In the 21st Century Ian Manning Managing Director Stagecoach West 20 November 2012

BRIEF HISTORY (1) Bristol Tramways and Carriage Company Ltd Bristol Omnibus Co. Ltd Cheltenham District Traction Co. Ltd City of Gloucester Tilling Group Companies

BRIEF HISTORY (2) Part of the National Bus Company (established 1969) Split up of Bristol Omnibus Co. Ltd pre privatisation in 1983 Bristol City – Cityline Bristol Country – Badgerline Cheltenham & Gloucester – Cheltenham and Gloucester Omnibus Co. Ltd Privatisation of NBC from 1985 onwards Management Buyouts

BRIEF HISTORY (3) Divisional Management Structure of Cheltenham & Gloucester Omnibus Co. Cheltenham District Traction City of Gloucester Stroud Valleys Swindon and District Western Travel (Holding Company) Subsequently Western Travel bought Red and White (part of National Welsh) and Midland Red South Companies Stagecoach Group purchased Western Travel Group (except the hotels) in December 1993

STAGECOACH WEST One of 18 regional bus companies collectively forming the UK Bus division of Stagecoach Group plc, a leading international public transportation group Our company operates from 6 depots and outstations in Gloucestershire, Wiltshire & Herefordshire 234 - strong fleet plus 5 training & 13 ancillary vehicles We employ over 665 staff (one of Gloucestershire’s largest employers) During FY11-12, we carried 23.25 million customers

MANAGEMENT TEAM

WHERE WE WERE At the beginning of the twenty-first century, our performance left a lot to be desired Reliability was seriously undermined by: Staff recruitment difficulties and high levels of turnover An inherited, relatively old fleet An inadequately designed network Local politicians, the media and public justifiably demanded better from us 2000 reorganisation had seen the creation of a West and Wales monster Passenger numbers static or declining Operating at little better than break even in West

OUR SOLUTIONS To attract a better calibre of driver and reduce turn-over and training costs, we had to introduce significantly higher wages appropriate to the area These rises could not be covered by a one-off fares increase, so medium-term profitability was suppressed We invested substantially in the fleet reducing the average age of the fleet to only 7.1 years c.f. the current Government target is 8 years We’ve also redesigned our bus networks to ensure they more effectively satisfy demand We tailor made our fares offers and promotions We set about energetically marketing our products We reviewed our staff and operating practices along the way

ENGINEERING REMIT Fleet Maintenance Fleet & Safety Inspections Annual Tests Property Portfolio Ongoing Staff & Apprentice Training Health & Safety

FLEET MAINTENANCE Safety is of paramount importance Each vehicle has a: Daily walk round check before entering service Full 78 point safety inspection every 21 days 17 planned inspections per year MOT test every year (Class VI)

INSPECTIONS All engineers are trained in vehicle inspection techniques to VOSA standards Stagecoach’s Engineering Audit Team audit each depot at least once every 12 months Full safety inspection includes: Brake performance Exhaust gas analysis Tyre tread depth Brake liner thickness Oil changes are carried out at 3 monthly intervals

ANNUAL TEST Our annual MoT test pass rate last year was 97.7% c.f. national average of 76.8% amongst PCV and HGV operators (data courtesy of VOSA web site) (Class VI)

SPARE VEHICLES To carry out routine maintenance on the fleet, each depot has spare vehicles Company wide, we have 14% spare vehicles above our Peak Vehicle Requirement (PVR) The current PVR is 202 vehicles against a licensed fleet of 234, leaving 32 spare vehicles Each spare vehicle costs the engineering department on average an extra £15,750 per annum

OPERATIONS REMIT Primary objectives: To have sufficient drivers to operate services according to published timetables To roster the resources effectively To manage day - to - day operational requirements, problems and relationships with external bodies Rely upon the support of 3 Operations Managers, 3 Assistant Managers, 3 Controllers, 10 Supervisors and 13 Leading Drivers based throughout our depots and outstations Currently employ 520 drivers

TRAINING SCHOOL Consists of 6 staff, plus 5 driving instructors and an examiner Training is not just technical - it includes: Customer care Disability awareness Ongoing training to the CPC qualification Safety awareness training as buses get wider for wheelchair access and higher following the reintroduction of double deckers EU Dictate on Driver CPC has cost the Company £210k per annum

