State transport companies ‘do not have reserves’ to survive future downturn

The main State-owned transport companies could not absorb cuts to exchequer subvention payments and reduced fare revenues in future downturns as their reserves have been exhausted, a new spending review has found.

The review says that the three operators, Dublin Bus, Bus Éireann and Irish Rail had made substantial losses during the period 2009-2013, due to the loss in public service obligation funding over this period, coupled with the loss of fare revenue.

“Operators responded by absorbing losses using reserves to cover the shortfall over the period 2009-2011, retaining many of the services considered socially optimal, while other services were curtailed. Operators’ financial positions have improved over the period 2014-2019 as the level of public service obligation funding has been increased and passenger numbers have increased.”

However the spending review warns that this in turn led to additional costs such as redundancies.

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“It is worth noting that this could not be repeated in future years as operators’ reserves have been exhausted and there has been no period of significant surplus in subsequent years.”

The spending review examines the public service obligation funding provided to transport companies. Essentially this is a subvention payment provided by the Government to cover the shortfall between costs and revenues for transport operators to run services that are considered to be socially beneficial but financially unviable.

Public service obligation funding – which declined by 37 per cent from 2009-2015 from €303.2 million to €190.6 million before rebounding to €314.45 million in 2019 – manly goes to Bus Éireann, Dublin Bus and Irish Rail. Funding is also allocated to Go-Ahead Ireland and other smaller operators.

In September, Bus Éireann said a number of its intercity Expressway services would cease to operate due to the financial impact of the Covid-19 pandemic. The Dublin to Belfast route was expected to end this month with service between Dublin, Cork, Limerick and Galway all stopping at some stage next year.

The review says the punctuality rate on the country’s train services was above the target rate (90 per cent) for all routes with the exception of the Dublin Heuston-Cork route in the third quarter of 2019.

“Additionally, reliability has increased between 2018 and 2019. In 2018 and 2019, punctuality rate is above the target punctuality rate [90 per cent] for all but one route. However, it is important to note that punctuality is defined as the service arriving within 10 minutes of its scheduled time. Additionally, the punctuality rate improved for only five out of 18 routes between 2018 and 2019. On the other hand, reliability has increased between 2018 and 2019.”

The spending review says that at Dublin Bus in recent years, the cost of running services has increased per kilometre, “which at a high level indicates a reduction in efficiency”.

“However, the cost per passenger has fallen due to a higher usage of the service and the service has become less dependent on public service obligation subsidisation. Between 2017 and 2019, the punctuality rate has improved slightly. Additionally, between 2018 and 2019, departures on time have improved for 17 per cent of the routes.”

The review says that at Bus Éireann in recent years, cost per passenger/seat km has remained relatively consistent, “broadly indicating unchanged levels of efficiency”. However, it says, the level of subsidy per passenger has increased.

The review says Dublin Bus services with more than 30 per cent of late departures were routes :16D, 155, 33, 33E, 39, 41X,44, 68, 77A and 7D.