New Bus For London - Ownership

Ownership

Under the bus contract tendering system for London, routes are often updated with new buses every seven years, with new buses owned or leased by the operator, whether the route operator changes or not. Redundant buses, if not used on other London contracts or sold to other London operators, often go on to further use outside London, either cascaded within the fleets of the large national operators who own several of the London operating companies, or sold to other regional companies.

The London transport commissioner Peter Hendy acknowledged in 2008 that there were economic challenges in requiring current private London bus operators to tender for routes if they required the outright purchase of the new bus for London. He acknowledged this could lead to higher bids overall, due to the fact a rear platform bus was unlikely to appeal to operators outside London, and with the questionable utility of hybrid technology to more rural operations.

An independent review of London buses by KPMG for TfL's London Buses Ltd division, which oversees the day-to-day network and route-tendering system, but does not own or operate buses, found that in the current credit climate London bus operators were reluctant to take on the residual value risk posed by the New Bus for London route contracts, while TfL would not be able to own the bus fleet due to capital restrictions. It therefore recommended that to allow use of the new buses either route contracts be extended to the expected life of the buses, or use of a leasing company to own the whole fleet, or to otherwise guarantee in some way that the residual risk to operators could be reduced.