SPECIAL OPERATIONS Cheltenham Racecourse shuttle service from the Railway Station to Prestbury Park during the Gold Cup (70+ double deckers) and other race meetings

SPECIAL OPERATIONS Coach transfers for international aircrews at the Fairford Air Tattoo Cheltenham – Gloucester – Swindon - London megabus Weekend rail replacement services

COMMERCIAL REMIT Contracts and Tenders Revenue Management Budgets and analysis Concessionary Fares Fares & Tickets On bus and via travel shops & agencies Development of Green Travel Plans with external organisations Network & Service Development “The ideas factory" Bus and Driver Scheduling

MARKETING REMIT Promotions Media Relations Market Research Internet & Social Media Design & Publicity Events Charitable & Community Initiatives

THE MICRO PICTURE Route-Specific Enhancements Fleet Investment Network Redesign Innovation & Marketing Fares and Ticketing Initiatives Staff Travel Schemes Community-Friendly Initiatives

ROUTE ENHANCEMENTS: 94 Flagship service, emanating from a Quality Bus Partnership between Stagecoach and GCC / CBC Fleet of 10 low-floor easy access double deckers providing a 10 minute frequency of service between Cheltenham and Gloucester via Churchdown and Longlevens Real Time Information Over 40% patronage growth from 2003 Upgraded again in 2009 to Stagecoach gold. In 2011 / 12 patronage was up by over 15%

ROUTE ENHANCEMENTS: 37 To counteract falling patronage, 2 new low-floor buses were launched on a revised route in Nov 2004, offering enhanced 15 min daytime frequency to/from Merrywalks Follow-up research suggested a minor town centre route revision would bring greater results

ROUTE ENHANCEMENTS: 37 Hence, new route via King Street was introduced in Aug 2005, with special fares from Merrywalks Result: 64% patronage growth from 2004 But – Poor Concessionary Travel Reimbursement Further Stroud network changes have put the depot into the black for the first time under Stagecoach’s management Recent setback with tender losses

ROUTE ENHANCEMENTS: Joint Kickstart submission with GCC to the DfT, focusing on our Hatherley & Warden Hill to Bishop’s Cleeve services GCC met the cost of the consultants One of 43 English schemes accepted by the DfT

ROUTE ENHANCEMENTS: We invested £700k in new buses for use on a new routing and 10 minute daytime ‘turn-up-and-go’ timetable DfT agreed to invest £435k over 3 years 35% patronage growth target for first 3 years, by which time the service reverted to its pre-Kickstart commercial level Initial growth in excess of 50% year on year

FLEET INVESTMENT Route enhancements often linked with fleet investment Annually submit business case to Perth for new vehicles 2004 / 05 saw a £2.4 million investment in 16 new Trident double deckers for Service 10 (Cheltenham – Brockworth – Gloucester – Lower Tuffley) Also purchased 2 new single deckers to boost Service A (Prestbury – Town Centre – GCHQ/Benhall) and 6 new midi buses as part of a section 106 funded partnership for Service 14 to Kingsway, a new estate in Gloucester in 2007 Just taking delivery of 19 Gold liveried Scania double deckers for Service 10

NETWORK REDESIGN: THE FOREST OF DEAN In September 2004, we became the Forest’s principal bus operator, accepting responsibility for Cottrell’s routes Seven months later, the network was redesigned to encompass more buses, more destinations and more frequent services Some daytime frequencies were doubled and total mileage increased by over 30% at no extra cost to passengers

NETWORK REDESIGN: THE FOREST OF DEAN Results for the first 12 months speak for themselves: Coleford and Cinderford corridor patronage up 21.5% Newent & Ledbury patronage up 22% We’ve since filled the void left by Duke’s Travel in April 2006, and extended the Forest megarider later that year Increased the patronage on the residual Duke’s operation by 10%

INNOVATION & MARKETING: 41 Cheltenham – Tewkesbury A high frequency bus service on new, attractive and easily accessible branded vehicles Launched in 2003 with new vehicles, local advertising, a discount voucher door-drop and associated marketing materials, the route has also benefited from a two-phase telemarketing campaign

INNOVATION & MARKETING: 41 Patronage grew a staggering 85% in the early years Received the Most Innovative Transport Project at the 2004/05 National Transport Awards Forthcoming diversion into Wheatpieces when Concessionary Fares funding has been rectified

INNOVATION & MARKETING Vehicle Branding Direct Mail and Telesales Route Branding High Quality Publicity Advertising including print, on-line, radio and outdoor media Ticket promotions Internet and Social Media Geographical promotions

