[Ashley2]

One thing which revolutionized in the last decade is the Intercity Bus transportation. As such how this has emerged itself is a big topic and can be discussed across the length and breadth. Thanks to better road infrastructure which really shrunk the distance between the cities. Coupled with socio economic changes and high spending nature of people pulled in high end coaches from global manufacturers like Volvo, Mercedes Benz. India never traveled in them and now its available off the shelf.

With growing needs for transportation, bus frequency increased and today there are more than 50 services between Blore and Mumbai. With almost 90% of them are Volvo Multi axles, there exists a heavy competition between the operators. However good the buses and operators are, occupancy ratio is less during weekdays and the operator breaks even only during weekends.

This leads to cancellation / merging of few services, to reduce the loss. Other aspect being increased ticket fare, making people to opt for bus only as a option.

Here in the bus business, until other wise an operator establishes himself the viability becomes a problem and at times even for the established players also issue is very high during weekdays. How is the EMI's, fuel cost, tyre cost and driver wages are managed? Coming to the availability of drivers - they are the precious resource for the operators and we can see them switching over between operators quite frequently. There are also cases due to which operators are forced to run services with single driver.

With the inducting price of high end coach are near to a Crore, this makes the operator to put a high sticker price for the ticket. With reduced ticket fare, it only makes a still high ticket fare during week ends. There are many small operators by fleet size have inducted Volvo/Merc for the sake of brand and are now struggling with the viability.

This issue started with single axle coaches, and now there are very few single axle Volvo and Merc purchased newly for intercity application. As the ticket fare was not justifying the operation, operators moved to high capacity buses to offset the loss, as they can add 8 rows additionally. Now this is slowly reaching the multi axle coaches also. Primarily due to increased competition and reduced occupancy.

The problem is also with the manufacturers, as there exists no low cost Multi axle coach / bus in the market. Tata / AMW showcasing their products in the Auto Expo 2012, but the success determines the business change.

Now, this all happens for the seater buses. But in the other side, the sleepers are getting good crowd considerably for the increased comfort they are offering. There are operators who have invested in a good number of sleepers recently - either AC or Non AC. SRS, KPN are to name a few.

In the light of this scenario, will this business become a soap bubble and burst, as it happened in the Air lines business? With wafer thin margins, it wiped off few operators like Paramount, Kingfisher. Others surviving but it was a big wake up call for others to sustain.

[GTO]

Thread moved from the Assembly Line to the Commercial Vehicles Section. Thanks for sharing!

[vinair]

I don't think the situation is so grim. To my knowledge, the occupancy rate at any given day is pretty good with established players. More over, these guys make money not only on tickets but also on the cargo they carry. Though it is illegal, money stuffed at the right places ensure these goes unchecked at the checkposts.

I have personally faced no issues getting tickets on week days (with no festivals around the corner!)!

[prashanthyr]

Ashley, you have brought up many interesting points, chief among them being the demand supply equation. As supply exceeds demand, there will be some operators who will suffer and eventually shut shop. However, the smart ones - who have a good mix of sleepers/semi sleepers and combine that with good service will thrive, no matter what.

The technology (read Bus make / model / type) used and its price / TCO will also drive operator survival, but as a secondary factor and not a primary one. The good thing about new introductions is that it's taught both the consumer and the operator (owner and driver) what we were missing. The issue is that we are paying a premium for what essentially should be a standard (for ex air suspension). This will right itself as more and more manufacturers come onboard and reduce the price. What we need is Tata / AL to do a Lexus on the Mercs/Volvos currently in existence (context: What lexus did to the Germans in the luxury car market - sell equivalent product at 50-70% of the price)

[binaiks]

Very good topic.

The bubble has slowly started losing air in the Bangalore-Kerala route. This route is more of a balloon than a bubble - it is slowly losing air, and not breaking off at one point. Almost all operators running on the Bangalore-Kerala route have put off plans to buy new buses! Some operators had ordered them, but are not taking delivery now!

It is surely a bubble.

One operator has already put up their buses for sale, while some established players have put their expansion plans on hold. Some other players pulled out of some routes and are operating those buses as "Extra" buses during weekends or to destinations like Chennai.

