Change, Challenge, Opportunity – CPT Scotland faces up
to the future
The 2015 CPT Scotland Chair is Andrew Jarvis, MD Stagecoach East Scotland who opened the organisation’s annual conference at the Cameron House Hotel on the banks of a misty Loch Lomond by explaining the rationale behind the conference title, pointing out that the industry was arriving at a crossroads at which change was inevitable, which would bring with it challenges and opportunities. The cost of car ownership continued to fall, in areas the economy was recovering, young people were less likely to want to obtain a driving licence, and people were tending not to want to own things but rent or share them instead. There was the change in the capabilities of phones, which raised the question; should the like of Uber and Blablacar be welcomed, emulated, feared, or all three? There were also autonomous vehicles with their attendant safety and
Andrew outlined the industry’s recent partnership, investment, customer satisfaction and e-ticketing successes in Scotland and called for the forthcoming National Transport Strategy Refresh to put pressure on local authorities and regional transport partnerships to deliver public transport related improvements on the ground. As modern commercial businesses with long life assets, the industry preferred not to have shocks in policy or support.
There was clearly an appetite to discuss the issues, or at least listen to what the speakers had to say because attendance (137) was the highest it has been for some years.
Derek Mackay, MSP, Minister for Transport and Islands
After years attending conferences I’ve learned not to expect too much from Transport Ministers, so Derek Mackay’s clear grasp of his brief and genuine engagement with the audience was a welcome change, on top of which his message was a welcome one. He thought there was a great success story within the Scottish bus industry, but was slightly disappointed that average patronage levels across the country were not quite as high as he would want them to be. He praised investment, including that in staff and said that, as a new Minister, he had been surprised most by passenger satisfaction levels, which were not always reflected in debate in parliament but were something to be proud of.
He wanted to give the bus industry a degree of stability around funding and policy and also more priority because public transport was good for us all, for investment, for tackling inequality and also for tackling the environmental challenge. He had recently announced £3m for the sixth round of the Scottish Green Bus Fund.
The Scottish Government’s refreshed economic strategy touched on infrastructure, innovation, internationalisation and inequality, so the bus industry’s role was social, economic and environmental with political awareness as well.
On the re-regulation of buses he made the Government position very clear: ‘I want to work in partnership with operators to deliver on incomes, quality bus services and I have no plans to return to the regulation of buses. I think it would not be helpful in an already difficult and challenging public sector landscape.’ What he did want to focus on was, ‘making the bus industry more attractive, accessible and affordable’. His mailbag was not full of complaints about services withdrawn, route changes or affordability though there could be localised issues and in those areas he wanted local authorities and regional transport partnerships to work in partnership with the sector to deliver locally. ‘Strengthened community planning and local transport strategies that work for local areas should all be assisted by the refresh of the NTS’, he claimed.
His decision to have a refresh of the NTS, not a wholesale review, wasn’t because the fundamental transport strategies were broken or were wrong, he just felt it needed an update since the last review about nine years ago. He wanted to make it clear that he thought bus travel should have a priority within transport planning and would empower local authorities to give it that priority, not just in policy, but in infrastructure as well, reducing journey times and making public transport more accessible.
He wanted to do more about a greater clarity of responsibility at a local and a regional level through the NTS. He regretted not having done more about transport when he was a council leader, but thought he probably hadn’t been equipped with the policy solutions that he could have deployed at the time. He thought more could be done about enhanced and strengthened community planning at a local level and was reviewing grant support to make sure that it was calibrated to support the sector in the transition to a low carbon economy, and while the SGBF had supported the purchase of 269 vehicles he recognised that the fleet was 4,500.
Derek said he was also conducting a review of the Scottish Roadworks Commissioner as well as looking at infrastructure and engineering support.
Inevitably he wanted something of the industry. ‘My big ask of you, as an industry of which I want to be supportive, is the fulfilment of smart ticketing and integrated transport. I’ve made it clear to my civil servants that this is the next big thing that I want to achieve, not because everything else is easy, but because I think smart ticketing will make public transport even more attractive. Knowing that it is part of the franchise for rail and ferry, it is the bus industry that is the next big player. Great work is already underway, but my ambition is big: It is nationwide, cross modal, cross boundary and cross operator. The reason for that is, from a customer point of view, that makes the most sense,’ he said. He also wanted to make sure that the technology used was future proof.
