Government funding needed to keep public transport on the road

The Government seems likely to have to stump up considerable sums of money to keep key public transport services on the road.

Passenger numbers on bus and rail services have been very badly hit by the Covid-19 pandemic over recent weeks, and social distancing measures mean they are unlikely to return to the pre-crisis position any time soon.

Many bus and rail services are financially supported by government because they could not operate on a commercial basis. They receive what is known as public service obligation funding. Close to €300 million was allocated for this purpose last year.

Cash flow in the three State-owned CIÉ companies has been supported, according to informed sources, by the provision of this public service obligation funding.

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The CIÉ group said at the weekend its companies had been told that the National Transport Authority (NTA) would be "assuming revenue risk for such public service obligation services".

However, the Government has been warned that the level of public service obligation funding currently available could run out within weeks, possibly by the end of June.

The board of the CIÉ transport group advised Minister for Transport Shane Ross last week that its companies were now facing a very serious financial position.

Senior sources have described the financial situation facing public transport operators as “dire”. It is expected the Cabinet will consider the matter in the coming weeks with a decision to provide additional funding anticipated.

Mr Ross on Sunday evening pledged that the Government would support key public transport across the country. He said “the Government is determined that there will be no interruption to subvented public transport operations as a result of Covid-19”.

“We will continue to take whatever measures are necessary to support these essential transport services.”

Supports

The Minister’s comments indicated the exchequer was likely to have to boost spending on transport at a time when it is already spending €4.5 billion on wage supports. This comes just as the Health Service Executive warned it would need well in excess of €1 billion for personal protective equipment (PPE) for staff and to operate testing and contact tracing services.

The comments about protecting subvented transport services are likely to raise questions about the future of Bus Éireann’s Expressway inter-city network, which is considered to be a commercial operation. Unions have for some time argued that the Expressway service should be regarded as essential and not a commercial operation as it serves dozens of towns between cities and does not simply run point-to-point services along motorways. The financial position of the service is understood to be particularly worrying within the CIÉ group.

The company is understood to have commissioned external management consultants to carry out a review of the inter-city bus service, including an examination of existing routes and job numbers.

Bus Éireann did not comment on reports that Expressway, which has about 500 staff, was currently losing about €750,000 a week or answer questions about the consultancy report.

Any job losses at a State transport company would be fiercely resisted by unions. Bus Éireann stressed on Sunday that the Expressway service received no State funding and said its business had been heavily impacted during the Covid-19 pandemic.

The company said there had been a “significant reduction in passenger numbers”. However, it said any details around the finances of the Expressway business were commercially sensitive.

The CIÉ group said the NTA had advised the operating companies, based on public service obligation contracts, that it would be assuming revenue risk for such public service obligation services.