Arriva in Portugal: a tale of two companies

With almost nine years’ experience in the Portuguese transport market, Arriva looks at how its operations in the country have contributed to Arriva’s development from a relative unknown to one of Europe’s leading transport groups with bus, rail and coach operations in 12 countries.

When Arriva entered the Portuguese transport market in November 2000, it was seen as a predominantly UK transport group which was venturing out into Europe. With bus operations in Denmark, the Netherlands, Spain and Sweden in their first few years of operation it was still early days, however, the group’s strategy was clear – to grow the business with acquisitions and contract wins.

The group’s thinking is long-term and we deliver this by building our market positions piece-by-piece. Starting small is the preferred approach, but the aim is always to be one of the top three private operators in the markets where we operate. Within 20 months, Arriva had achieved this goal in Portugal.

Arriva’s first footholds in the Portuguese transport market started in November 2000 with the acquisition of Ami-Transportes, S.A, João Carlos Soares e Filhos S.A, Viação Costa e Lino S.A, Transportes and Abilio da Costa Moreira e Companhia S.A. The four family-owned businesses, which all operated in the north west of Portugal, were brought together to form Arriva Portugal. Operating as Arriva Portugal it also secured full ownership of TUG (Transporte Urbanos Guimarães) and became a majority shareholder in TUF (Transporte Urbanos Familicão) and minority shareholder TUST (Transporte Urbanos Santo Tirso).

After securing our entry into the market, Arriva focused its efforts on bringing the companies into one which could deliver for its passengers, client bodies and other key stakeholders. It also harnessed the local management’s extensive expertise and knowledge to help build up the group’s contact networks and relationships locally, regionally and nationally as this would be essential for securing continued growth in a country where the market is evolving.

The Portuguese bus market is a regulated market in transition with no competitive tendering. Inter-urban routes are concessions from the State. The concessions are issued by the Instituto da Mobilidade e dos Transportes Terrestres, I.P., (IMTT) following formal requests by transport groups, operating within transport regulation legislation, to operate a specific route. Fares are set by central government.

Urban networks are defined by the Municipalities. The Municipalities can deliver services themselves directly or put them out to open tender. Rail services remain dominated by the state operator Comboios de Portugal. In order to succeed in this operating environment, Arriva knew that organic growth would be the way forward.

In 2002, Arriva strengthened its position in the Portuguese transport market with the acquisition of 51% of Transportes Sul de Tejo (TST), which operates on the Setúbal Peninsula, from the Barraqueiro Group. In September 2003, Arriva exercised its option to purchase the remaining 49%. This acquisition took the group into the top three private transport operators in Portugal and in 2006, Arriva consolidated its position with the acquisition of a 21.5% stake in the Barraqueiro Group, Portugal’s leading transport public transport operator. The stake was increased to 31.5% in 2009.

Barraqueiro runs urban, interurban and long-distance bus services and is the only private operator in Portugal to hold a rail concession via its Fertagus business. It also has a 34% investment in the Metro Sul de Tejo tram operation, to the south of Lisbon.

While Arriva plc does not report separately for these companies, they represent a significant proportion of the £175.3 million revenue from Arriva’s Iberian operations in 2008.

Arriva’s Portuguese operations

Transportes Sul Tejo (TST)

Located on the Setúbal Peninsula south of Lisbon, TST provides urban, suburban, inter-urban and rapid public transport services as well as private hire contracts for the business community.

The business has some 620 vehicles and 205 bus routes serving a population of approximately one million. Its services cover the municipalities of Alchochete, Almada, Barreriro, Moita, Montijo, Palmela, Seixal, Sesimbra and Setúbal – totalling 1,600km2.

Transporting some 81.2 million passengers a year and travelling more than 34.6 million kilometres a year, TST’s fleet works to link larger towns and cities in the Setúbal urban network, serves several key suburbs, provides rapid connections between major conurbations of the Setúbal Peninsula and Lisbon and integrates with many local rail services.

