Supporting the deregulated bus sector during COVID-19

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The impact of COVID-19 on the long distance, tourism, charter and express sector has been enormous. The current pandemic and lockdown situation has put a complete halt to most bus and coach business operations in the de-regulated sector. On April 21, 2020, the Bus Industry Confederation (BIC) provided a report on the de-regulated sector to:
  • Department of Treasury
  • Department of Infrastructure, Transport, Regional Development and Communications, and
  • Ministers and Shadow Ministers responsible for portfolios involving transport, infrastructure and tourism.
The report, COVID-19: Impacts and Stimulus Required – Deregulated Sector – Long Distance, Express, Tour and Charter, contains state-by-state information about the impact of COVID-19 on the deregulated sector, and a series of recommendations for support and assistance by:
  • Federal government
  • State, territory and local governments
  • Tourism, hospitality and travel recovery campaigns
You can download the full copy of the report from the BIC website. Bus SA contributed to the report on behalf of the South Australian industry. Excerpts from the report are below.
An industry survey (begun 9 April 2020) measured the impacts of COVID-19 and business continuation. There were 31 responses from coach operators across Australia of various size, operating intra and/or inter-state services. After a very quick collation of responses, here are some results as at 17 April 2020:
  • 41% of the 1,114 registered coaches operating before COVID-19 have been either de-registered or moth-balled (permanently parked).
  • Of 2,402 staff employed, close to 950 employees have been retained under the JobKeeper scheme*.
  • Close to 26% of employees have been let go due to:
    • significant loss of business income (up to 100% in some cases)
    • inability to cover JobKeeper income before government payments commence in May
    • ineligibility for the JobKeeper scheme.
  • 71% of businesses have taken up banking incentives relating to suspension of finance payments.
  • 85% of businesses support extension of the asset write-off but only 19% have taken it up. Presumably the low take-up versus the high support for extension is due to the current period of March 12 to June 30, 2020.
  • Broadly the sector stands to lose 88% of business from March 30 – June 30 2020, and 68% of business from July to December. Many responses were contingent upon unknown factors or events.
  • Only 6% of operators surveyed felt that business could return to pre-COVID-19 levels in 2021. 46% believed business could return in 2022, and 17% did not expect business return until 2023 or 2024.
*Responses strongly indicate that some businesses are still trying to work through JobKeeper eligibility criteria.

How has the industry been affected? Are people not travelling anymore? In some instances. School bus numbers down, country bus service down, charter almost non-existent.

What is the impact of the social distancing rules on buses? This is confusing – is PT exempt? On other services numbers are low enough to meet social distancing parameters. So, it’s almost irrelevant.

Has the number of trips been cut back? Depends on sector. Tour and charter almost gone. School bus services no. Adelaide Metro no. Country bus service yes – to a weekend timetable. Provincial city contracts no.

Has there been an impact from cross-jurisdictional travel being banned unless essential? How does a bus/coach cross border? Buses don’t cross borders unless it’s an express service or a school service that is exempt from bans.

How many people in the industry have been impacted (i.e. stood down or let go)? School bus minimal since JobKeeper, route services city and regional centre none or minimal, tour and charter – not sure of numbers, but one would assume not that many since JobKeeper.

Do the bus/coach companies have sufficient reserves to cover the fixed costs over the next 6 months? Some yes, some no. As we said to the Treasurer in the letter written by Bus SA, each operator is different. Assistance with fixed costs for tour and charter would be hugely beneficial.

Structure of the industry- is there overlap between touring groups and travel between towns etc.? Are these the same companies? Not much overlap from what is understood of the SA market. Country Bus Service (regional express) has suffered a huge drop as it is farebox risk. Desperately needs propping up.

The BIC believes that the regulated and deregulated sectors of bus and coach businesses should be treated as separate entities. Tourism, charter and express bus and coach businesses are vitally important to the tourism sector. They should be looked at as stand-alone businesses with regards to their eligibility for government support and initiatives, including JobKeeper.

  1. Subsidisation of the national coach sector network, recognising the national coach road network as a key passenger sector, similar to airlines.
  2. Set aside significant Australian tourism marketing and product development funds to reignite demand when borders and flights are reactivated. Governments need to be thinking 6 to 12 months ahead.
  3. A national rescue package for cancelled bookings as a result of COVID-19, including capital expenditure and labour costs.
  4. Suspension or waiving of government fees, charges and taxes (mainly state based) such as payroll tax, registration fees, stamp duty and certificates of insurance fees into recovery.
  5. Suspension of the Road User Charge (RUC) component of fuel excise for buses and coaches. This would mean a full rebate of fuel excise paid for fuel used for the purposes of bus and coach travel as applies to miners and farmers operating off road. Currently fuel excise is 42.3 cents per litre. Of this buses, coaches and industry can claim approximately 16.5 cents per litre as a rebate, and the difference is the RUC which is currently frozen at 25.8 cents per litre.
    Industry is asking government to continue with the proposed suspension of the RUC due to COVID-19, and for an agreed period of time (no less than 6 months) after return to normal services.
  6. JobKeeper to provide flexibility around a highly casualised workforce to allow payments for drivers employed less than 12 months.
  7. Review of the JobKeeper eligibility model of 30% reduction in turnover. Given the high fixed costs and low margins across the coach sector, the BIC has done financial modelling based on a real transport business. It indicates that many businesses would be in an unsustainable position well before reaching a 30% reduction in turnover.
  8. Financial support and program initiatives for staff training for when business begins to return.
  9. Financial rental and lease assistance for fixed costs such, as depots and offices.
  1. Suspension of road tolls for buses and coaches for an agreed period into recovery.
  2. A cash refund of all recent taxes paid during the period on COVID-19 interruption of services.
  3. Government-backed loans be provided either direct or through the banking system.
  4. Suspension of ‘parked up’ coaches for the duration of their ‘parked up’ or non-operational period. Suspension to be lifted when the vehicle goes back into service (which could be 6 months). This will see the operator get the benefit of amortising the registration costs over a longer period as they would pay one full years’ registration fee when the residual pre-non-operational registration period is added to the non-operational period.
    Such a system could be virtually identical to the one Transport Safety Victoria (TSV) has in place for operators who do not need to get annual roadworthy certificates on ‘parked up’ vehicles.
  5. Waiving of new vehicle fees for operators for new coaches that are in production, not bound for government contract work, but have no customers. For example in Victoria this could mean waiving registration fees, TAC charges, stamp duty and plate fees payable on new coach registrations (only). Inspection firms would be happy to waive minor administration costs associated with registering a coach.

It is anticipated that the tourism hospitality and travel industry will take many years to rebound and it is vital to have a short- and long-term tourism recovery strategy in place, including tourism campaigns.

Some short to medium term initiatives could be:

  1. Subsidise excursions/holidays for pensioners and home care package recipients.
  2. Access to apps like “Checked In Care” may be advantageous.
  3. Regional motel/hotel and coach tour industry support?
  4. Promote regional events beyond their local region to encourage increased domestic travel.
  5. Provide centralised industry database of continuing and new tourism venues and events to aid forward tour planning.
  6. Return to schools as soon as feasible.