Working out the costs of running a bus service through the day
Archive - Originally posted on "The Horse's Mouth" - 2016-02-06 13:43:49 - Graham Ellis
I like to work from strength of knowledge of mechanisms. And on that basis, I've modelled the costs in running a bus and the income it might generate each hour through the day. The figures used in this model are llustrative educated guesses only.
It costs me 100 pounds a day in salary to pay a bus driver. Call that 140 pounds with employment overhead. It costs me a further 180 pounds a day to have a vehicle on the road, and it costs me 75 pounds a day in running costs.
The 180 pounds has to be paid whether or not the vehicle is running. The 75 pounds running costs can be factored at 7.50 per hour, and the 140 pound driver cost can be somewhat saved if you can take the odd hour off the beginning or end of the day, but split shift savings in the middle of the day between two peaks are unlikely to be a great deal by the time the driver gets the vehicle back to base and out again, qute apart from most staff really not liking such splits and you loosing staff.
Let's take a ten hour bus day - from 07:45 to 17:45 - that's going to cost us 395 pounds to operate, or 39.50 per hour.
Income perhaps is as follows (school contracts, fares, ENCTS, BSOG atc)::
07:45 - School and work hour - 65 pounds income
08:45 - quieter hour - 45 pounds income
09:45 - seniors peak - 60 pound income
10:45 - seniors getting a bit quieter - 45 pounds
11:45 - 40 pounds (seniors returning but not sharp a peak)
12:45 - 30 pounds (seniors returning but not sharp a peak)
13:45 - say 20 pounds
14:45 - school return - 55 pounds
15:45 - say 30 pounds
16:45 - work return and mop up - 50 pounds
and that's a total of 440 pounds - 11% profit margin.
7 hours are profitable on any measure. Two hours make more than the driver and running costs, and are better run than not run for the total profit as at least they help towards the fixed cost. Just one hour operates at a loss, and it could be suggested that the early afternoon is being subsidised. But wait a moment - most of the people using buses are on day return trips, and pulling out the bus for that hour and loosing 20 pounds would lead to a loss of - let's say - 10 pounds at some other point in the day. And I doubt you would save more than 10 pounds (running cost plus a bit of pay) if you pulled the bus off the road for an hour - so the net result is a 385 pound expenditure and a 410 pound income - day's profit down from 45 to 25 pounds.
Conclusions based on these figure:
1. At these costs, a service is shown to be basically profitable, though I would question whether it's commercially profitable bearing in mind you may consider ENCTS payments and BSOG to be subsidies [[ Anon writes to me on 6th March - "ENCTS should never be considered as subsidy. It is a payment for services provided to those persons in possession of a valid pass.".I'm inclined to agree. But never the less, it is a further payment to the bus companies from local government at a time that local government is pressed for funds, and it has be allowed for in relevant budgets.]]
2. There are a handful of hours during the day when depreciation and other capital costs aren't covered by income, but they are compensated by considerably higher income peaks
3. The "siesta hour" around 2 p.m. may not even cover its direct operating costs, but in practise it's carried by the rest of the day and the ultimate bottom line says commercially it needs to be run.
Note that the movement of concessionary passes to start at 09:30 rather than 09:00 has added a significant peakyness to the bus operation which makes it more difficult to run profitably even on the same overall income - peak PASSENGER numbers are around 09:45 (as ENCTS passengers contribute less) leading to loading issues. You can see how this issue fits to the model, but there's not enough depth in the model's data to illustrate the point in numbers.
Although the figures in this article are educated guesses, the analysis was triggered by the words of Justin Pickford of Faresaver buses in the Gazette and Herald - "Bus services must not be cut.
