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Driving a positive shift towards public transport

Posted: 30 April 2009 | Keith Ludeman, Group Chief Executive, Go-Ahead Group plc | No comments yet

The Go-Ahead Group plc is listed on the London Stock Exchange with its Headquarters based in London. Employing over 27,500 people in the UK and with revenue1 of £2,199 million and operating profit2 of £144.9 million, Go-Ahead is one of the UK’s largest public transport operators.

Go-Ahead is the busiest rail operator in the UK and is responsible for nearly 30% of all UK passenger rail journeys. With its three rail franchises – Southern (including Gatwick Express), Southeastern and London Midland – it is responsible for nearly 46% of all peak rail commuter journeys to London.

The Go-Ahead Group plc is listed on the London Stock Exchange with its Headquarters based in London. Employing over 27,500 people in the UK and with revenue1 of £2,199 million and operating profit2 of £144.9 million, Go-Ahead is one of the UK's largest public transport operators.Go-Ahead is the busiest rail operator in the UK and is responsible for nearly 30% of all UK passenger rail journeys. With its three rail franchises - Southern (including Gatwick Express), Southeastern and London Midland - it is responsible for nearly 46% of all peak rail commuter journeys to London.

The Go-Ahead Group plc is listed on the London Stock Exchange with its Headquarters based in London. Employing over 27,500 people in the UK and with revenue1 of £2,199 million and operating profit2 of £144.9 million, Go-Ahead is one of the UK’s largest public transport operators.

Go-Ahead is the busiest rail operator in the UK and is responsible for nearly 30% of all UK passenger rail journeys. With its three rail franchises – Southern (including Gatwick Express), Southeastern and London Midland – it is responsible for nearly 46% of all peak rail commuter journeys to London.

Go-Ahead is one of the UK’s largest bus operators. With a fleet of over 3,400 buses, Go-Ahead carries an average of approximately 1.6 million passengers every day. Go-Ahead’s operations are focused on high density commuter markets and have a strong London presence, with around 20% market share, where they provide regulated services for Transport for London (TfL). Go-Ahead also operates deregulated services in the north-east; Oxford; the south-east and southern England.

Go-Ahead is unique amongst UK public transport plcs, as it is the only one which currently derives all of its income from the UK. It also distinguishes itself from its peers by having a devolved management structure and strong local branding. Go-Ahead believes that public transport is best provided at a local level and this ‘devolved approach’ best supports its culture of customer care, social responsibility and performance ownership. Go-Ahead’s Managing Directors and their senior management teams are truly empowered and Go-Ahead’s aim is to maintain the value of this strong local culture.

Go-Ahead is committed to reducing the environmental impacts of its operations. It is the first public transport company to have been officially certified with the Carbon Trust Standard after taking action on climate change. Its bus fleets are the youngest and greenest in the UK. (TAS 2008 – excluding London).

Go-Ahead and Buses

The Bus Division is integral to Go-Ahead. The Group traces its origins from the National Bus Company (NBC) privatisation process in the North East of England. NBC subsidiary company Northern General (which operated services in Sunderland, Newcastle and Durham in the north-east of England) was sold to its managers in 1987. They formed Go-Ahead Northern and acquired the Brighton & Hove Bus Company in 1993. In 1994, Go-Ahead was floated on the London Stock Exchange to give the company greater financial strength before acquiring the Oxford Bus Company in 1994 and entering the London bus market with its acquisition of London Central in the same year. Further bus acquisitions were made in London (London General in 1996) and the south-east (Metrobus in 1999) with the most recent being the purchases of Wilts & Dorset and Southern Vectis (the Isle of Wight bus operation) in 2003 and 2005 respectively and Docklands Buses and Blue Triangle in London, the latter as recently as 2007.

Throughout, Go-Ahead’s bus acquisition and growth strategy has been focused on targeting dense urban ‘commuter’ markets which provide the potential for strong demographic growth. A factor in this selection in non-regulated areas has been the identification of local authorities who are committed to supporting bus passenger growth by the provision of bus priority and car restraint measures including ‘park and ride’ and car parking strategies. On average, around 1,600,000 passenger journeys are made on Go-Ahead’s buses every day.

In the 2007/8 financial year the Bus Division turnover was nearly £560 million, generating a profit of £66 million, representing nearly half of the Group’s earnings.

The local approach

Go-Ahead strongly believes in high quality bus operations delivered by market led, customer focused bus companies with management teams embedded in the communities they serve. Bus services serve intrinsically local markets and it is important that managers who truly understand the intricacies and dynamics of these markets are accessible and are able to make decisions which impact on them. They need to be properly empowered to make decisions in a timely and appropriate manner. Experience from cities such as Oxford and Brighton, are regularly held out as examples of best practice by the UK Government. It demonstrates that if local management teams get the product right, the bus has a major role to play in the lives of communities even where there is high car ownership and wealth.

All of Go-Ahead’s bus companies follow the Group ethos of local branding. This ethos is underpinned by the recognition that bus companies which are either named after the town or the city they serve, or have a close historical association to those communities, encourage a sense of engagement by customers and stakeholders – something that is very important when making the argument for greater bus priority. Attractive ‘sub brands’ have been recently created at Go North East to appeal on a route-by-route basis to ensure services stand out in a competitive market. This has been a very successful formula, resulting in Go North East receiving many major national awards for this and other initiatives. In 2007 (before the introduction of the national concessionary scheme which encouraged passenger growth everywhere) patronage growth across Go-Ahead’s non London operations was 6.8%. The formula is simple but effective and includes: continuing fleet investment, reliable services, market led operations and management teams that understand and can respond in a timely fashion to the dynamics of the market.