STAGECOACH GOLD Reciprocate luxury of a modern car Gold livery Leather seats Drivers in smart uniforms Customer Charter Free Wi-Fi (enables customers to do what a car driver cannot!) Implemented on 94 Cheltenham – Churchdown – Gloucester (existing frequency) 66 Swindon – Oxford (doubled frequency) and soon: 10 Cheltenham – Brockworth – Gloucester – Lower Tuffley (frequency doubled Cheltenham – Brockworth) Results: 94 - 15% increase in patronage 66 - 30% increase in patronage

INNOVATION & MARKETING Highly commended in the 2011 UK Bus Awards “Eureka Award for Marketing Initiatives” Highly commended in the 2011 UK Bus Awards “Marketing Excellence Award” Highly commended in the 2011 UK Bus Awards “Shire Operator of the Year Award” Nominated as a finalist for the ”Large Operator of the Year Award” in the 2010 Route One Awards

FARES AND TICKETING INITIATIVES Megariders and pricing sensitivity Try to keep fares as affordable as possible Employer deals Current initiative is to implement commercial products on Smartcard Latest addition will be Multi Operator tickets such as Swindon Travelpass

STAFF TRAVEL SCHEMES: ROUTE 99 Partnership between Stagecoach West and the Gloucestershire Hospitals NHS Foundation Trust providing passengers with a frequent shuttle bus between the two hospitals and a park and ride service from the Racecourse to Cheltenham General Hospital via the Town Centre Hospital staff benefit from free travel to and from work within the county, easing pressure on both car parks and the region’s roads Four brand new Optare Solos purchased to operate the service

STAGECOACH WEST GTi SCHEME The Greener Travel Initiative is a scheme developed by Stagecoach West to encourage large organisations to promote the use of public transport to and from their premises instead of cars, as part of their carbon reduction plans. Recognising that young people are potentially the bus passengers of the future, Stagecoach West is also keen to form similar partnerships with academic institutions The scheme offers discounted fares at peak times. Revenue is recouped by additional journeys being made as a result of the scheme at off peak times and by leisure users.

STAGECOACH WEST GTi SCHEME Currently signed up to the scheme: - Swindon College - New College, Swindon - Honda - Cranfield University - Wiltshire College - Zurich - Gloucestershire Hospitals NHS Foundation Trust - GlosCol In addition to GTi we also operate a discount ticket scheme called Unirider with a number of Academic Institutions

COMMUNITY INITIATIVES NIGHTBUS Series of weekend services up until 3am for a flat fare of £2.80 Run in association with Gloucestershire Police, the Crime & Disorder Partnership, town/city councils and local pubs/clubs Redesigned timetables to reflect changes in licensing laws Deemed a failure in the end as the licensing laws diluted the carryings over a greater number of hours

COMMUNITY INITIATIVES PRIDE OF GLOUCESTERSHIRE AWARDS (2007) Co-Sponsor of Caring Hero award FIVE VALLEYS WALK Shuttle Service for Macmillan Cancer Charity TERRITORIAL ARMY Staff on active service in Afghanistan

ENVIRONMENTAL ISSUES Target to reduce Buildings CO2e emissions by 8% Target to reduce annual fleet transport CO2e emissions by 3% Stagecoach Group is investing £11million in measures to support its sustainability strategy to reduce further the carbon emissions from its transport operations in the UK and North America Earlier this year, Stagecoach Group was re-certified under the prestigious Carbon Trust Standard for its UK bus and rail operations Initial success in West however targets get more challenging

THE RESULTS TODAY Patronage continues to grow at all 4 key depots. During the financial year of 2011 / 2012 patronage was (compared to 2006/07): Up 1.5% in Gloucester (4.6%) Up 2% in Cheltenham (12.6%) Up 1.4% in Stroud (16.5%) Up 9.4% in Swindon Over 90% of our mileage today is run commercially Reliability rates have significantly improved Provision of low-floor, wheelchair/buggy friendly buses is well ahead of the Government’s 2017 target Operating at a healthy above industry average profit

ROOM FOR IMPROVEMENT Despite all these successes, our operation still has some room for improvement Some of our staff need to work harder at being good ambassadors for our company Some of our services have underperformed But significant progress has been made thanks in no small part to the passion of management and staff This despite the recession