Every year, TST invests approximately €3.5 million in its fleet which comprises single deck and midi vehicles. The fleet comprises 85% urban type vehicles, and 15% inter-urban and tourism vehicles.

In February, TST enhanced its fleet through the acquisition of three new Mercedes 518 CDI mini buses. The 22 seater vehicles offer low floor easy access and have been adapted to accommodate transporting people with disabilities.

TST has also recently increased its rental fleet with the acquisition of two new 55 seater Touristic vehicles which have enhanced the quality of TST’s rental fleet.

The business also has four highly successful single-deck open-topped vehicles which provide summer services to the region’s beaches for tourists.

Investing in facilities that can deliver a well maintained and reliable fleet is essential to the business and in September 2007, TST opened its new Moita facility. Responsible for the maintenance of a large part of TST’s fleet, the Moita workshop offers outstanding facilities for maintaining and servicing buses and a 21st century working environment for staff.

The workshop was the group’s first workshop to be built with reducing environmental impact at the heart of its design. Some €2 million was invested in the facility which offers solar powered heating, a wind generator for electricity and an exhaust gas extraction system to improve air quality for staff working on vehicles. It also has its own borehole for water supply and a water purifier system which permits 80% of water used to wash buses to be recycled. The purifier is saving TST around 4,700m3 of water usage every year.

The use of technology to improve the customer experience is also something TST is actively pursuing. The business is currently implementing an Automatic Vehicle Location (AVL) system. Costing in the region of €2.1 million, AVL will significantly improve the provision of travel information to TST customers.

The system involves installing new bus stop display panels which will receive real-time data indicating expected arrival times. The bus stop panels are also innovative as they will be solar powered and will provide audio information for visually impaired passengers.

TST passengers are also set to benefit from the introduction of a new contactless ticketing system as a result of a €5 million joint investment by TST and central government. The system will make travelling quicker, easier and more cost effective for both customers and the business.

In order to make the introduction of new technology a success, TST has recognised the important role that its people play in ensuring it works in everyday operations. The 2009 training plan – which has been designed in line with TST’s strategic business plan – will see an investment of approximately 44,000 training hours and includes special training programmes for staff working with the contactless ticketing and AVL systems. All drivers and supervisors are receiving comprehensive training to help them use the new equipment and understand the monitoring and data management processes.

Training, combined with technology, is also playing an important role in helping TST reduce its fuel consumption and exhaust emissions. Drivers are being provided with training on how to ensure maximum efficiency – and passenger comfort – from their vehicles through controlled acceleration and braking.

This programme is part of a wider initiative with industrial and academic partners, which has seen the installation of an eco-driving system on a number of its vehicles. The technology records information which enables comparisons between different routes, vehicles and driving styles.

The systematic good practice in fleet management, staff training and maintenance management has undoubtedly contributed towards TST receiving ISO 9001 accreditation. It is rare for transport companies in Portugal to hold this accreditation which recognises the use of efficient quality management to deliver high service standards to customers and stakeholders.

Arriva Portugal

Located in the north west of the country, Arriva Portugal provides urban, inter-urban and private hire bus services. With over 190 concessions and 200 lines, it covers 15 different council districts and 313 parishes.

The business serves two regions – the Ave valley and Porto’s metropolitan area (including the coast) totalling 2,500km2. More than 230 buses travel some 12.3 million kilometres a year supporting the two regions’ 500,000 inhabitants. Porto, Guimãeres, Famalicão, Braga, Barcelos and Fafe are the larger conurbations in Arriva Portugal’s network.

Arriva Portugal’s fleet, which transports more than 17 million passengers a year, comprises a mix of full-size single deck and some articulated vehicles. Approximately 64% are Mercedes; 18% Scania and 16% Volvo. The remainder includes Iveco and Pegaso.

As part of its fleet development the business has worked in partnership with Evobus Portugal, Irmaos Mota, and the Portuguese Government culminating in the launch of a prototype bus, specially designed as a new multi-purpose vehicle.

