On Sat, 5 Nov 2005 13:13:28 +0000 (UTC), "Chris Read"
wrote:


"Paul Corfield" wrote:

With Net Cost contracts routes that are profitable are bid on the basis
of providing a return to the operator with any extra profit being shared
between TfL and the operator. Thus TfL gains from good performance as
does the operator. On routes which need subsidy then the bid would be on
the basis of lowest subsidy - hence incentivising lower cost operation
but balanced by a desire to grow revenue from good performance. If you
aim to minimise subsidy but still have a well funded budget you can
argue that extra routes could be funded as more budget will be leftover
if the core network is basically profitable or run at low subsidy
levels.

(snip)

Interesting, thanks for posting.

Which are the most 'profitable' routes, and which require the largest
subsidy?

It's very hard to know because the contract fees are not related to
revenue. I am unaware of any data that shows how much money any one
individual route takes (including apportioned revenue from permits and
prepaid tickets).

I would guess though that very popular routes like the 2, 6. 8, 9, 10,
11, 12, 29, 24, 38, 36, 73, 176, 68 / 468 would all easily make a profit
even at TfL fare levels. There are countless other examples of routes
with high and sustained demand. However they would do amazingly well if
commercial fare levels applied because even if some people decided not
to use them due to high fares there is enough of a core demand to bring
in the money. Of course, in a deregulated environment there would be
huge levels of competition on all of the above routes - at least in the
short term until the dominant operator won out.

Routes like mobility and school services have high subsidy levels
because they have earn next to no revenue but still have to run at peak
times (for schools that is). There are numerous other examples of small
scale routes that serve a purpose but are not exactly money spinners -
W12, W13, W14, 395, 273, R8, B15 are all examples that would fit the
bill.

The other thing to bear in mind with London's bus market is that it is
so big that I'm pretty convinced that anyone who could run a decent and
reliable service would probably be able to make money. They'd not be
millionaires but the demand for travel is so high that it would be hard
to fail if you picked either a good corridor or else provided a good
niche type service with a regular clientele.
--
Paul C


Admits to working for London Underground!