Dan White: Wheels haven't come off Bus Eireann – yet
The improved motorway network and private car ownership levels threaten the future of the CIE empire, writes Dan White
THE belated settlement of the Bus Eireann dispute only postpones the existential crisis confronting CIE. With a vastly improved road network having dramatically reduced travelling times and vehicle ownership still at close to record levels, the state-owned transport company faces the prospect of drastic surgery in the near future.
Despite the two-day strike at Bus Eireann last week, to seasoned observers the dispute had all the appearance of a sham battle. With Bus Eireann and its CIE parent company bleeding to death and zero public sympathy for an extended transport strike at a heavily subsidised body, the job of management and unions was to get this matter sorted quickly.
So, after a quick tweaking of the original Labour Relations Commission proposals, the bus drivers were back at work on Tuesday morning. Bus Eireann management were"persuaded" to accept a total of €1m in pay cuts, a face-saving formula, which allowed the company to achieve its original target of €5m in labour cost savings.
While Bus Eireann customers will no doubt be delighted by the end of the strike, the underlying factors which created the crisis in the first place remain in place.
The recession has hit Bus Eireann and its fellow-CIE subsidiaries, Iarnrod and Dublin Bus, hard. Passenger numbers at Bus Eireann have fallen from 93.9 million in 2008 to 78.3 million in 2011, the last year for which figures are available. This pattern has been repeated at the other CIE companies with passenger numbers at Iarnrod down from 44.7 million to 37.4 million and at Dublin Bus from 143.5 million to 117 million over the same period.
At the same time as passenger numbers have plummeted, the cash-strapped State has also been reining in the subsidy paid to CIE. The total CIE subsidy has been cut from a peak of €321m in 2008 to €280m in 2011.
The CIE companies have attempted to offset the impact of a 13 per cent drop in the state subsidy by jacking up passenger fares. The latest round of fare increases came in December 2012 when Bus Eireann fares rose by an average of 6 per cent, Iarnrod fares by an average of 9 per cent for commuters and up to 4 per cent for mainline journeys while Dublin Bus fares rose by up to 18 per cent for travellers paying by cash and by 12 per cent for those paying in advance.
By increasing fares in an effort to offset lower levels of state subsidy and reduced passenger numbers, CIE is doing little more than chasing its tail. Higher fares lead to lower passenger numbers which in turn increases the pressure on a reduced state subsidy.
But that is only part of CIE's problems. While much of the public spending of the Celtic Tiger years was wasted, one of the enduring legacies is the motorway network. It may have cost the guts of €20bn but it has reduced the journey times between our major urban centres.
Take the trip by road from Dublin to Cork, the two largest cities in the country. In pre-motorway days this was a journey that took at least four hours and five or more hours when traffic was heavy. By motorway this is a journey that now takes less than three hours. By comparison the railway journey time is at least two hours and 35 minutes. And that's not allowing for the time spent getting to and from Dublin's Heuston station and Kent station in Cork. The journey by Bus Eireann, takes even longer at four hours.
In a motorway era that's no longer good enough.
Apart from the motorway network, one of the other legacies of the Celtic Tiger is record levels of private car ownership. There were 1.887m private cars registered at the end of 2011. While the number of cars was down by 37,000 or 2 per cent from the 2008 peak, it was still up by 36 per cent over the past decade.
This combination of motorways and near-record levels of private car ownership has potentially lethal implications for the CIE empire. Remember the re-opening of the Limerick-Galway railway line in March 2010, a project that cost €160m? The festivities went swimmingly until it was revealed that the journey by car, most of the road has been upgraded to dual-carriageway standard, took an hour less.
This debacle neatly encapsulated the problems facing CIE. Why take the bus or the train when you can make the journey much more quickly by car? Unless CIE can provide a convincing answer to this question then it is probable that the state-owned transport company will shrink to Dublin Bus, Dart and not much more – Dublin's Luas tram system is already operated by French company Veolia on behalf of the Railway Procurement Agency.
Last week's "solution" to the bus strike failed to answer these pressing questions.