The Department for Transport (DfT) has awarded £167m in emergency funding to bus operators, enabling Go-Ahead Group (GOG), FirstGroup (FGP) and Stagecoach (SGC) to run reduced services and accommodate social distancing protocol during the coronavirus pandemic.
Bus passenger numbers have slumped since the outbreak of coronavirus in the UK. Go-Ahead, which generated £433m in regional bus revenues last year (around 11 per cent of group turnover), has observed a 90 per cent decline in bus passenger travel since the government warned against non-essential travel.
The government will pay up to £167m over 12 weeks to bus operators, allowing key workers to continue travelling to work. Bus companies will have to cap their service levels at 50 per cent and ensure that social distancing practices can be maintained during their journeys.
The new funding comes on top of £200m already promised under the Bus Services Operators Grant, which is linked to fuel duty. Transport for London will maintain its contracted revenue payments to London bus operators.
Local authorities will also receive £30m for the safeguarding of existing routes. Go-Ahead said that around 30 per cent of its regional bus revenue came from local authority contracts and that these would be supported.
English local authorities have also been directed by national and devolved governments to retain contract tenders at their previous levels. Go-Ahead announced that its board and executive directors have agreed a 20 per cent cut to their base salaries and fees in response to the crisis.
FirstGroup, whose First Bus division provided £876m in revenue (12 per cent of group turnover), said that the new funding would “ensure continuity of operation for those who are dependent on the bus network”.
Stagecoach, which plans to lower its vehicle mileage from its present level of around 50 per cent to 40 per cent over next week, said that the funding would “reduce the risk of substantial ongoing operating losses”. Its local regional bus sales currently sit at around 15 per cent of normal levels. Stagecoach is far more exposed to a decline in UK bus travel than Go-Ahead and FirstGroup, it now being almost exclusively a UK bus company having exited franchised rail last year.
Stagecoach will suspend its inter-city Megabus services by 5 April. “We do not expect the regional bus business to earn a profit for the time being and for the weeks ahead,” the company said. Stagecoach has also scrapped its dividend for its year ending 2 May 2020.