The situation is indeed grim - the recent increase in road taxes in TN has also complicated matters - operators shell out around 4.5 lakh rupees every quarter towards road tax for three states - KA, TN and KL. The number of seats on weekdays is often in single digits!

Not all operators carry cargo as is being claimed. Some operators carry only flower as cargo (that does not earn much).

[ecenandu]

Originally Posted by binaiks

The situation is indeed grim - the recent increase in road taxes in TN has also complicated matters - operators shell out around 4.5 lakh rupees every quarter towards road tax for three states - KA, TN and KL. The number of seats on weekdays is often in single digits!

Yes, the road tax are quite high. SRM Tiruvalla - Chennai bus is paying Rs 66670 as TN road tax for a month, Rs 30,000 as Kerala road tax for 3 months. BTW I got these figures from the driver, he even showed me the receipt.

[TheARUN]

The whole Intercity Bus operations business is illegal. If you look at the laws, there is no provision for anybody to operate busses between cities. You can have a stage carriage under license from the RTO.

Intercity transport is the sole prerogative of the State Road Transport Corporations. The Operators are paying the authorities and running this business illegally

They are getting Busses registered as All India Tourist Omni Bus where the law clearly says that the Bus cannot run from point to point, it can only run as a package tour and passenger details have to be submitted to the RTO for every trip. Some Operators, especially the largest one in Karnataka have got their Busses registered as Contract Carriages, especially the sleeper coaches and is running them for Inter-city Operations

The Government cannot pull the plug on the Industry, its a huge vote bank, what they can do is legalise the whole thing, allow People to run Busses between cities and compete with the State Transport Corporations

The Operator is always on the losing side, the only People who benefit are Drivers, Manufacturers, Mechanics and Passengers. Just sit back and think, how many Operators have gone out of Business in the past 10 years, plenty

Puzhekadavil
Raj National Travels etc.

Another thing is the more an Operator scales up, the more difficult it becomes to manage. Its a vicious circle -
Stage 1- The Operator raises money with great difficulty and buys 2 Busses, now because his neck is on the line he gives 100% attention to the business and it succeeds
Stage 2 - Seeing the Operator succeed, Banks loosen their purse and provide easy finance, the Operator is tempted to go big, he buys a few more Busses
Stage 3 - The Operator is now a well known name with a fleet of Busses, he gloats in his new found glory and goes all out buying Busses and starting new routes
Stage 4 - As the scale has increased, his scope of Management has decreased, there is now more pilferage and mis-management
Stage 5 - All this results in missing payments to the Bank and then the whole house crashes like a pack of cards

Moral of the story -
You should have a passion for vehicles, its not one you run with your head, its more of the hearth that is involved, and never exceed your capacity, with 5 Busses running you can live in a mansion with a Q7 parked in your garage, but don't then let greed get the better of you

[teamveevee]

Originally Posted by TheARUN

The whole Intercity Bus operations business is illegal.

If it is illegal, it is high time to make it "Legal". You can see this kind of operations in any part of the world, including developed countries. States are getting taxes per seat, which is a huge income. The same can be used to provide subsidized transport system with in the state. Also, the operators are using their own infrastructure such as bus stands, bus stops, waiting area. But i agree, Govts need to come up with rules and regulations to control the operators.
Once the operator grows big, you are right, the owner cannot manage it himself. Then he is rich enough to employ people to manage the business professionally. They need to invest in Fleet Management solutions, hire qualified people to manage the day to day operations.
For less traffic on week days, one thing they can do is, operate as a group (which is happening in private moffussil operators now such Kottayam-Ernakulam, Kottayam-Kumily) on week days and share the income. Weekends and holidays, they will operate with full capacity.

[mayankjha1806]

I can only speak as a customer. So if i am planning to make a trip to Hyderabad/Chennai/Mumbai, choosing Bus as a option comes at last (if everything else is either unavailable or not-viable (due to cost).

So in our recent surprise trip to Chennai, we first thought of looking at Shatabdi as its cheapest and quiet fast (For four people traveling), once we saw that the reservations arent available we looked at Bus, and with four people on a multi-axle ticket cost was coming close to driving in our own car. So we ditched the bus option and instead took the car. This when distance was small.

