Sunday 29 January 2012

BSOG Reduction to Increase Bus Fares?

Bus companies will soon be hit by reductions in BSOG formally known as Fuel Duty Rebate and speculation is that fare rises and route cut backs will follow as a result. Bus companies have always been at a disadvantage compared to rail and air travel and BSOG was a way of levelling up the playing field. By tinkering with this rebate and now blatantly reducing it, the reality is that bus companies will have to recover it from fares.
By paying more for their fuel the bus companies will need
recover the costs through higher ticket prices.
The question must be asked why BSOG is being reduced whilst allowing rail and air travel total exemption from fuel taxes. Rail and some light rail systems such as the Tyne & Wear Metro just expect to be funded by government handouts and have never been in the real world of fares being set at a level to finance all maintenance future investment in rolling stock as well as making a profit.
In spite of the disadvantages the bus companies face, they manage to run services at competitive prices and each year invest in their fleet and in doing so demonstrate how real businesses are run. The forthcoming rebate reduction will hit passengers but the bus companies will be in the firing line.
TAS has published its latest survey of over 1,000 individual bus fares which shows that the average fare for a typical three-mile journey had risen from £1.74 in 2009 to £1.91 in 2011 - an increase of 9.8 per cent, slightly below the 10.1 per cent rise in the Retail Prices Index over the same period.
TAS Partnership operations director Steve Warburton warns that the reduction of BSOG in April could push fares up by over 5 per cent, risking a sharp drop in passenger numbers. “If we’re not careful, we could end up with a 1970s-style spiral of decline,” says Warburton.
Now, in a very late announcement, the Welsh Government has said that it will reduce its BSOG payments by 25% from 1 April 2012. The cut will effectively mean a 12p per litre rise in the cost of diesel for the Welsh bus operators. The decision and the short notice of the proposal have met criticism from Welsh operators. Padarn Bus MD, David Hulme, said, ‘In England there was about 18 months notice of the cut, we effectively only have two weeks to make service changes in line with the cut because of the notice we have to give. It’s the people who need the bus the most that will suffer the most"

David Gambles