Stagecoach Revenues Face Downward Pressure

Stagecoach said the US market remains “challenging due to the effects of sustained lower fuel prices, through heightened car and air competition” with like-for-like revenues from its megabus.com division down 10.1 per cent and revenue from its other North America businesses up 0.1 per cent.

Stagecoach said: “UK Rail industry revenue growth has slowed over the last year and the outlook for the industry remains uncertain, particularly given its sensitivity to economic conditions.”

Adding: “As previously highlighted, we believe the reduced rate of growth reflects the effects of weakening consumer and business confidence, increased terrorism concerns, sustained lower fuel prices, the related effects of car and air competition, slower UK GDP growth and slowing growth in real earnings.”

Earlier in the week the rail union RMT confirmed Virgin East Coast staff will stage a a 24-hour walkout on October 3 in a dispute over job security and working conditions.

The RMT has claimed the jobs of around 200 of its members are under threat though operator Virgin Trains has insisted compulsory job cuts are not being considered.

Stagecoach notes in the trading update: “We will continue to take steps to mitigate the effects of lower revenue growth, focussing on cost control as well as additional initiatives to grow revenue.

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Managers Minimize Employee Training and Skills

James M. Kanalley Jr. is a mechanic and a member of ATU Local 1342 representing transit workers at the Niagara Frontier Transportation Authority. The members of his local have not had a raise in 8 years and and a group of them were recently at Bisons baseball game leafleting those in attendance and making the public aware of labour issues at the NFTA.

At the same time members of NAFTA management were holding a recruitment drive for new drivers and mechanics due to a shortage of each. One of the ATU members approached an upper level manager and asked some questions about the recruiting process. The manager's response was very telling, he said as much that "Well, you chose this. That's why I went to college."

Kanalley says this speaks volumes about the little regard management has towards maintenance and transportation department employees. He goes on to say:

To me, this implies that maintenance and transportation department employees are uneducated and unable to handle difficult positions and not worth paying a decent wage.

This shows the view that upper management has toward the men and women who come to work every day, despite not having had a raise in the past eight years. Many of us, myself included, do in fact have a college education.

I don’t think people realize that the skills and licenses one has to acquire to be able to properly and safely drive, diagnose, repair and maintain these increasingly complicated vehicles are very difficult and take years to acquire.

Janitorial employees willingly take health risks every time they step on a bus or railcar to thoroughly clean it so that passengers have a safe, clean and healthy ride to their destination. These workers should not be looked down upon.

As a mechanic, I would love to ask a manager how he would go about diagnosing a fuel injection issue on a diesel engine. Or how to read the schematics on a multiplexing computer system that controls the interlock and door operating system of a bus. Or how to make sure the AC system is cool enough for rider comfort, but follow the regulations for environmental safety, and diagnose an issue with said system when the defect write-up simply says, “No AC.”

“Well, you chose this.” Yes, we did choose this. I chose to go to vocational school in high school and to college in Nashville, Tenn., to get a degree in diesel and automotive technology.

I chose to be a mechanic because that’s what I’m good at and have advanced skills in. It’s how I can best make a living and contribute to the mission the NFTA has in providing transportation for our many thousands upon thousands of riders.

I didn’t, however, choose to be knocking on the door of being poor simply because I recognized that I’m not cut out for managerial office work.

We have families and homes that we are struggling to provide for and pay for.

So please take into consideration the many men and women whose lives are affected by this disregard for and disdain of employees and the system’s riders. We aren’t asking to be paid on the same level as those in upper management, but we are asking to be paid fairly for the hard work we put in every day and for the knowledge we’ve acquired to do our jobs properly and ensure that this region’s residents have safe and reliable public transportation.

Well said Mr. Kanalley. Read More>>

The MegaBus Business Model

The brand name that reinvented intercity bus travel, the home of the $1 fare and double decker buses, MegaBus, is fine tuning it's business model and adjusting its' routes and scheduling to pump up revenues in tough economic times.

Low gas prices are eating into the bus carriers preferred market demographic of the young and affluent who are more likely to own a car.

The Akron Railroad Club quotes Joseph Schwieterman, a professor at DePaul University in Chicago who studies intercity bus transportation, (and) told The Plain Dealer that the intercity bus industry is contracting after several years of rapid growth.

“Gas prices are raining on the parade of bus companies in a big way,” Schwieterman said. “It’s surprising how quickly people change their habits when fuel is cheap.” It was also surprising that Megabus passengers tend generally to be more affluent, younger and more likely to own cars.

So when gas prices drop, they are inclined to drive rather than take public transportation.

In the 1960's intercity bus travel became less and less popular with increased automobile ownership, and the post war boom in highway construction. Ridership and service to rural areas declined even further in the 1980's after deregulation of the intercity bus industry.

A 2014 paper published by the AARP cited U.S. Department of Transportation Bureau of Transportation figures showing that 8.4 million rural residents lost access to intercity bus service between 2005 and 2010.

MegaBus has a business model that is not based on providing service to small towns. Here is how they do it instead according to the Akron Railroad Club article cited above.

Since starting service in April 2006, Megabus has operated much like an airline. You won’t find Megabus stopping in small towns or even small cities unless they happen to have a large state university.

MegaBus started out in 1996 as a subunit of CoachUSA/Coach Canada offering low fares and curbside pickup instead of traditional brick and mortar bus stations. In another Akron Railroad Club piece they describe how MegaBus began.

The initial route network fanned out from Chicago and included service to Cleveland. Four years later, the Megabus business model began making a transition from a hub and spoke orientation to a point-to-point model. Also like airlines, Megabus uses yield management to set fares. Although it has attracted much attention with its $1 tickets, Megabus imposes a $1.50 per transaction fee for tickets purchased online. Tickets can also be purchased by phone, but cannot be bought from bus drivers.

A review of the MegaBus website and schedules shows how its business model favors large cities with large colleges in close vicinity.

According to Schwieterman Megabus has done best in heavily urbanized areas, between cities that are between three and six hours apart, and in places where parking is scarce and expensive.