Derek believed it was important from a customer service point of view as well as from a
It was all about partnership and he believed Government had to strengthen the links at a local level so the 32 local authorities and the regional transport partnerships appreciate the role they have to play as well as Government. It was the triple ‘A’s of Attractive, Accessible and Affordable bus transport’.
Although he now travels in a ministerial car (it’s the papers that are important not me) Derek has always found bus travel accessible, straightforward and enjoyable and he wants more people to share his view and actively go out of their way to be part of bus travel.
‘As long as I am Minister, what you can expect from me is partnership working, no surprises, but a clear focus on quality and delivery to provide the kind of service we would all wish to see,’ he promised, ‘I’ll set the conditions I can within investment decisions and holistic Scottish Government policy to support your industry so that satisfaction levels can be sustained or indeed improved and patronage levels can go back up because delivering on public transport is central to the Government’s economic message and for the social and environmental, including wellbeing, issues I think we can deliver so much more in partnership.’
He concluded, ‘You are a success story but there is much more I think we can do to invest in the future.’
In a question and answer session afterwards during which he urged operators to ‘really grill me’, he was asked about daughter documents to the NTS, replying, ‘There should be enough in the NTS to give you clarity on policy.’ He accepted there may be a need after next May (when there are Scottish elections) for a more root and branch review and undertook that, ‘If required, I’ll review the bus
Asked by Ralph Roberts of McGills how he could help Local Authorities to help operators make services more reliable, he said, by helping set policy that makes bus transport a priority. ‘Giving buses priority at junctions doesn’t have to be a huge infrastructure spend and I don’t think we’ve done too much of that…. We’ve got to breathe life into our town centres,’ he said, adding, ‘A lot of your bus stations should be more central’.
Martin Griffiths Chief Executive, Stagecoach Group plc
Following Derek Mackay, Martin Griffiths began saying, ‘That was really refreshing, as someone who spends a lot of time with our elected politicians, particularly in Westminster. Some of the things the Minister said we need to take away. If we get the right policy agenda we then have to look at ourselves and do what we can do. I was greatly encouraged by a lot of the words about partnership, about inclusiveness, about working together, about not re-regulating this great industry of ours. Believe me, that’s not what we are getting south of the border at the moment where there is a different agenda.’
He stressed the importance of the trust that passengers put in bus companies to get them safely from A to B saying that in the debate about buses the point was often missed. People were what the industry was about, front line staff, not political rows and ideological debates about structure, or regulatory modes, or how bus services were delivered. ‘What matters is consumer priorities,’ he said, something that was very relevant in the context of new technologies.
‘Let’s just be clear, companies, mine included, that fail to understand the consumer agenda and how quickly it is changing, we won’t have a business to come back to. We need to all think about that. Equally, politicians who are out of tune with the consumer agenda, they might be out of a job too when the ballot box comes along.’ He believed that, especially in Scotland in the run up to the elections, the industry had to ensure its voice was heard.
For Martin there were six core drivers which had to come as a package: convenience; value for money; reliability; end to end journeys; customer service; and environmental performance. The glue that held these priorities together was ongoing investment and the right political will and framework to allow us to do what we do.
Applying this to Stagecoach, having low fares was what had driven the business model over many years. ‘As we move to new technology it will allow us to reassess and we can build our business through increased sensible pricing’, he said. Special tickets for young people and students were important because they were the passengers of the future.
The company’s second pillar was investment. Profits had been reinvested in improving the quality of vehicles. Something like £650m had been invested across the UK in the last eight years. On this Martin said how pleased he was to hear a Minister stand up and admit that the bus industry did not make super-profits. It did need to make profits to be able to maintain investment in our people, fleet
Thirdly, customer service was absolutely critical to success. Across every sector of the economy expectations were increasing. Stagecoach was already offering smart ticketing across all of the bus companies in Scotland. Social media was needed to keep people informed but more needed to be done. Stagecoach was in the middle of developing what would be ‘a transformational digital product’ that would ‘change the way we have a relationship with our customers’.
