More bus operator closures a stark reality

Picture : Motshwari Mofokeng /African News Agency (ANA)

Picture : Motshwari Mofokeng /African News Agency (ANA)

Published Feb 9, 2021

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DURBAN - THE closure of Greyhound reflects the impact of Covid-19 on bus operators across the industry, with the possibility that more bus companies were going to shut down.

This is according to the executive manager of the South African Bus Operators Association (Saboa), Bazil Govender, after Greyhound and Citiliner announced last week that after 37 years of transporting people across South Africa, they would be closing down operations from February 14.

“Greyhound was a pioneer in getting this mode of transport introduced as an accessible and affordable alternative to the long-distance rail service that existed all those years ago.

“Not only was the Greyhound service and fleet built on superior and world-class standards – this is consistent within a sector that renders high quality service with a fleet that matches any you will find across the world,” said Govender.

According to Govender, the sector normally operates around 1 000 coaches, employing in excess of 5 000 people, with a pre-Covid-19 annual revenue estimated at R5 billion.

Govender said there have been many companies which have ceased trading or closed down and retrenched employees.

“It is plausible that the situation will continue through to at least August this year, thus the possibility of many more companies closing is a stark reality,” he said.

He said the closure of Greyhound reflects the plight across the bus and coach industry, but specifically this sub-sector of the industry, which covers inter-city, long-distance, cross-border, tourism and charter operations and services.

Govender said that prior to Covid-19, the sector was under tremendous financial pressure due to increasing costs and currency fluctuations, while the market was negatively affected by the declining economy.

“This sector has not recovered from the inception of the State of Disaster lockdown level 5, and has limped and choked its way to this current time.

“We are just short of one year during which time the income streams have been completely depleted,” he said.

While there was some hope that there may be some semblance of normality by March this year, the second wave and the potential of a third wave could result in close to 18 months of non-operation and no income for the operators in this sector.

“The sector is also still operating under restrictions of 70% capacity on loads over 200 kilometres,” he said, adding that this further impacted the potential revenue earning under the load restrictions.

“There were initial commitments made towards providing relief, but that has become a frustrating lack of responsiveness and accountability, and no relief at all has been provided to this sector,” said Govender.

With no relief and no income during this period of almost 12 months, the sector has had to cover costs of finance, labour and licensing.

“Licensing costs range from R25 000 to R55 000, depending on the bus configuration. Extrapolate that for a fleet of 5 to 10 for context and you are looking at costs of around R550 000 for licences only,” he said.

He said they have appealed to Transport Minister Fikile Mbalula and his department, to review the accruing penalties on licences that had expired during the lockdown periods. Govender said this was totally ignored and passed between the national and provincial authorities.

“The Industry is pleading with the minister and the departments of Transport to engage further to preserve and protect the industry.”

He advised that flexibility of the licence costs that have accrued would have an immediate impact.

“This will go a long way to providing some immediate relief, which will definitely prevent further closures and save jobs,” said Govender.

Fiona Brooke-Leggatt, chairperson of the Private Charter Passenger Association, said repeated pleas to the minister to extend its members’ bus licences’ validity had fallen on deaf ears.

Brooke-Leggatt said she had written repeatedly to senior officials in the Department of Transport and to Mbalula, advising that the industry was struggling and desperate. She said she had requested a meeting for assistance with licence fees but had not received any response.

Intercape, which was established 42 years ago, said the long-distance bus operator was not planning to close down. However, it said the impact of the pandemic on its business was substantial.

“Our innovation and agility to adapt to market changes provides us with a competitive advantage.”

Intercape said they continuously identify opportunities to provide service to customers in a convenient way.

Other operators did not respond to a request for comment.

The Ministry of Transport said bus operators in need of financial assistance should apply for the Credit Guarantee Scheme.

Ministry spokesperson Ayanda Allie-Paine said that in response to the Covid-19 pandemic, President Cyril Ramaphosa, had announced various sector-specific grants to assist businesses in distress from the start of the regulations.

“Bus operators were not only permitted to apply for such relief but were in fact encouraged to do so.”

Bus operators, depending on their configuration and characterisation, were catered for by departments such as Small Business and Tourism, she said.

“Creating an additional fund in transport would have been a duplication of processes as the operators were already accommodated.”

Allie-Paine added that even before the outbreak, as a formalised sector, short-distance carriers or commuter bus services had received state subsidies.

She said the taxi industry was offered relief assistance by the Department of Transport because it did not qualify for any of the other relief packages offered by government

Over and above these subsidies, Allie-Paine said the Ministry of Transport has on several occasions extended the validity of relevant documents necessary for the success and sustainability of transport operations.

Regarding Greyhound, the ministry said the position the operator found itself in was unfortunate.

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