Tuesday 7 January 2014


ARRIVAderci! **


Yesterday marked the first day of the new government run public transport service, after the old service provider Arriva was given its marching orders.
A formal contract between the government and Arriva is expected to be signed imminently, detailing the exact arrangements of the handover.
No changes to routes will be affected during the transitional period, but the name ‘Arriva’ has been removed from buses.
Arriva apologised for the incident where a bendy bus got stuck in Qormi Road, Hamrun.
Arriva racked up a debt of 50 million during its two-and-a-half years of operation in Malta. 15 million of that debt has been foisted on the government.
Transport Malta will be taking over Arriva’s buses and IT system, while workers will be retained for the time-being until a new operator is found.
The writing had been on the wall for a while, with the final nail in the coffin seemingly being the unloved bendy-buses fiery summer last year.
In September, Transport Minister Joe Mizzi said that the government has no ‘Plan B’ if Arriva decided to pull out of Malta. The minister changed his tune a month later, declaring that a ‘Plan B’ is in fact in place.
Talks between the government and Arriva continued to drag out, with the government insisting that further improvements to the service had to be made.
The end of December saw Mr Mizzi confirming that talks had broken down, leading to Arriva pulling out of Malta by the first quarter of this year, following a transition agreement between the company and transport authorities.
Mr Mizzi said more buses and drivers are needed in order to ensure that the service offered is up to scratch.
Prime Minister Joseph Muscat laid the blame firmly on the previous administration, lamenting the disaster inherited by his government.
“The public transport disaster, from bad route planning to the EU ticket pricing probe, is a clear example of the legacy this government inherited. With a new service we will work hard on the difficult but necessary task to raise standards and give Malta the public transport it deserves,” Prime Minister Muscat said.
History of a downfall
The much vaunted buses arrived from China on April 2011. The vehicles were lauded as a much needed improvement over the previous fume-belchers, as they boast air-conditioning and low-emission engines.
The problems began from day one, with many commuters having to wait in the heat for long stretches seeing buses pass by without stopping when the service was launched on 3 July 2011.
The routes used by the new transport system were changed three times, as the initial system revolved around a number of interchanges.
Driven round the bend
The company’s bendy-buses were the poster-child for all that was wrong with the service. They were portrayed as being ill-suited for Malta, causing even more traffic congestion on Malta’s roads.
The bendy buses were hugely unpopular in London, and in 2012 London Mayor Boris Johnson quipped that the” jack-knifed diplodocus” buses were now “clogging up the streets of Malta.”
The news of Malta’s spontaneously combusting bendy-buses spread like wildfire this summer, with reports popping up in both the British and Australian media.

April 2011- Arrival of new buses from China
July 2011- Launch of the new service
October 2012- Bus crashes into Portes des Bombes, several passengers injured
August 2013- 68 bendy-buses are taken off the road after three of them caught fire
October 2013 – Transport Minister says there is a ‘Plan B’ if Arriva pulls out
December 2013 – Transport Minister announces Arriva’s withdrawal


Uncertainty after Arriva nightmare

The Arriva experiment is no more. It ended ignominously, all the more so given the fanfare and hype with which it was announced, devised and implemented.
It was ill-starred from the start. At first it was fair to say that all projects, especially complicated ones, have teething troubles. That benefit of the doubt was extended to Arriva to a certain extent.
It could not be total. The project was flawed from its conception. Stuffing the transport fleet with bendy buses rejected elsewhere, especially in London, made Malta the laughing stock of Britain. Worse than that, those buses soon proved they were not suited to Malta’s roads. Accidents piled up, with the other buses too.
The insurers must have had a nightmare. It was also noted from early on that the network of starts and pick-ups was not well designed. Large outlays on it were money down the drain. The fracas was bad far beyond what it takes for drivers to get used to their routes. Good timekeeping, so heartily promised, proved zilch. The system worked well in Gozo, but not in Malta.
On its part the Arriva company began making losses beyond what one expects a new venture to tot up in its early phase. While the system was intended to end public subsidies to the individual owners of the old network, Arriva too required subsidies. These even had to be increased as time went by.
The new Labour government inherited a nightmare of a system. For months it negotiated behind the scenes to try to bring sense into a senseless situation. Two points proved to be sticky. The government wanted the company to scrap the bendy buses. The company, which had been given permission to include them by the previous government, did not agree.
Also, the government wanted to revise the route system. The company requested an increase in subsidies. No agreement was reached on the quantum. It was mutually agreed that Arriva would exit from the scene, under a formula whereby it transferred its assets, excluding the bendy buses horrors, and part of its liabilities to a state company to be set up for the temporary purpose of transiting to new private ownership of the public transport system.
The arrangement was seen to be a preferred alternative to Arriva going into messy liquidation. I have a feeling that was the shareholders’ main bargaining chip once they had decided to cut their losses and shake the dust of the Maltese islands off their sandals.
Yesterday saw a new dawn. I am uncertain what it will bring. The buses will run under the combined guidance of ex-Arriva and Transport Malta officials. The government will issue a fresh call of expression of interest.
Frankly, the scenario looks bleak, whatever Plan B the government may have in mind. I doubt that there will be any foreign firm interested in taking over the new company. Arriva was owned by a top German company. The fact that it sunk under that ownership offers little attraction to the other foreign operators.
There might be an expression of interest by a local consortium. But the subsidy the consortium will demand will be hefty. There are also unknowns in the equation as apparent at the time of writing. Arriva has said that since it started operating it made a loss of some €50 million. The largest chunk of that was made in recent months.
But the company has not revealed, to my knowledge, the basis of its calculation. The public does not know what went into that loss, how much was depreciation, how much was revenue not covering operating costs, and how much exactly was the subsidy required to finance the gap before depreciation.
Anyone interested in investing money and hope in a revived venture will be asking those questions and a thousand more. Staffing levels will be discussed.
The government and the Opposition seem to be competing to raise expectations in that regard, rather than to set a backdrop of realism which allows for time to see how all costs can be kept to a minimum.
The level of fares will also need revising, and not simply because the anomaly of non-residents paying higher fares than residents will be removed under EU edict.
It remains to be seen how much loss will be run up in the six months during which the government expects to be operating the new company in an inevitable holding exercise, and whether that loss can be factored into any agreement with new private investors in the public transport system.
The government seems to have done its best so far to handle the terrible mess it inherited from the outgoing administration. The Opposition is not acknowledging that, nor has it been coming up with any helpful positive proposals.
The Arriva drama is over in name. In terms of fact it has only just started.