For longer travel like Hyderabad-Bangalore, the comfort provided by the bus seemed insufficient, but as there was nothing available in train, or very expensive (in flight), we choose the bus. It cost us upwards of 6K for bus tickets, honestly if we have had the option, driving the car would have been cheaper.

So all in all, the cost structure looks like is making it un-viable for bus travel, and its having similar effect on the operators.

[libranof1987]

The OP's points are valid but I believe saturation is still a distance away.

From a measly Pune-Mumbai, operators are now aggressively at Bangalore-Ahmedabad with the eventual goal of say Mumbai-Delhi or maybe even Bangalore-Delhi.

Given how frequently each bus is run and the condition of most highways going through ghats (eg. Bangalore - Mangalore), I believe most of these buses will be discarded just as often by major players like KSRTC.

So, I believe the bubble will get bigger for just a big longer.

[indian21r]

Originally Posted by TheARUN

Moral of the story -
You should have a passion for vehicles, its not one you run with your head, its more of the hearth that is involved, and never exceed your capacity, with 5 Busses running you can live in a mansion with a Q7 parked in your garage, but don't then let greed get the better of you

OT: Hmm this cannot ever work in the real world. And the scenario you are talking is about micro managing. And I guess more of Indian mentality as we are used to small scale operations with few people to manage. See if McDonald's or starbucks had the same idea we would never hear about them.

And why settle for a Q7 when there is something better

Anyway back to topic, with the road conditions improving and lack of other major alternatives, we will be seeing a lot of operators for a long time to come. Even if an operator goes bust the impact is not the same as Airlines Industry. He can still sell his assets at a discount and recoup something.

Maybe Government should stop harassing these people as they are not providing any alternative.

As long as getting a Train ticket in India is a lottery (few days before travel), buses will survive and operators will come and go.

[TKMCE]

A properly run operation will survive without much problems. VRL for instance which has been around for long is a case in point.

1 Invest in proper technology and go automated even at the agency level. VRL for instance like KaSRTC uses their own pre printed ticket stock and their own ticket printers at all their authorised agents and hence they have better control both in ensuring revenue is not siphoned off at the agency level (their ticket numbers are validated against a central ticketing data base before each issuance) and also it enables them to control inventory better. Their Bangalore Ahmedabad service via Belgaum, Pune, Mumbai and Surat is a classic example.While it may be difficult to fill the bus with end to end Bangalore Ahmedabad passengers, the operation can still make money by effectively managing the loads on various sub segments. The number of passengers getting down at Pune can be compensated by the same number of passengers being booked from Pune to Baroda or Ahmedabad and a fully computerised inventory management system is helping them do that and change allocations on various sectors on a day to day basis depending on demand on each segment. And with internet based ticketing solutions improving by the day, the customised hardware and ticket stock requirement can also be phased out.

2 Keep passengers informed at all times. SMS will do the job more than adequately. VRL - u will get two SMS- one immediately on booking and 2nd on the day of departure with the bus number. This is of great help, especially when you are boarding at intemediate points.

3 Have back up plans ready in terms of breakdowns. An extensive network or tie up with local operators for eventualities wil help a long way. A few years back, SRMs Bangalore service via Ernakulam from Trivandrum on which I was travelling got into a small accident near Harippad. The bus (a B9R) was not allowed to proceed further that day by the authorities and we were wondering what will be our fate as it was the last departure from Trivandrum of any operator. But the operator SRM handled the situation very well. They persuaded the authorities to allow the bus to contnue till their scheduled dinner place which was only a few minutes away. Then they made arrangements with another operator (Kallada) who managed to provide them a spare Volvo (a B7R but still a Volvo) which was available in Changanacherry. The new bus was brought to Harippad, the passengers were kept updated regularly by the SRM boking agent at Harippad who came immediately to the accident site and in the end we reached only three hours late. Similar efficency by VRL on another break down on Mumbai Bangalore, again within an hour an alternate bus (B9R itself) was brought in and the delay was kept to a minimum. It is not a surprise that these two operators are among the more successful onces around.

