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GOLDEN ARROW SHOOTS PAST TARGET

05 Oct Transport

ICONIC Cape Town passenger transport business Golden Arrow Bus Services (GABS) is looking pretty sprightly for a 150 year old company.

In the past financial year to end March GABS, which manages a 80 000km weekly schedule in and around Cape Town with 1114 buses – increased its operating income by 7.3% to R963 million.

Despite being faced by fuel price volatility, a fare adjustment of only 5% and static passenger numbers (220 000 per day), GABS management managed to grow bottom line markedly by limiting the increase in operating expenses to just 2.3%. This resulted in a 57% surge in net profit after tax to R159 million.

CBN reckons much credit for GABS’ vibrant operating status must go to controlling shareholders Hosken Consolidated Investments (HCI).

HCI’s R300 million investment in GABS around eight years ago was initially regarded sceptically, with observers at the time noting the huge capital expenditure required to modernise the company’s fleet.

HCI executive director Johnny Copelyn – writing in the company’s annual report – reckoned the past financial year vindicated the bus company’s ambitious fleet recapitalisation strategy.

He said this programme, which realised the addition of 461 new bus units since its inception seven years ago, provided a solid operational basis under the kilometre based subsidy regime prescribed by the Division of Revenue Act (DORA).

Copelyn said the containment of operational costs can largely be attributed to the steady introduction of new units to the fleet and innovative engineering applications by the company’s central technical facility.

“These have reduced incidents of unplanned maintenance and significantly decreased vehicle downtimes which are critical to the avoidance of contractual penalties.”

He said GABS notched up a notable milestone recently when the company took delivery of the 500th MAN bus unit. “MAN and GABS have forged a ten-year partnership and have mutually collaborated to achieve reliabilities and efficiencies in the technical constitution of the bus units.”

Copelyn said renewing the fleet of busses over the last four years had resulted in all the latest models having Euro3 specifications for reduced exhaust emissions through the fitment of turbo chargers, electronic fuel pumps and injectors that regulate efficient engine operations.

One downbeat note in HCI’s review of GABS was Copelyn’s argument that government’s capped subsidy system does not make provision for the expansion of bus services in the wake of increased passenger demand. “This restriction and conservative DORA adjustments to the budgetary allocation for passenger subsidies are unfortunately inhibitors to the long term organic growth of the commuter bus sector, in an industry that, by all accounts, is set to expand substantially in view of concerns for the environment and massive national government capital investment in public transport.”

But there was more heartening news in the recent appointment of GABS as one of three Vehicle Operating Companies (VOC’s) in the first phase of the Integrated Rapid Transport (IRT) system for the City of Cape Town.

Copelyn explained that GABS would manage the operation of eight MyCiti buses on the trunk route along the west coast corridor and three on the inner city route. He said a total of 40 operational staff has been seconded to oversee operations on these routes.

Copelyn predicted the 12-month interim phase of the IRT system will undoubtedly influence the future landscape of public transport in Cape Town as operating companies prepare to enter into longer term (12 year tendered operating contracts) with the city.

He said that with the annual estimated operating deficit modelled at R116 million, the operational experience garnered during the first phase of the IRT would determine the viability and future sustainability of the system.

Copelyn stressed GABS was committed to providing services that were affordable, convenient and safe and which derived an equitable rate of return on investments.

Source: Cape Business News