CIE given €36m extra funding to protect public transport

[karlr42]

http://www.rte.ie/news/2012/0724/cie...transport.html

The Cabinet has authorised the Department of Transport to allocate an extra €36m to CIE immediately to protect public transport services.

It is unclear to what extent rail and bus services have been at risk to warrant the extra allocation.

Are things really this dire that emergency cash injections are becoming necessary just to cover current costs?

[Mark Gleeson]

Its unclear who the money is for, but I would be guessing its to cover the once off redundancy costs as the group tries to shed several hundred staff.

Day to day I know revenue is actually up in some areas and products within Irish Rail but at the same time, fairly major cuts in subvention.

The 36 million basically reverses the subvention cut for this year

[karlr42]

The full press release is here: http://www.transport.ie/pressRelease.aspx?Id=603

“We have had to reduce funding from other areas of the Department in order to increase the subvention. This will involve cutbacks or deferrals in capital spending in the areas of sport, tourism, other areas of public transport, smarter travel, and maritime operations.

Wonderful.

[Mark Gleeson]

Alternatively the department of social protection could actually pay a market price for the free travel scheme

700,000 passes, annual budget 70 odd million, only 100 euro per pass

Irish Rail passenger numbers actually are fairly stable, between 37 and 38 million, Dublin Bus is in serious trouble on that front, but then again Dublin Bus lost passengers even in the boom time while Irish Rail climbed massively

[Thomas J Stamp]

Its an insteresting situation. The minister has cut the subsidy and was intent on further cutting it. Note, this is one of the lowest public transport subsidies in Europe and is probably directly the reason why prople give out about their lousy bus service. Anyway, cutting the sub means, in effect, running the service out of the fare box. Is that in any way possible? No, its not. Not unless there is a massive round of cost cutting. In effect, if you are to phase out the sub you have to, gradually, bring in €280 million in cuts. Even if the sub was to be reduced in half - €140 million. Where can you do that without impacting on services?

Minister Leo was on Morning Ireland today and he seemed to suggest that the 5% rise of fares this year had produced a bigger knock on than had been projected. Someone in CIE/DoT in the financial planning department may be in for a kick in the backside.

What we do not know is what part of this money is heading to the Rail Company. There has been rumours about the bus company, and in particular, BAC, running out of cash. As Mark says, passenger numbers have held up in IE, and fares are higher, so it proabably isnt IE this time, although the need to find the cash to make savings in IE has hit the CIE accounts head on.

What this does show, however, is that it does not take long in raising fares/cutting the subsidy to wash away the topsoil of the company and hit the bedrock. Fares going up will drive more punters away, cutting the sub will hit services and drive punters away increasing losses and a need for more sub, which will not happen, and so we are into a perfect storm.

What has to happen is for all of CIE to try and sell every single seat as often as it can. It is not doign this, but it must find a way to do it. Being a state company it doesnt seem to have the marketing imagination of a Ryanair. Even if an early morning seat is €1, its still one euro more then not being sold at all. Yes, I am aware of the webfares promotions. The thing is - how many out there are not aware of them???

[Colm Moore]

http://www.rte.ie/news/2012/0725/bus...-varadkar.html

Leo Varadkar cannot rule out CIÉ bus or rail fare increases
Updated: 13:51, Wednesday, 25 July 2012

Minister for Transport Leo Varadkar has said that he cannot rule out increases in fares on CIÉ buses and trains.

The Government announced yesterday that it is to increase its subvention to CIÉ by €36 million this year.

Mr Varadkar said there was a need to be very sensitive about fare increases.

Fares had already gone up this year and there were increases planned for next year and the year after, but there were no immediate plans to implement those increases, he added.

The minister said there was some evidence that higher fares lead to a reduction in the number of people travelling.

Speaking on RTÉ's Morning Ireland, Mr Varadkar said the monopoly contracts for Bus Éireann and Dublin Bus were up for renewal in 2015, and the Government would be considering opening up some of the routes to the private sector.

Mr Varadkar also said the Government would not be making any decision on its response to Ryanair's latest bid for Aer Lingus until at least September.

[karlr42]

Don't know why Leo even bothered to say anything. We all know there is an annual increase in fares, we are well used to it by now. He could have just kept his mouth shut and avoided the bad press.

What he should be saying instead is what exactly the extra funding is for. The lack of transparency is unacceptable. Most people in the know seem to agree it's to pay redundancy, but why should we have to guess like that? Why can't they just flat out say what the extra subvention is needed for? Is it because there is no actual specific destination for the money and CIE just threw a tantrum at the loss of subvention and are in fact financially unable to continue operating services? I don't think that is the case at all, but by not telling us they invite that kind of speculation.

[Thomas J Stamp]

well, €21 million was spent on voluntary redundancies in IE according to the 2010 report, and they had a cut in the sub of €15.5 million and a loss in fares of €7.4 - thats €43 million less to play with last year.

a further cut in the sub, another €15 mill to find for this years vol redundancies and losses in fares (we dont know how much) and you are looking at an €70million turnaround in two years. There will be benefits in relation to not paying those who have been let go, and other savings.

[ACustomer]

It may be the case that CIE understimated the effect of recent fare increases on demand. I don't know how sophisticated their modelling of demand is, but if they had simply relied on rules-of-thumb based on past experience, then I can see how they might have got it wrong.

It's one thing to look at the effect of a 5% fare increase when money (and maybe real) incomes are increasing, as they generally were up to 2008-9. But it's entirely different if the trend of income is downwards, which it has been recently. It's not rocket science: if people have less money then fare inreases can be pretty disasterous.

[James Howard]

The other factor that they are possibly modeling very badly is the very effective competition provided by private bus operators. Citylink provide an hourly or more frequent service from Galway to Dublin which beats the train in time and goes to the actual city centre - or airport. And this is at a significant discount to the train. Many other routes have buses that are faster than the train.

When money is tight, people are willing to try the alternatives and if they offer a reasonable service at a significantly cheaper price, then people will stick with them. With Irish Rail offering luxury prices and Ryanair customer service, who is going to stick with them when there are alternatives available?