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Moving to a new bus contracting model - lessons from London

Public bus transportation is set to change in Singapore as it moves towards a government contracting model for the industry. Our reporter looks at how London transitioned to a similar model.

LONDON:  London is one of the most congested cities in Europe. It has a population of more than eight million, most of them using the bus for transport. Moving large numbers of passengers efficiently is a challenge. So to improve service reliability, the city introduced the contracting regime in the mid-1980s. For the first time, there was open competition in the market.

"Undoubtedly it was scary at times, things were changing, companies were being privatised, new people were coming to compete in London," said Mr John Trayner, Managing Director of bus operator Go-Ahead London. "You're constantly learning, you're constantly trying to make yourself as efficient as you can, as competitive as you can, and each time a route contract comes up for grabs, you are learning something more about what the competition is doing, what you are doing to keep ahead of them, and it's constant innovation to be honest."

Under the London contracting model, bus services are tendered by routes. Operators compete for routes regularly. Each contract is worth between three and four million pounds.

Singapore-listed company ComfortDelgro entered the market 15 years ago, when it bought over Metroline. 

"The competition here is very fierce. There are several operators who are operating in the market. If you know your business, if you know how to price your bids, if you know how to run your routes reliably, you can make a good return. If you can't, then you will be forced out of the market," said Mr Jaspal Singh, Chief Executive Officer of Comfort Delgro in the UK and Ireland.

Over the years, many operators have left. London now consists of seven major companies, operating about 96 per cent of the market. Go-Ahead London is the biggest company, with a quarter of the market share.

Stockwell garage is one of 17 depots owned by Go-Ahead London. The depot can hold 200 buses, and it serves about 15 routes. "Depots like these are important for a bus operator, because it allows them to compete for routes when they go up for tender," explained Go-Ahead bus driver Dane Wellington.

The winning operator runs the route for five years. The tender can be extended for two more years for good performance. However, in competitive tendering, operators may also lose routes to other companies. And when routes change hands, bus drivers may also get transferred. 

Go-Ahead London has 6,000 drivers - 1,000 of which are from other companies.

Said Mr Trayner: "It's a communication exercise. The biggest factor most drivers are concerned with is job security. Can we retain their work? Can we keep their work in the garage they work from?"

"Personally it's not something that I will be looking forward to, because this company has been very good to me," said Mr Wellington. "It will be very drastic for me if we were to lose a route and I move on to another company. That's why personally, as a driver, I will try my best to do my work, try to meet the schedule, so the company won't have this problem because losing routes is not very good."

London's transition arrangements ensures the employee's working conditions are not worsened. Workers also have a choice whether to move to the new operator, who may offer a higher salary to incentivise them. However, this may not necessarily be the case if the employee is already earning a high salary. Such transfers are also seen as a loss to operators who have invested heavily in staff development. Well-trained workers are also essential in ensuring the reliability and quality of bus services.

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