Partnership works

Go-Ahead is a strong advocate of partnership working with local authorities. This enables both the bus operator and local authority to concentrate on their respective strengths and elements that they are best equipped to deliver in partnership. The bus company is an expert in the delivery of bus service planning, operation and marketing. As the bus company takes the revenue risk it has to be innovative and entrepreneurial. Local authorities are expert at infrastructure planning including the delivery of strategies which deliver bus priority, passenger information and waiting facilities. Local Authorities also have to manage the ‘political risk’ of promoting public transport over individual car use with the introduction of potential unpopular car restraint and bus priority systems.

This approach, often on an informal basis, has led to some spectacularly successful schemes to increase bus use and divert people away from cars. In West Sussex and Surrey, a Bus Rapid Transit project known as Fastway has led to a 60% increase in passengers in three years with 10% of those using the service being transfers from the private car. This is a partnership between Go-Ahead’s subsidiary Metrobus and West Sussex and Surrey County Councils and utilises bus lanes, sections of guided busways, real-time information, state-of-the-art vehicles and bus waiting facilities to create a modern efficient transit system at a fraction of the cost of a fixed track system. Go-Ahead’s Brighton & Hove Bus Company’s close partnership relationship with the local authority is held out by the Government as an example of best practice. It has seen year-on-year passenger growth of 5% since Go-Ahead acquired it in 1993.

In Greater London, where the regulatory system differs and buses operate to a specification determined by TfL, Go-Ahead has a fleet of over 1,400 buses running on TfL contracts. Go-Ahead is proud to have played a role as a key contractor in the growth of bus usage in the capital city and is regularly at the top of TfL’s quality leagues.

Although each of Go-Ahead’s subsidiary companies places emphasis on local management and local branding, Go-Ahead Group plays a key role in supporting them with specialist knowledge and information transfer. In addition, Go-Ahead Group provides financial support and the benefits from group synergies which include purchasing, technology, property and environmental support expertise. There are also certain principles that each company is expected to follow, for example the provision of passenger focused quality services.

Our environmental contribution

Environmental awareness is another key Go-Ahead principle. In Go-Ahead we have pioneered the use of clean vehicle technology. Buses contribute just 3.75% of total UK transport CO2 emissions while the car contributes 52%. It is clear from these statistics that the industry has a good record and the most effective way to reduce carbon use and improve air quality further would be to encourage more people to travel by bus. However, Go-Ahead recognises that as public transport operators it is a contributor to carbon use and if people are prepared to switch to bus to save the environment, they want to be absolutely clear that bus is doing as much as possible to minimise its impact.

On buses, the age and type of engine is the most significant factor governing environmental efficiency. Go-Ahead’s vehicle purchasing policy specifies that all new vehicles should comply with the latest European fuel efficiency standards (currently Euro IV). However, Go-Ahead choses to go beyond the minimum standards by being the first to introduce Euro V engines ahead of the required introduction date of September 2009. In addition, older vehicles are fitted (where appropriate) with Continuously Regenerating Traps (CRT) or equivalent technology.

Go-Ahead’s focus in this area has been rewarded with accreditation by independent assessors. TAS, a specialist public transport consultancy which (excluding the London market), ranked it as having the youngest and greenest bus fleets of all the major UK operators. Go-Ahead has a wider commitment to good environmental management and this has led to accreditation with the Carbon Trust Standard, the UK’s only independent certification recognising achievements in action on climate change by leading organisations in industry, commerce and the public sector.

Go-Ahead is not complacent. Hybrid technology – which uses a combination of diesel and electric power to drive vehicles – is being tested in partnership with TfL on a number of routes in London with the potential prize being a 30% reduction in carbon emissions.

Go-Ahead has also found that investment in driver training as well as vehicles can have a significant impact on carbon use. Go-Ahead has embarked on a company wide training programme to retrain bus drivers in fuel efficient driving techniques. Drivers go on a course and then when they return to the cab, a display screen with a traffic light warning system indicates whether they are braking too harshly, accelerating too quickly, idling the vehicle unnecessarily or over speeding. Not only does this cut down on unnecessary fuel consumption, but the smoother driving means that the customer gets a better ride. This dynamic initiative was introduced in July 2008 and to date nearly 70% of Go-Ahead’s 8,720 drivers have been trained on this new technology with the aim of training all drivers soon. This initiative demonstrates how a combination of investment by the company in both new technologies and staff training can deliver changes to individual behaviours and commitment to reducing carbon emissions.

The future

Go-Ahead has come a long way since its origins back in the privatisation of bus companies in 1987. The Group has faced many challenges in between and there are more to come. In England, the 2008 Transport Act has recently received assent. The implications of this legislation are yet to be seen, but Go-Ahead welcomes new provisions which strengthen genuine partnership working between local authorities and operators, which results in an obvious community benefit. For example, the Act now makes it possible for operators to discuss service levels with local authority mediation, which had previously been difficult because of anti-competitive clauses enshrined in legislation. However, Go-Ahead does have concerns at further provisions which could allow local authorities to take back the planning and regulation of bus services (so called Quality Contracts). Although Go-Ahead will be least affected by these provisions because of its market geography compared to the other major UK transport operators, the Group believe that these should only be considered as a last resort where there is clearly market failure, not as an alternative to a working partnership which is clearly delivering benefits.

There are other areas of uncertainty created by the economic situation and doubts over some aspects of Government funding to the industry, but overall now is a great time to be a public transport operator. The quality of bus travel and public transport in general has increased significantly as private companies, local authorities and the Government have invested heavily in improving the bus and rail networks in the UK. Better services and increasing environmental awareness are driving a positive shift in customer attitudes towards public transport. Go-Ahead is in the vanguard!

References

  1. For the financial year ended 28 June 2008.
  2. Before amortisation and exceptional items. For the financial year ended 28 June 2008.

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