With a Mercedes OC500 RF engine and a Mercedes Benz 380 chassis it offers the comfort of some of the best touring coaches, while the body, produced by Irmaos Mota, provides operators with the flexibility to use it for both commuter and private hire services. With disabled access and seating, the bus proved successful in service trials and Arriva Portugal purchased a further 10 of the €165,000 vehicles. The vehicles operate on a range of routes, as well as private hire. They proved so effective that a further four similar buses, with Marco Polo bodies, were purchased and put into service.

As part of its work to reduce its environmental impact Arriva Portugal agreed a contract with PRIO Advanced Fuels for the supply of B30 biodiesel. Since October 2007, the whole of the fleet has operated on blended fuel. As part of the partnership several studies are being carried out into the use and environmental benefits of the fuel.

In addition to exploring new fuel technology, Arriva Portugal has worked with IT developer AMI- Transport Technologies and EDITMINHO research institute to develop and implement a new contactless ticketing system. The new ticket machines provide the business with valuable intelligence. Using a satellite Global Positioning System (GPS) they provide two-way communication with the operational control using General Packet Radio System (GPRS). Every 30 seconds they send a signal providing valuable information on revenue, patronage, real service speeds and location.

Technology is also playing a key role in Arriva Portugal’s facilities. The business is spending €4.7 million on a state-of-the-art building which will bring the quality of its maintenance and transport services to even higher standards for customers.

The new facility in Guimarães will create new headquarters and a central workshop for the business. It has been designed by leading architects Viera de Melo and reducing the environmental impact of the business is at the forefront of the design.

To be known as Edifício Arriva, the facility, which opens later this month, has been equipped with solar panels to provide water heating and has been constructed to capture the maximum levels of direct light from the sun to reduce the need for unnecessary interior lighting.

It also boasts a wind turbine to produce electricity, oil collection to facilitate recycling and water harvesting and recycling facilities which will make it possible for around 85% of the water used in bus washing on the site to be recycled.

The new head office will also offer Arriva’s staff an outstanding working environment with new maintenance areas and machinery, modern rest areas and specialised training facilities that can ensure staff keep abreast of the latest techniques and have the skills needed to deliver high quality maintenance and transport management services now and in the future.

Arriva Portugal is also currently working with Universidade do Minho University on the development of new driving simulator for Edifício Arriva that can be used to help assess potential or new drivers and provide enhanced training to existing drivers on driving techniques that can improve safety and fuel efficiency in the future.

Arriva in Portugal – the future

With established and successful service networks, positive working relationships with contracting bodies, new facilities and enhanced technologies, the future for Arriva Portugal and TST remains positive.

The two companies are an example of how the group’s ethos of developing partnerships and embracing and retaining local expertise can deliver success for all customers – from traveller to industry stakeholders.

Arriva Portugal and TST’s operations provide the group with a firm foundation to demonstrate how the private sector can innovate and deliver so that Arriva can continue to drive its business forward as Portugal starts its journey towards a more liberalised transport market.

Expanding current and winning new concessions remains a key driver for the business and the group has prequalified for a major light rail transport contract.

Operating as Arriva Portugalis, the group is a member of the ViaPORTO consortium, which includes Keolis and local partners Barraqueiro and Mota-Engil, and is bidding for the five-year concession to operate Metro do Porto from April 2010.

The Metro do Porto network started operation in 2002 and has five rapid transit lines serving six municipalities within the greater metropolitan Porto area: Porto, Maia, Matosinhos, Póvoa de Varzim, Vila do Conde and Vila Nova de Gaia.

The network, which carries some 50 million passengers a year, operates a modern fleet of trams which is shortly to be increased to 102 trams to accommodate the growth in demand.

The contract provides an exciting opportunity for Arriva to venture further into Portuguese rail transport. With Arriva Portugal’s local bus network it provides a real opportunity for the consortium to maximise integrated bus/tram solutions and deliver a better transport solution for travellers.

Something which customers and client bodies want and Arriva always strives to deliver wherever we do business.