** By the way.
"arrivederci" may be the wrong way of interpreting things. In certain quarters the meaning of the word is "until we see each other again". !! 


Expression of interest for new bus operator to be issued next week

Joe Mizzi said a state-owned company will increase the efficiency of public transport

Fresh from putting pen to a share transfer agreement between Arriva and Transport Malta, Transport Minister Joe Mizzi said that a call for expressions of interest for Malta's next public transport operator would be issued in the coming week.
Speaking on PBS's Dissett, Mizzi insisted that the government did not pay anything for the transfer of Arriva's assets and furthermore, it would not pay Arriva anything during the transitional period.
"Arriva's €68 million in debt were solely incurred by the company. The government did not pay anything for this share transfer agreement," he stressed.
Earlier this evening Transport Malta and Arriva officially signed a share transfer agreement, subsequently confirming that a government-owned company would take over the public transport system. The agreement marks the end of the Arriva's tumultuous two and a half years in Malta and will see the government take over Arriva's assets including its vehicles, IT system, the Park and Ride facilities, its shares as well as its license.
Now the minister said, a call for expression of interest would be issued next week to find the next private operator of the country's public transport system.
"Apart from its vehicles and assets, the government will also incur Arriva's €3 million debt to creditors and its accruals," the minister argued while keeping mum on the amount of the accruals.
"However," he reiterated, "its €68 million in debts were borne solely by Arriva and not the government."
Minister Mizzi explained how Arriva had been losing close to €1 million per month and due to its mounting debts and financial difficulties it became apparent that the company's time was short-lived.
"Had it not been for the service's inefficiency and subsequent withdrawal of the bendy buses, the government would have still intervened due to Arriva's debts."
He explained that the watershed moment was when the government presented the bus operator with the new routes.
"After embarking on a consultancy with all stakeholders, back in October, the government presented Arriva its new bus route. Upon being presented with the new routes, Arriva asked the government to invest €45 million as it was not in a position to invest in the public transport."
Consequently, Mizzi explained, following months of fruitless negotiations, the best option was for the government to take over the public transport system. 
"During preliminary discussions, Arriva offered to sell for €30 million plus its debts, before quickly reducing this number by half. No way was the government going to pay this," Mizzi explained.
"Upon trading suggestions and further discussions, Arriva had asked for a €6 million payment during the transitory period. It was then that the government decided to scrap the idea and take over the transport system until a new operator is found."
Meanwhile, asked whether he had ever threatened Arriva to nationalise the company, the minister quashed the claims and insisted the government could not have afforded to nationalise the public transport system.
"Had the government nationalised the public transport, Arriva's vehicles would have been tied up in the liquidation process while its drivers' future would have ended up hanging in the balance."
On his part Reno Bugeja said that Mizzi's explanation in October that the government was prepared to take over the bus service, fuelled rumours that Arriva's ousting was long in the pipeline.
"The government has no prejudice. The government was simply prepared for anything when I said that."
"Tasked with the new transport system, the new state-owned company will increase efficiency," Mizzi reassured while quickly being shut down by Reno Bugeja who argued that this is a tall order given the mass inefficiencies by the previous private operator.
However, the minister insisted that he will not do any miracles and said that the situation of the public transport in Malta may quickly change.
"The government is aware that in order to ensure efficiency It had no choice but to subsidise the new operator," Mizzi explained while keeping mum on the government's possible expenses.
Turning his attention on the length of the transitory period, the minister said the government is committed to limit this to the least time possible and stressed that both Maltese as well as foreign operators are already showing interest to take over the Malta's public transport system.
Asked whether one of the specifications in the new contract will be for the new operator to use the fleet of Arriva buses, the minister failed to disclose the details, but said that the  "new operator will need them."
On the routes, Mizzi said that the new routes set by the government three months ago will be published in the expression of interest.