‘Do we have much of a relationship with our customers? We’re starting to get there but we don’t really know much about them’. Martin believed the personalisation of travel was coming and if we didn’t look out and look at our customers in a different way, we could end up as just a commodity in a supply chain which is not where we want to be.
There would be new websites and apps. He said, ‘It’s really important that we demonstrate to Government that we are taking up the challenge.’ If we did there were good opportunities.
He welcomed the Minister’s embracing of partnership saying that trying to get someone in Westminster to say the word partnership in relation to buses is difficult at the moment. They were talking about franchising and contracting, without understanding the consequences not only for the business but for customers and taxpayers. Partnership was important because that was how to deliver the best service for customers and stakeholders. ‘It’s not just about us.’
Asking, ‘Are we in a good place in Scotland right now’, he thought that though there were challenges, ‘We can, should and must do better.’
The real industry challenges are not about decline, they were all about growth and getting more passengers. ‘We fail if we don’t persuade people over the next ten years that there is a better alternative to the car.’
On fares, the pricing strategy had to be right; because once you lost people it was difficult to win them back. Generally, the position in Scotland was good, lower than the UK average and in real terms down 2.5% over the last five years.
‘We have to continue to think and innovate about what changes to the market mean for the consumer experience,’ he said. On customer satisfaction, we were in a great starting place, but we couldn’t rest on our laurels. ‘It’s a great endorsement of what front line staff do. We wouldn’t get the satisfaction levels if they weren’t.’ The reason the industry was not high on the list for structural change was because we and our staff do a good job.
‘It all sounds really rosy but we have a number of challenges that we can’t ignore,’ said Martin. Firstly the economy. The ability to have stable patronage over the past five years shouldn’t be underestimated. The challenge was to turn the industry to growth, which wouldn’t be easy.
He argued that Scotland shouldn’t be compared with some of the places it was compared with. ‘Wouldn’t we love to get all the funding London gets for its public transport system? It isn’t going to happen and nor should it because we can’t as a country afford it. We had to make the money we had in the system work better and go further.’
Funding had flatlined. As a mode we get the least public transport investment though we carry 80% of passengers. The industry was not a subsidy junkie. Both the concession scheme and BSOG are subsidies to the passenger. They are important benefits and we need to protect them. If the Government wanted a concession scheme that was great, but the industry had the right to be paid properly. Martin asked, whether, as an industry, taking a ten year view, can we afford the concession scheme policy – carrying more and more people and being paid less and less. There had to be the funding for it.
It was good to hear the minister talking about the car as the competitor. Congestion was an issue. Journey times in parts of Scotland are up 12.5% in five years. It costs the UK economy £11bn a year. Costs have gone up over the UK average in the past five years.
Partnership was the best use of public funds. 81% of the Scottish network was commercial and in most cities it was 95%. ‘We need good public sector partners but in a time of changing technology would you move away from the innovation that the private sector brings?’ Partnership generated higher patronage and lower fares and he could see no reason to change the model.
Interpreting the Minister’s speech he said, ‘I think what Derek said was, “it’s over to you”. As long as we make it work, they’ll be supportive, so my message is, let’s make sure it does. If it’s not working they should reserve the right to intervene. Let’s not let it happen.’
The likes of Blablacar, Uber and Flixbus were coming and their technology and focus on the consumer meant that they would start to look at our customers. ‘Though we have the great advantage that they are our customers, we now have to build relationships with them to take our businesses to the next level. If we don’t they’ll come along and do it to us. From before the customer even leaves home to when they return back, all the steps that have to happen for them to have a positive journey experience. We may not do all of it but we have to influence and control most of it for us to continue to be successful’.
The three fundamentals he wanted from the NTS were: better journey times and connections; reduced emissions; and quality, affordability and accessibility. To provide it required more than just a few bus lanes. If we are serious about it we need bus priority measures that deliver a better environment for everybody, helping provide better traffic flows for all road users. Punctuality was the number one ask for the majority of customers.
The industry wasn’t scared of facing tough targets from the Traffic Commissioners but local Government also needed clear targets for improvement, possibly around ensuring minimum bus speeds and management of road networks. It was inequitable that operators faced fines and the loss of their licence yet there was no sanction at all on those who controlled the road space. It wasn’t just about stick, the incentives needed to be right. There should be budgetary incentives for Local Authorities who met and exceeded targets.
