Regional bus variations unpicked

The operating margins that bus operators make vary in different regions of England, and this is one of the topics covered in our Bus Industry Performance 2020 Report. Here, we look at the facts and consider some of the factors which account for the variations.

For the last three years, the region that has seen the highest margin is North East England. In 2018/19, operators in the region earned 7.7%, down from 10.1% in the two previous years. 

The  next highest figure was 6.9%, earned in West Midlands, closely followed by the South East on 6.4%. The least profitable region was the South West on 2.3%, down from 2.6% in 2017/18.

So why do margins vary so much?  There is no one measure that can explain the diverse results. In simple terms, margins simply represent the difference between income earned and costs of operation, and therefore are a function of revenue earned from passengers (and therefore demand for travel by bus) and the costs of operation. Thus, in areas where passenger demand is high, and costs are relatively low (a depressed local labour market, for example, or low levels of congestion so that productivity is high) then margins will be higher. 

Our latest Bus Industry Performance report looks at the variations in labour costs around the country, and underlines the importance of time and speed in determining how much it costs to run a bus service, with an updated worked example. It shows how bus productivity has been falling because of congestion, driving up costs and making services less attractive.

In our work to understand demand for bus services, discussed in our report The Bus Demand Jigsaw, we can measure some of the factors that account for variations in demand in different local markets. For example, ridership per head of the population will be a factor. This is higher in the profitable North East at 64.4 journeys per person per year and 55.1 in the West Midlands, but on the other hand it is much lower than in the South East, at 38.0, but profits have historically been relatively high (in fact the highest in the country for four of the previous ten years). 

Population density is also important, and does vary widely across the country - for example between the South West on 236 people per square kilometre and the North West on 520 - by the way, the same figure for Inner London is 11,338.

Network supply is a vital factor as well: and is usually measured both by the kilometres run. However, that does not give a feel for the how the level of service relates to the size of the area - we can do this by considering kilometres run per square kilometre. At region level, this varies between 6,714 bus km per sq km in the South West and the densest network which is provided in the North West on 17,086 bus km per sq km. Interestingly, the same figure for Greater London is 30,307. 

Even in a stable market, all these factors are difficult to understand and capture - however, we are not in a stable market (and, in reality, never have been). Life is changing at a rapid pace all around us, and we're not quite sure yet how all these changes are going to impact on all our lives. Thus, we should beware of politicians and others who offer regulatory reform as a simple solution to the bus industry's amazingly complex problems. Such people might claim to have the answer, but in reality they do not. 

You can see the full table of all the English regions, and how the 107 companies are spread across them, in our report Bus Industry Performance 2020. This is on sale HERE. Alternatively, you can subscribe to whole Bus Industry Monitor database - it costs from just 68p per day. Subscribers get all our reports free of charge, and access to raw financial data and a host of other fascinating stuff - like a full listing of bus company privatisation and what subsequently happened to all the companies. CLICK HERE for more information.

Bus in the English Regions - some fascinating facts


Region Bus Operating Margin 2018/19 Bus Ridership per head 2018/19 Population Density* 2019 Network Density† 2018/19
North East 7.7% 64 311 14,317
North West 2.9% 52 521 17,086
Yorks & Humber 3.0% 55 357 12,400
West Midlands 6.9% 55 457 13,619
East Midlands 4.8% 39 310 8,926
Eastern 2.8% 28 326 8,325
South East 6.4% 38 481 12,234
South West 2.3% 39 236 6,714

* - Persons per square kilometre. † - Bus km run per square kilometre

Sources: Bus Industry Monitor database, PTIS Analysis of ONS Mid Year Population Estimates 2019 and DfT Annual Bus Statistics