Business Irish

Friday 19 September 2014

Doors open for private bus operators

Published 22/01/2004 | 00:11

  • Share

More and more Irish and international companies aim to compete with CIE in Dublin and nationally as Seamus Brennan pursues his goal of privatising 25pc of bus routes. The Department of Transport has seen a policy change in recent years, allowing the private firms to find a firmer toehold in the market

  • Share
  • Go To

DAYS before Christmas, Transport Minister Seamus Brennan caused consternation among trade unions at CIE by revealing his plans to privatise 25pc of bus routes.

But the workers' representatives weren't the only ones who sat bolt upright and took an interest in the festive season bombshell.

A growing group of private Irish and international bus companies - which are trying to compete with the State transport organisation - warmly applauded the Minister's new policy, which he first revealed in the Irish Independent business supplement.

The new entrants have been eagerly growing share in any part of the market where they are permitted to operate.

In 2002, Mr Brennan said he would franchise out 25pc of the Dublin Bus market to private operators.

But last month he went a step further by saying he would extend the policy to the national sector.

Already, there is growing competition for Bus Eireann, which provides services between Ireland's towns and cities.

In fact, one of the legal footholds the private bus companies used to operate in the market has been as a result of a court case taken by Galway bus company Nestor.

In the legal action, it argued that Bus Eireann should not receive subsidies under the National Development Plan when it is competing against private operators.

In fact, the same rules apply in the aviation sector, as the Government is prohibited from providing State support to Aer Lingus because it is competing against companies such as Ryanair. Bus Eireann had to settle the Nestor case on the steps of the court.

But in a further development, a German bus company, Altmark, has secured a significant judgment in the European Court of Justice along similar lines.

As a result, the European Union appears to be edging its way towards a directive which would block State aid for bus companies competing with private operators.

In Ireland, there has been a quiet revolution in the sector as small family-owned operations have been acquired by major international players.

Last year, Citylink - which operates the Galway-Dublin-Dublin Airport route - was taken over by the Metroline Group, which is a familiar sight on the streets of London.

It bought the Irish service from businessman Jim Burke, who set it up in 1994.

The ultimate parent group is ComfortDelGro, a transport company which is involved in taxi, bus, and car rental in Singapore, Britain, China and Malaysia and employs 10,000 people. The company has won the contract to run the AerDart route, which links the Dart with Dublin Airport, and it has invested ?2m in the service.

Allen Parker, managing director of Citylink, says: "We got AerDart and we will be applying for other routes as they come up." The company's website resembles that of a modern airline rather than of a bus company. A ?1m injection in a new online sales and reservation system now offers 24-hour booking facilities and electronic tickets.

Mr Parker says the company is now looking at all main intercity routes for growth. Among them are routes from Dublin to Cork, Rosslare, Belfast, Derry, Sligo, Ballina and Limerick.

"We have plans to introduce a national network," he explains.

In the Department of Transport there has been a quiet policy change in recent years, allowing the private bus companies to find a firmer toehold in the market.

In the past, when a private firm applied for a licence to the Government, the application was sent to CIE for its comments. Invariably, the semi-state organisation would argue against giving the go-ahead. In recent years, there has been a sea change as many more licences have been issued by the Department of Transport.

These have allowed competition on national routes - but opportunities have also been opened up in the capital as the Department has issued licences for routes not serviced by Dublin Bus.

Mr Parker says his company plans to continue to grow through the acquisition of other bus operators who have developed successful businesses, by applying for licences and through joint ventures.

Another company which is eyeing the talk of privatisation is John O'Sullivan's Aircoach, whose fleet of blue buses brings passengers from the city centre hotels and other locations to Dublin Airport.

Late last year, British company First Group took a 90pc stake in the firm, which was founded by former bus driver Mr O'Sullivan and his wife, Una. She had worked as a vet until she became involved in Aircoach.

Mr O'Sullivan says his company would be interested in applying for national and Dublin routes.

One growing company which has managed to develop commuter routes in the capital has been Dualway, which is based in Rathcoole, Co Dublin.

The company runs buses from Rathcoole and Newcastle to the Square centre in Tallaght - and from Lucan and Parkwest to Dublin city centre. It also runs a series of open-top tours of the capital.

Its managing director, Tony McConn, says the firm would be interested in applying for routes, provided they were sufficiently attractive. He points out that his company operates with no subsidies.

Another company, Morton's, is also expanding in the Dublin area and runs a service from Lucan to Heuston Station and Rathfarnham.

While the bus companies call for competition, the detail of how Seamus Brennan will tackle the issue of franchising still has to be ironed out.

In the Dublin area, Seamus Brennan could put a series of packages of new and existing routes out to tender to private companies in order to hit his target of 25pc private involvement.

He could also offer bundles of routes which would include profitable and unprofitable lines to avoid the situation of firms cherry-picking lucrative routes.

The Minister's first step would be to appoint a transport regulator who would award routes to private companies - this would require legislation, which is always time-consuming.

On the national sector, it is yet to be seen if Mr Brennan would take the step of franchising out 25pc of existing routes if the intercity lines are already subject to competition. Instead, he could use a mixture of franchising and awarding new licences to reach the 25pc threshold.

The attitude of the unions - who can easily cause public transport mayhem at the drop of a hat - will be a key factor in the speed at which the Minister can implement his plans.

Trade union Siptu says it will not agree to let franchising proceed this year or next year.

One source in the union adds: "Dublin Bus will be stopped from taking part in some routes - these will go to the private sector. We are not against competition but we are not going to let it destroy the company. The company has 1,000 buses.

Privatising them would mean 25pc, or 250 buses, would be unused. Would they be leased out to private operators?"

The Department of Transport argues the market is expanding at the rate of 25pc per annum and, in reality, the workers at the bus companies have no real grounds for fearing that there will not be enough work for them. It says the growth will absorb the addition of the private operators.

Whether or not the unions accept this is likely to dictate the speed at which Seamus Brennan's privatisation proceeds. Either way, the bus sector is en route for fundamental changes.

Read More

Editors Choice

Also in Business