a single contracted operator do that?

[SurfRail]

Competition is substantially lessened by having only one active participant in the market.  How can anybody else price bids when a single supplier is distorting the market by virtue of their monopoly?  It isn't just the right to run services, it is where they get their consumables, staff relationships, who supplies their buses, who supplies them with professional services, financing, the whole works.

Unless you're going to specifically address anything I've said I'm out.

I'm seriously wondering whether I'm debating with the same person who thought the Canberra Airport bus route extension should have been tendered out and purported to lecture me about the National Competition Policy.

[#Metro]

I think it should be at least considered.

- Better than current situation where there is virtually no competition right now, bar the ferry.
And that is despite the presence of non-public operators in the system, such as Surfside.

- Traditional monopoly concerns such as high pricing of fares don't apply here as Translink sets fares

- Local presence or incumbency isn't necessary, as seen with French companies Connex, Keolis or Hong Kong company Metro winning contracts in Melbourne. And Australian companies Transit Systems winning a contract to run buses in London.

- Ability to test the "there won't be many bidders" argument by calling for Expressions of Interest.

staff relationships, who supplies their buses, who supplies them with professional services, financing, the whole works.

What do they do in Toronto? All these issues apply there.

As for bus suppliers, buses aren't just made and sold to one City. They are sold all over the country in a national market. The fact that one capital, the third largest, has a single operator isn't going to cause a national monopoly. Plenty of other capital cities with different operators they could supply.

[achiruel]

I'd ideally like to see all operators able to bid on each route or perhaps group of routes (not an entire region necessarily) separately. e.g. Logan City Buses could compete against PRT for the 545, 560 etc. Perhaps PRT could put in a bid on the 150. Maybe HBL could bid on the 310, 311, 312, 313, 314. BT GC Depot or whatever replaces it could bid on the 555.

[SurfRail]

It would have to be contract regions, for many reasons (operational, regulatory, planning and financial). 

The Perth model works, we should be following it:

1. Replace the existing arrangements for SEQ with say 13 contract regions - one operator per region (although an operator could run more than one region).  As a prelim suggestion:
- Sunshine Coast (all subsidised services run by Sunbus, Buslink and Cavbus)
- Moreton Bay (all subsidised services run by Bribie Island Coaches, Caboolture Bus Lines, Christensens, Kangaroo Bus Lines, Thompsons Bus Service and Hornibrook Bus Lines)
- Brisbane North (BCC Virginia and Eagle Farm depots, Brisbane Bus Lines and Hornibrook's subsidiary which runs some of the BCC routes)
- Redlands (Transdev and Mt Gravatt Bus Service)
- North Stradbroke
- Brisbane South East (BCC Carina and Garden City)
- Logan (Logan City Bus Service and Park Ridge Transit)
- Brisbane South (BCC Willawong)
- Ipswich and Lockyer (Westside, Laidley and Southern Cross Transit)
- Toowoomba (Bus Queensland)
- Brisbane West (BCC Toowong and Sherwood, and Hornibrook's subsidiary which runs some of the Inala routes)
- Gold Coast North (Surfside Coomera and Ernest)
- Gold Coast South (Surfside Tweed)

Gympie is probably not essential but it could be included.

2. Get control of the assets:
- buy out or long term lease depots from the privates and acquire the BCC depots
- have stronger protections and clearer responsibilities for bus stations on commercial properties

3. Take control of the fleet
- have long term supply arrangements with 2-3 suppliers for the consistent supply of new buses built to a completely standard specification - operators no longer specify anything in their vehicles at all, they run what is supplied to them.
- common radio and telematics systems.
- no more school buses - all new buses are capable of being used in frontline service and must be low entry and with at least 1 door per 5 whole metres of bus.
- phase out all non Euro V or better vehicles by say 2023 and work out a plan to introduce full battery electrics with no new fossil fuelled vehicles by around that date.

4.  Roll similar arrangements out to regional Qld (excluding the smaller school bus operators)

5.  Regularly retender everything.

[#Metro]

I'm not a fan of individual route tendering. Operators should be given a block of route km and then bid for that. There might be a +/- tolerance on this as well.

That allows areas to overlap, allows routes to be added or subtracted.

I also don't think there needs to be heaps of operators. If the govt is single payer, I think the gains from having many operators will be marginal. So I wouldn't do things like spit the GC in half. If anything, the bus and light rail operator might merge.

QR also should be subject to competitive tender if buses are.

[SurfRail]

I don't think there is any advantage in having a single operator responsible for a very large contract region.  The Gold Coast contract would be the largest by far in terms of fleet and revenue km if the BCC contract was broken down into constituent regions, so it makes perfect sense to split it. 

You really don't seem to appreciate the commercial risks inherent in putting all your eggs in one basket, which can lead to disastrous outcomes like when National Express exited the Australian market and V/line had to be handed back to the Victorian government.  Having a selection of different operators ameliorates this outcome.  It's the same reason putting all your superannuation into a single asset is a bad idea.