Martin concluded, ‘My message for Derek is that I was encouraged. We need to work with them to make it work. Don’t give them the excuse to say the industry isn’t working.’
Technology in Transport
In a session entitled ‘Technology in transport – a look to the future’, chaired by John Curtis of the Smart Mobility Demonstration Centre, three speakers addressed aspects of the issue. John’s main point was that, ‘What’s really important about future transport is that we never forget the customer.’
Derek Halden of DHC Loop Connections’ main themes were: simple, straightforward, smart ticketing solutions; future technology; and not having that big vision for our local towns which are dying. There were a lot of megatrends occurring that were critically important for the industry.
He recommended the Travel Needs report with which he agreed in its entirety. This was all about intelligent mobility, the four elements of which were automation, demand supply, integration and access. He wanted to see specific bus products for specific groups. We needed to look at where we have empty bus seats and who could be filling them. With personalised travel everyone could be travelling at a different fare but nobody would know it. Most of the innovation we needed to see was in business models rather than technology.
He warned that when the autonomous electric car came, which it would ahead of many other innovations, the bus would look slow, non-green and non-efficient, so we needed to change fast.
He warned operators to expect big changes. Collaboration technology companies (like Uber) were growing fast. There were a lot of potential partners for bus companies to work with but they felt that they always lost money when working with the industry, so the industry needed to learn to take away the pain points.
Looking at what the role of the bus is he concluded that the bus was massively undervalued.
Roger French, well known former MD of Brighton & Hove Bus and regular B&CB columnist, tackled the question of disruptive technologies. He thought the problem was not so much that there were going to be more taxis and automatic cars without drivers in, because towns were congested and nobody wanted more of it, it was more that these disruptors were in the university of technology, whereas we were in the kindergarten. The internet had been around over 20 years, he had first registered buses.co.uk in 1991, and yet ‘Stagecoach, Arriva and First had the naffest websites imaginable.’ Smart cards had been around since 2003 and yet Reading still had a flat fare of £1.90 that needed a minimum of four coins. A lot of realtime wasn’t realtime it was just the timetable. Stagecoach didn’t even have an App, and the one Arriva had was ‘useless’.
In a series of slides and experiences he showed just how poor the industry’s information provision was for the customer, and got so animated or rather angry that at one point he fell off the stage. Much of the information that companies provided was useless.
The industry had got to get real. It had to have open date. There had to be open data, there had to be personal pricing, there had to be an information revolution with joined up data and proper maps. And he wanted Wi-Fi that works and didn’t require so much information that you were at your stop before you’d connected.
Steven Salmon, CPT UK
In a brief and wide-ranging presentation, Steve illustrated the point about adapting to meet market needs with an ultra sound image, technology developed by new company’s to the imaging market because the guys who sold X-ray equipment failed to provide what the market wanted and made bigger, better X-ray machines instead, losing a big chunk of the market in the process.
He then ran through a number of different autonomous passenger transport vehicle schemes starting with the first to go into operation at Torregrande in Sardinia, as well as schemes in Holland and Switzerland. He pondered what use such vehicles without expensive drivers might be put to by the like of Uber, with their customer interface systems and suggested that operators might want to wake up.
‘I think disruptive influences are coming our way,’ he said, asking ‘Will the regulators boot them off.’ It would depend, these new disruptors all had a story to tell. We had to tell our story.
Chris Cheek – Director, The TAS Partnership
Encouraged by the timely announcement, earlier that morning, of the QCS’ board’s ‘comprehensive rejection’ of the Nexus franchising proposals, Chris spoke on ‘The regulation fallacy’, looking at whether bus re-regulation was the answer for the future and what the costs, risks and opportunities were. It was a fascinating, detailed presentation but covering it fully would take rather more space than I have available here. Indeed, Chris ran out of time to share all that he would have liked. With apologies to Chris, the main points were that the customer wanted quality, reliability and value for money but there were also economic, financial, environmental and social elements of the equation and the market alone could not provide all of them. Operators could not deliver without local authority help on infrastructure and highway space allocation but conflicts arose over customer interest and the wider public interest. There was less divergence between public and private sector interests than is often claimed. Operators wanted sustainable growth which made it a self reinforcing virtuous circle because delivering social, economic and environmental factors encouraged growth and patronage growth encouraged the same factors.
