Welsh operators making ‘supernormal’ profits?

A report published by the Public Policy Institute for Wales suggests a significant element of government subsidy is being captured as ‘supernormal’ profits by the bus industry in Wales. Modelling by transport academic, Professor John Preston, indicates bus companies in Wales could be making as much as £22m more than a normal return on sales. The report, ‘A Fare Deal? Regulation and Financing of Bus Services in Wales’, looked at the impact of deregulation in the country. It suggests Quality Partnerships, which would place legal obligations into contracts, could be used to drive up performance, particularly in urban areas. It claims Flexible Transport Services, a door-to-door service which allows pre-booked tickets in a range of vehicles, would be better suited to rural areas of Wales.

Responding to the report, Director of CPT Cymru, John Pockett, said, ‘The bus industry across Wales is in a far better state now than it has ever been in terms of investment in services, punctuality, reliability and age of vehicles. This investment has been achieved despite substantial funding cuts. We note particularly that this report concludes that the level of bus subsidy in London, (£131), a model sometimes advocated for Wales compares with £34 per head in Wales.’

Visit http://ppiw.org.uk/files/2014/11/Regulation-and-Financing-of-Bus-Services.pdf to see A Fare Deal? Regulation and Financing of Bus Services in Wales.

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