Buses in Adelaide - Experience With Contracted Bus Operations

Experience With Contracted Bus Operations

The tendering out of bus operations has been a bumpy ride for Adelaide commuters. The original 1996 partial service tendering saw services run and marketed under each operator's name, presenting a disjointed network to the public. The Adelaide Metro brand was created in 2000 to restore a unified face to the public.

Contract holder Serco withdrew in 2004, at the contracted half-term break-point, after failing to renegotiate its contract on better terms. Serco had previously informed the Minister for Transport that it was not willing to continue to operate the bus services for a further five years on the terms contained in the then existing Contract. Serco had made a submission to the Department of Transport and Urban Planning proposing to operate the bus services in the contract areas on new terms and conditions. This submission was rejected by the Department of Transport and Urban Planning. The company unsuccessfully rebid for the contract in the subsequent competition.

Light City Buses was awarded two Adelaide's six public bus contract regions commencing operation in October 2011, taking over the North South and Outer North East Contract Areas from Torrens Transit. These two contract regions cover 43% of the bus services in Adelaide, valued at $567 million over the eight-year life of the contracts. The contracts are in place for an initial eight-year term, from 2 October 2011 to 30 June 2019 with an option to extend for a further four years, subject to government approval. Since the start of operations of bus services by Light City Buses in October 2011 service interruptions and delays which were initially dismissed as teething problems have continued to frustrate commuters. Transfield has claimed most of the problems have been resolved and they are working on resolving the rest, however in May 2012, Transport Services minister Chloë Fox imposed a fine of $121,000 for failing to meet Performance Benchmark Targets:

• Transfield has performed "significantly worse" than the other two companies (SouthLink & Torrens Transit) operating contracted buses in Adelaide in reaching its contractual benchmarks.

• The number of Transfield buses running on time from 1 January – 31 March 2012 ranged from as low as 51.6%on Transfield North South contract region to 66.9% on the Outer North East region. Transfield was fined $121,345 for late running buses services as a result.

• In the 1 April – 30 June 2012 period Transfield, on-time running increased only marginally to 52.2% for the North South contract region and 71.3% for the Outer North East contract region. Transfield was fined $70,000 for its poor on-time running performance.

Transfield have said that new timetables in July 2012 should help get buses running on time.

The negative experience following this latest change of operators reflects the advice given to the Government in 2009, when it was recommended that contracts should be extended by negotiation, rather than re-tendered. The expert advice was based on:

• the efficiency of existing tender prices
• the incumbent operators' service quality performance
• the incumbent operators' entrepreneurship in regards to service development

The expert advice stated that:

• there are significant risks in any transition from one operator to another, including public uncertainty and staff unrest,
• there would be difficulties inherent in ‘unpicking’ the then current network structure and timetables,
• any change in operators was likely to present considerable risks, such as reduced service quality, reduced patronage growth, and limited benefits.

The South Australian Government went ahead with tenders in 2010. As noted above, the resultant change of operator from the incumbent Torrens Transit to Light City Buses in the North South and Outer North East Contract Areas has seen many of the warnings given come to fruition.

Professor David Hensher, Director of the Institute of Transport and Logistics Studies at the University of Sydney, has commented that while three rounds of competitive tendering in Adelaide had ironed out the cost inefficiencies and lack of service incentives under the previous public monopoly model,

It is not just service performance which is suffering; Government data shows a steady increase in patronage over the first two complete rounds of competitive tendering, followed by a sharp drop-off in the past two years.