He looked at perceptions of market performance and why some regarded the market as failing, areas of misconception (including the reasons behind passenger decline), why transport is different, the crucial importance of time, what drives fare increases, speed and productivity issues, costs per passenger and profit levels and would have gone deeper had time permitted.
Finally he stressed, London’s patronage increase was not about regulation, it had grown because population growth within its boundaries had been equivalent to three additional cities the size of Edinburgh. It had a population density 150% greater than the next nearest city (Portsmouth).
Anthony Smith – Chief Executive, Transport Focus
We have covered the role of Transport Focus (formerly Passenger Focus) quite extensively in these pages previously, so I will not delve too deeply into Anthony’s speech, though there were a number of interesting points that caught my attention. Firstly, that Transport Focus gets one in three of the 12 page questionnaires it hands out returned completed; secondly that most customers have no affinity or relationship with the operator and think that the Local Authority has a much greater role in service provision; and thirdly that research conducted via social media produces a load of rubbish, almost all of it negative.
Colin Howden – Director, Transform Scotland
Transform Scotland is a national Scottish alliance for sustainable transport, bringing together organisations from the private, public and voluntary sectors. It has around 60 member organisations and seeks to influence in favour of better public transport, healthy travel, lower emissions, fairer funding and fairer prices.
He pointed out that Scottish Government had invested heavily in transport from 2011/12 to 2015/16 but it was spending most of the money on the unsustainable modes of roads and aviation. Spending on aviation was up 70% but spending on buses was only up by 1%, though ferries had seen a 101% rise and rail a 15% increase.
There was, he stressed, ‘a clear need to reinforce campaigning for greater support for buses in Scottish Government policy priorities.’
Michael Nielsen – IRU Permanent Delegation to the EU
Michael explained that the IRU had been founded in 1948 with the UK as a founding member and now had permanent delegations in Istanbul, Moscow and New York, though the one covering Africa was now based in Geneva.
Among the organisation’s successes had been the lobbying to obtain the forthcoming increase in GVWs to 19.5 tonnes.
He anticipated that the 201617 EU Road Package would include: A new business friendly 12 day derogation; weekly rest periods that fit coach driver specific patterns; and changing the daily spreadover back to 16 hours.
All aspects of transport were under pressure from market disruptors. The digital revolution that
sees mobility as a service was already happening but it wouldn’t work without the inclusion of buses and coaches.
Marc Crothall – Chief Executive, Scottish Tourism Alliance
Arguing that ‘Tourism is everyone’s business’ Marc pointed out that tourism was worth £11.6bn to
the Scottish economy with overnight visitor spend accounting for £4.4bn. The industry employed 211,200 people.
He saw the hot topics as: education in order to provide the employment skills needed; the living wage; tourism taxation; air passenger duty (APD); destination funding and: regulation, particularly planning and licensing.
80% of tourists were currently from the UK but the Chinese were coming.
He concluded, ‘Do you have 20-20 vision?’
Dirk Ahlborn – Chief Executive, Hyperloop
Public transport but not as we know it is the Hyperloop system developed by Tesla founder, Elon Musk, using long established vacuum technology to propel a cylindrical carriage down a tube between two points at up to 760mph. You’d be able to go from London to Glasgow in 40 minutes.
Not only is the system technologically futuristic, it is funded in a revolutionary way called Crowdstorm whereby 450 top professionals from 21 countries have agreed to undertake at least ten hours work a week on the project in return for stock options in the business.
A 5km full passenger scale test track is being built at Quay Valley, Kings County, California which should be operational in 2018. Dirk said it was likely that the first full size systems would be in Asia, China or the Middle East.
Next year’s CPT Scotland President will be Fiona Kerr, MD of First Glasgow, who closed the event and thanked everyone for attending.
As is always the case, the conference relies heavily on the generosity of sponsors to maintain its viability. This year’s partners were ADL, Volvo and Wrightbus, with sponsorship and support from: Argent Energy, Backhouse Jones, Byte Token, EPM, Ferrymill Motors, Portland Fuel Price Protection, Scania and Ticketer.