KDR holds the light rail pursuant to a 15 year operating concession so there are no changes until that ends.  Again, it isn't at all clear to me what advantages you think might actually accrue from an arrangement where they run buses and light rail which wouldn't already happen if we had a competent system manager in the style of Transperth to do the timetabling, branding, ticketing and other coordination - which is something we need anyway.

[#Metro]

We've had single region single bus operator for a long time.

Gold Coast with Surfside, pre light rail, for example.

Have there ever been any examples for bus operators in Qld going bust like that?

You raise the case of National Express, but it is an odd example to use.

They had split the Melbourne train network into two precisely how you would have it.

Since handover, Melbourne has run one suburban rail operator. It hasn't tried to split the network again.

The Melbourne contacts were also franchises. That means pay for pax. That is inherently risky. We don't have that model in Qld, so the risk is far lower.

I'm in general agreement with your suggestions, just not a fan of heaps of operators.

[SurfRail]

Rail is a completely different box of frogs for the obvious reasons.  Our system for instance is not even capable of being operated by more than one operator because there are no discrete parts of the system to hive off.  Melbourne's metropolitan system could have multiple operators with a bit of work, but as you point out the way it was done in the 90s was inept (and that has probably cruelled any chance of it being pursued again).  V/Line however was not split up, NEX was running the whole thing, and that is what I was referring to.

Buses have a very low barrier to entry by way of comparison.  In particular, it is a lot easier to move a bus depot or build a new one (especially a smaller satellite one), and much easier to take over operations quickly.

There are plenty of quite recent examples of disruption caused by operators exiting before their contract was up.  NEX ran buses in Australia as well, including the Redlands system.  The most prominent recent one is probably Transfield which only just recently handed its Adelaide contracts across to Transit Systems.  They were also forced to give up some of their routes much earlier in their contract due to poor performance.  Perfectly manageable where you already have other operators in place on the ground in the same city, but what happens if an operator running and entire network goes under and the government is left holding the bag?

It is all about risk reduction.  For exactly the same reason, you wouldn't retender every single contract region at the same time.

At the same time I agree that you don't need to have an enormous number of operators.  One per region is manageable, and I don't have any issue with operators holding multiple regions.  Perth seems to be in the sweet spot where they only have 3 which run the entire metropolitan bus network.  Arrangements like the current Moreton Bay set up where you have 6 separate operators (including the Christensens service to Kilcoy) is the opposite of what should be happening. 

What it is really about is having one operator to deal with for a single, coherent group of services, and chopping up the entire system in such a way that disruption is minimised - whether relating to a change of operator, or just ensuring you don't have every route interlined with every other route which carries delays across the whole network.

[#Metro]

Perfectly manageable where you already have other operators in place on the ground in the same city, but what happens if an operator running and entire network goes under and the government is left holding the bag?

A good question. You have the government run it as operator of last resort during the transition period. Appoint temporary administrators. Queensland Gov't did it for Ipswich Council, a far more complex operation than a bus company.

There is a precedent in the UK for this. https://en.wikipedia.org/wiki/Directly_Operated_Railways

From their website (Archived) http://www.directlyoperatedrailways.co.uk/html/index.php

Directly Operated Railways (DOR) was established by the UK Government's Department for Transport in July 2009. It fulfils the Secretary of State's requirements under Section 30 of the Railways Act to secure the continued provision of passenger railway services should an existing franchise not be able to complete its full term.

In November 2009 DOR stepped in to operate the East Coast franchise through its wholly owned subsidiary, East Coast Main Line Company Limited (East Coast). DOR assumed the role of a supportive parent organisation for East Coast as the business was developed and transformed.

Support was also given to East Coast and the Department of Transport during the procurement process, and the franchise was successfully re-let to Inter City Railways Limited, a consortium of Stagecoach Group (90%), and Virgin Trains (10%), on 1 March 2015.

DIRECTLY OPERATED RAILWAYS LIMITED
Registered Office:
Fourth Floor
5 Chancery Lane,
London EC4A 1BL
Company No. 06950819

It's very clever. Further background info (bolding added):

Government accused of 'contracting out' emergency train franchises to private firms
https://www.independent.co.uk/news/business/news/government-accused-of-contracting-out-emergency-train-franchises-to-private-firms-a6818436.html

DOR has prepared contingency plans for other franchises should they fail, and it was given the "statutory obligation to provide operator of last resort capability". It also acts as a second bidder when only one train firm pitches for a franchise, to make sure there is a benchmark against which to judge that tender.

^^ So, even if one operator shows up to the contest, there will be a minimum of two bids submitted.

[SurfRail]

That is an important risk reduction measure but it doesn't detract from anything I said.  They aren't rushing to bring back British Rail to run the entire country's rail services, they package things up to minimise risk.

[#Metro]

I would suggest:

Gold Coast - 1 operator. potential for LRT to also hold bus contract concurrently.
Logan - 1 operator
Redlands - 1 operator, potential to hold ferry contract concurrently.
Caboolture/North Lakes/Redcliffe - 1 operator
Sunshine Coast- 1 operator
Brisbane - 2 operators, North/West and South
Ipswich - 1 operator.

So that's 8 region based bus operators, plenty IMHO.