OUR NEXT DESTINATION In 2004, our founder and current Group Chief Executive, Brian Souter, suggested that there was at best 18 months of innovation left within the UK bus industry without serious infrastructure help from local authorities Those 8 years have elapsed and little has happened Our operation has to all intents and purposes now reached a plateau We can only go up another gear with the help of external partners such as GCC / SBC

WHY? Consider some of the external challenges we currently face: Spiralling Fuel & Insurance Costs Road Works & Diversions Indiscriminate Parking Staff Recruitment Barrage of Unwelcome EU Legislation Lack of joined-up thinking in Land Use Planning Engineering Poor Passenger Behaviour Inadequate Concessionary Fares reimbursement Yet another review of Bus Service Operator’s Grant (BSOG) or Bus Passengers Tax

FUEL & INSURANCE Our fuel costs have risen by 73% since May 2003 The actual price we pay has almost doubled once the BSOG effect is removed Our insurance costs have risen by 59% since May 2003

ROAD WORKS & DIVERSIONS Seriously undermines punctuality Traffic gridlock from M5 closure 4 sets of road works along London Rd, Hucclecote Rd, at the junction between Seymour Rd and Bristol Rd, and near the Cross Hands Brockworth in Nov 2004 brought traffic chaos to Gloucester Avoidable if discussions had taken place and careful consideration given to the timing Failure to negotiate Punctuality Partnerships with LA's

CAR PARK CHARGES Maintain realistic parking charges, at the very least in line with inflation Good public transport will never flourish where cheap parking is available Unhelpful Portas Report Problems with LA's in Gloucester and Swindon

INDISCRIMINATE PARKING Fully support decriminalisation Withdrew from Tredworth High St, Gloucester, in 2005 due to a failure to enforce double yellow lines Prevents access to bus stops

STAFF RECRUITMENT Shortage of skilled commercial staff Age restrictions for driving a bus prevent recruitment direct from schools Life on the buses is rarely a first-choice career Also an acute shortage of skilled mechanics Company had to respond by recruiting from Poland at the height of the shortage 40 Cheltenham drivers 1 Mechanic

EU LEGISLATION Training Directive Drivers Hours & Working Time Directive Vehicle Specifications Lower emission requirements causing increasing fuel consumption Also National Employment legislation… Digital Tachographs Bus services over 50 kilometres Passenger Charter threat

LAND USE PLANNING Poorly negotiated Section 106 Grants – Tewkesbury, Cooper’s Edge and Kingsway Threat to Section 106 grants The new Swindon Bus Station Peripheral office development is unhelpful

ENGINEERING Evolution of bus design and manufacture proving ever more costly to maintain Computer diagnostics required to repair engines Skirts on low-floor vehicles susceptible to kerb damage Very high accident costs Full cost of keeping the fleet in a safe and reliable working order in the last financial year - £3.9 million

PASSENGER BEHAVIOUR Large number of buses now fitted with assault-prevention screens and CCTV to counteract instances of unacceptable behaviour: Vandalism and graffiti Window-smashing during school holidays Alcohol and drugs Consumption of hot food on board Litter Push-chair wars Trouble hotspots have included Matson in Gloucester, Springbank in Cheltenham and parts of Swindon

CONCESSIONARY FARES Inadequate and worsening reimbursement from all schemes (except Scotland and Wales) Full buses not covering even their marginal cost of operation

BSOG (BUS SERVICE OPERATORS’ GRANT / FUEL DUTY REBATE) Buses and coaches pay the normal taxes on fuel Buses received an 82% rebate (less in Wales) Tax per bus passenger 8.7 pence per journey 20% reduction in April 2012 New DFT consultation Currently no tax for rail passengers Has led to severe reduction in rural and marginal services in some areas of the UK

BUT THE BIGGEST PROBLEM OF ALL? CONGESTION

IMPACT OF CONGESTION Consider Service 94 A recent analysis of stage-to-stage timings shows delay points between Lansdown Castle and Estcourt Road in either direction Journey times constant between 0900 and 1400 but: Increase by up to 30% between 1500 and 1800 Increase by over 50% between 0700 and 0900 Had to put 4 extra buses into Service 10 to maintain the timetable

AVERAGE WEEKDAY RUNNING TIMES

COST OF CONGESTION Timetables are constantly rewritten to combat congestion Service 94 timetables changed 3 times in 2005 for this reason alone and worsening In 2005, we also assigned 2 additional vehicles to Service 10 to combat congestion, costing us £250,000 per annum for no additional revenue Forest of Dean average running times increase by 20% during the peaks

