Earlier this month, the UK Government agreed a financial bailout with Transport for London (TFL), promising to make up some of the revenue lost due to the pandemic. At a time when bus operators and manufacturers are facing unprecedented uncertainty, deals like this will be welcome news to the sector. Here, Roger Brereton, head of sales at steering system specialist, Pailton Engineering, looks at the challenges facing the sector and makes the case for targeted government initiatives to get more buses on Europe’s roads.
In July of this year, Sadiq Khan sat before the House of Commons Transport Committee and pleaded with MPs for greater funding for London’s public transport. The British capital, the mayor explained, was more heavily impacted than other global cities because of differences in the funding arrangements.
Transport for London derives 80 percent of its revenue from passenger fees. In Madrid, the equivalent figure is 48 percent and in Paris, it is 37 percent. London was thus uniquely vulnerable to the impact of remote working, social distancing and lockdowns, which threatened to decimate TFL’s financial position.
Fortunately, the government has recognised the impact of the pandemic on TFL and the public transport sector and has now agreed a bailout worth up to £1.8 billion to make up for the lost revenue. Underpinning this decision was recognition of the vital importance that public transport plays both in the economic recovery and meeting the government’s carbon reduction targets.
The funding is therefore a welcome news story amid a period of uncertainty for bus manufacturers and bus operators. New bus and coach registrations fell by over 77 percent in the second quarter of 2020, with a mere 328 vehicles joining UK roads. Similar falls were reported across a COVID-battered Europe.
During the summer, as lockdown measures were lifted, passenger levels failed to return to previous levels. In many places, they returned to approximately 60 percent of pre-COVID capacity, but in London the figure was approximately 35 percent. It is likely that different levels of remote working and different rules for social distancing explain these variations.
In the medium term, when Europe is ready to exit the second wave of lockdowns, buses will play a vital role in any economic recovery. They need investment and financial support to compensate for the loss of fares caused by the pandemic, but there will also need to be a clear and effective communication strategy to reassure people that public transport is safe.
In the medium to longer term, there are more grounds for optimism. According to Mordor Intelligence, the global bus market is expected to grow at a compound annual growth rate of 7.8 per cent between now and 2025.
People will continue to debate whether the electric bus represents more than an interim solution to the challenge of environmental sustainability, but rapid changes in battery technology and state-led initiatives to provide greener transport were beginning to increase e-bus adoption in Europe. In 2018, 750 electric buses were sold in Europe. In 2019, that figure was up to 1,800 according to IDTechEx.
There are tentative grounds for optimism, if we can get through the difficult e immediate future. Bus manufacturers will not have the luxury of planning ahead to the extent they would in normal times. Parts suppliers will need to offer more flexibility to OEMs to help them respond to this challenge.
Governments, meanwhile, will have to be bold in supporting public transport through this challenging time. This should not amount to simply throwing money at the problem. Financial support is needed, but it must be worked out in consultation with industry and local leaders, reflecting the significant variations in transport use and funding arrangements in different locations. Hopefully, the TFL bailout is a sign that this locally targeted support will be the preferred way forward.