4 Proper maintenance planning. With a little extra effort, buses can be rotated on various routes and scheduled maintenance carried out on time and passengers affected by cancellations due to any such maintenance can be intimated well in advance. If there are poor loads on Saturdays, the window from Saturday morning to Sunday evening can be used for maintenance . Similarly week days where traffic is dull, if cancellations are planned well in advance (not 24 hours before...,) then passenger incovenience can be reduced significantly.

5 Carrying cargo is not a bad idea provided you do not forget that the fare paying passenger is more important and keep incovenience to the minimum. A classic contrast is VRL vs KPN. KPN make a mess of it by holding buses for 30 min or more at Hosur and then stop off to unload luggage sometimes at virtually every small town enroute.VRL also carries luggage but loading/unloading if any at intermediate points is properly planned and waiting time is kept to a minimum.

6 Do not hesitate to cancel or combine services if passenger load is minimal , but again do it a minimum of two days in advance. If you cant fill up a trip, dont blow good money running it empty. Of course this is not always possible on weekends when the return direction loads may be good, but on weekdays it is very much possible and should be practiced.

7 And finally do practice differential pricing based on demand. LPG subisides are now drastically cut and despite all the initial moaning and whining, people are getting used to it. Similary if you think that as an operator you can get away with charging 2000 or 3000 on a Ernakulam Bangalore departure on the Sunday after Onam, go ahead and do it!!! People who want to travel will travel anyway and will still find it a good bargain instead of paying 12000 for the same jouney on the same day by air!!!

If I have used VRL as example in many cases, it is only because I am impressed by them. I used their services for the first time nearly 15 years back on ther Pune Bangalore service (non AC - an ACGL coach) and 15 years down the line I have used them fairly frequently only to find them getting better by the minute. I dont work for them , dont know any of the owners or management nor do I get invitations for any of their route launches- if they have any. I simply respect them for their good industry practices!!!

[nbr]

Originally Posted by libranof1987

The OP's points are valid but I believe saturation is still a distance away.

From a measly Pune-Mumbai, operators are now aggressively at Bangalore-Ahmedabad with the eventual goal of say Mumbai-Delhi or maybe even Bangalore-Delhi.

Given how frequently each bus is run and the condition of most highways going through ghats (eg. Bangalore - Mangalore), I believe most of these buses will be discarded just as often by major players like KSRTC.

So, I believe the bubble will get bigger for just a big longer.

I know few of the owners who had Volvo buses running between Mangalore - Bangalore. After the roads got filled with craters in shiradi ghat, lot of the Volvos had to change their routes via coorg. But economicaly they were losing money just to be in the race. Recently one of them sold their Volvos and settled with Volvo lookalike Ashok Leyland front engined A/c buses .They say it works out better since maintaining will be easy and he has got his permanent customers who are not bothered about Volvos since these guys are known for their best service the industry . As Ashley said in one of his comments, KSRTC is investing in Sleeper coaches then the normal buses which is visible, roughly now 80% of the buses are sleeper coaches in Mangalore- Bangalore sector .

[satyaanveshi]

Originally Posted by mayankjha1806

So all in all, the cost structure looks like is making it un-viable for bus travel, and its having similar effect on the operators.

That buses, even the Volvo type, are 'uncomfortable' is a perception that some people have. But the broader market doesn't think so. There are many people for whom bus is first choice, especially on routes out of B'lore to Chennai/Hyd/Kerala. This is because of many factors, including reasonable comfort, convenient timings, suitability of locations for getting on/off, and easier availability of tickets.

As far as trains are concerned, yes they are a fundamentally superior alternative to buses on most counts. But lets face it, IR has chronically under-invested in capacity and there simply aren't enough trains to meet demand.

As regards cost, driving one's own car would certainly be cheaper than Volvo tickets if there are 3-4 people traveling. But for 1-2 people, the bus works out cheaper.

[raju2512]

If IR introduces overnight full A/C express trains in routes like Chennai - Bangalore , Chennai - Trichy - Madurai, most of the private operators will be out of business. A 18 coach train with 2A/3A accommodation will easily carry 1000 people and remove around 20 buses from the route.