HOW CAN LA's HELP DECONGEST OUR ROADS? Reorganise road space Introduce further dedicated bus lanes Selective vehicle detection at junctions and traffic lights Cost? Primarily white paint! Control indiscriminate parking Speedier introduction of more park and ride sites CBC’s civic pride initiative has underlined the importance of bus penetration in Central areas Need for partnerships to be dynamic with an immediacy of response on both sides

WHAT CAN WE OFFER IN RETURN? If main roads used by buses are decongested, we can: Run more frequent services more reliably Peg fares for longer periods, all other things being equal Commit to greater levels of investment, as quicker buses will attract more passengers and ultimately earn more Innovate Restrain or reduce ongoing subsidy requirements

“For every Local Authority that invests in bus priority measures to improve the operating environment, I will match that investment with new buses.” Brian Souter, Chief Executive

AND IF WE DON’T DECONGEST? Our punctuality and reliability will fall Journey times will lengthen in the peaks and the number of departure options will decrease Modal shift towards rather than away from cars Bus operators will have to focus solely upon routes where commercial success is guaranteed, and deregister marginal routes Bus fares will rise and service frequencies will reduce Councils would probably have to raise council tax to underwrite the increased number of non-commercial, socially-necessary services if they wish them to continue (they will not be allowed to)

PIPS The progress of our Punctuality Improvement Partnership has been anything but punctual: Initial Stagecoach/GCC discussions Feb 05 Template document issued to GCC March 05 …but still no evidence of a signed agreement! Swindon meetings held over 9 months ago and still waiting

WHAT’S HAPPENING ON THE BUSES IN THE UK AS A WHOLE?

HOW BUSES WORK IN THE UK Great Britain outside London: commercial networks (about 90% of buses); local authorities subsidise 10% of mileage where there is a social need not met by the commercial network London: 100% competitive tendering; all decisions on fares and frequencies taken by TfL Northern Ireland: 100% owned and operated by the state

QUALITY CONTRACTS Local authority takes over responsibility for designing and paying for the network Operators bid for contracts – local authority pays for what it specifies No link to key issue of highway management Risks for existing networks, investment plans and employees (and terms and conditions) Completely incompatible with the enterprise economy Certain death for SMEs

QUALITY PARTNERSHIPS Formal or informal agreement between operators and local authorities on how to improve bus service quality Quality Partnership Schemes allow local authorities to decide on standards for buses using new infrastructure (e.g. bus lanes) and can exclude buses that do not meet standards Quality Partnerships concentrate on issues important for passengers Need politically tough decisions about highway management

WHAT WORKS… Passenger growth when there is: Strong local relationship between operators and local authorities Willing operator who delivers consistent high quality and reliability Willing local authority which delivers pro-bus policies such as priorities for bus users, car parking management Buoyant local economy, including population stability/growth

THE SOLUTION FOR STAGECOACH WEST? What we desire are effective partnerships to keep our buses on the move These must be dynamic in nature, and promote an immediacy of response on both sides There is an immediate perishability to our product Cannot instantaneously turn off supply Costs are incurred regardless

CENTRAL GOVERNMENT Competition Commission Investigation - Major operator Ticketing Schemes - Bus Station Charges Threat to BSOG (already reduced by 20%) and new unnecessary complicated way of paying it Planning System dismantled without a meaningful replacement Localism and the potential failure to ringfence funding LEP’s - Adjudication of “Major Scheme Bids” No votes in buses despite the fact that 67% of public transport journeys are made on them

CONCLUSION We are a non-political organisation with a passion for what we do and a determination to offer people a real alternative to the car We want to provide a bus network which is: Frequent Reliable Cost-effective Utilises the highest standard of vehicles

CONCLUSION We have made significant advances over the past 10 years but are still far from perfect We can only go to the next level with the support and co-operation of LA’s We face many external challenges, with traffic congestion in particular a real threat to our industry Working in partnership, we can: Decongest the roads Reap the benefits of PIPs and other occasional Government grants Provide a public transport system we can all be proud of

ONE FINAL THOUGHT Confederation of Passenger Transport research shows that many of the most successful commercial centres benefit from a good public transport system This is because bus users travel more often and hence ultimately spend more than the one visit a week car user