British operator Go-Ahead Group wins second Government bus contract, services to start from third quarter of 2016

Second bus contract goes to another foreign player

British group Go-Ahead beats 7 other firms with lowest bid of $497.7 million for Loyang package

By Janice Heng and Adrian Lim, The Straits Times, 24 Nov 2015

Britain's Go-Ahead Group was yesterday awarded the second government bus contract - making it two in a row for foreign players.

With the lowest bid of $497.7 million, it beat seven other shortlisted firms, including incumbent public transport operators SBS Transit and SMRT, to clinch the Loyang package of 25 bus services in Pasir Ris and Punggol.

The sum is for a five-year contract with the possibility of a two- year extension and is about $134 million lower than the highest bid.

The first government bus contract for Bulim, named after a new depot to be built off Jurong West Avenue 2, was awarded to London-based Tower Transit in May.

The tenders are part of the Government's move to a bus contracting model, to increase competition in public bus services.

The Loyang package comprises three new services and 22 existing ones now run by SBS Transit. They will be run by Go-Ahead in two phases from the third quarter of next year, with the firm also managing Pasir Ris and Punggol bus interchanges, and the new Loyang Bus Depot.

Go-Ahead beat three local firms. "In terms of quality, the overall bids were actually closely matched - in fact, so closely matched that pricing of the bids became an important decisive factor," said Land Transport Authority (LTA) chief executive Chew Men Leong yesterday.

In the LTA's two-envelope process for evaluating bids, quality has a higher weighting and is evaluated first before price is looked at. The Loyang tender, launched on April 15, attracted 10 bids. Eight were shortlisted based on quality. LTA said Go-Ahead won with the highest combined quality and price score.

SBS Transit's senior vice-president of corporate communications Tammy Tan said: "We are naturally disappointed at not being awarded the tender." She said the firm would help ensure a smooth transition.

This is Go-Ahead's first bus contract outside Britain, where it has a fleet of around 4,600 buses. It is the largest bus operator in London with a market share of 24 per cent.

Go-Ahead said it will have 900 employees here, and expects to generate total revenues of around $500 million over the five years.

Go-Ahead had made the highest bid of $693 million for the Bulim contract. Said Mr David Brown, chief executive officer of the Go-Ahead Group: "We have had a longer time to understand the market and risks and therefore priced accordingly."

As for the LTA, the tenders gave it "a better sense of the overall pricing required", said Mr Chew. "We will have a better benchmark to refer to when we go into negotiating contracts for the remaining nine packages with the two incumbents."

With a fifth of bus services being tendered out initially, the rest will be run by the incumbents under negotiated contracts of about five years from September next year.

The third government bus contract tender will likely be called in the first half of next year, said LTA group director for public transport Yeo Teck Guan.

Happy Monday folks! We are excited to share another important milestone in the Singapore bus industry: Our second bus...
Posted by Land Transport Authority – We Keep Your World Moving on Monday, November 23, 2015

It is an exciting period of transformation for the Singapore Bus Industry with the award of the Loyang Bus Package to...
Posted by Land Transport Authority – We Keep Your World Moving on Monday, November 23, 2015

Go-Ahead's drivers trained to handle delays
By Adrian Lim and Janice Heng, The Straits Times, 24 Nov 2015

Singapore is the first bus market outside of Britain for Go-Ahead, but the transport operator is confident its 26 years of expertise in bus scheduling, route management and maintenance regimes will help it meet the performance standards laid out by the authorities.

"We have a strong track record of providing passenger transport in busy urban areas," said Go-Ahead Group chief executive David Brown.

Go-Ahead was announced yesterday as the winner of the second government bus tender, earning the rights to operate 25 bus services from the third quarter of next year.

It can receive a yearly performance payment or deduction - capped at 10 per cent of the annual service fee - depending on how well it can meet performance indicators, such as reliability and punctuality.

Mr Martin Dean, managing director of bus development, said the firm will implement its active route management system in which supervisors and drivers are trained to deal with disruptions and delays.

Its supervisors also monitor the routes and bus locations through iBus, which is fitted on every bus. "As soon as our drivers understand that they are catching up with the bus in front or the bus behind is getting too close to them, they contact supervisors for advice on what to do next. We try to maintain the gaps or headways between vehicles."

Go-Ahead has a robust maintenance regime, inspecting every vehicle every four weeks, regardless of use, said Mr Brown. Technicians are equipped with tablets to help them.

The firm plans to hire 900 staff here, mainly bus captains. Asked how it intends to tackle the driver crunch, Mr Dean said flexible working schemes would be possible and the firm will also have attractive career pathways for bus captains that extend beyond just driving.

Government bus contract: Foreign operators' entry a win-win for public transport
By Adrian Lim, The Straits Times, 25 Nov 2015

With yet another foreign player winning a government bus tender, the overhaul of Singapore's bus industry has now been truly set in motion.

Britain's Go-Ahead on Monday won the second government bus contract for $497.7 million. Anglo-Australian Tower Transit won the first package for $556 million in May.

Incumbent players SBS Transit and SMRT failed to find success in both tenders, despite having the home-ground advantage.

And between them, they have now lost 48 routes.

The two operators, combined, have at least 33 years of experience - SMRT, originally incorporated as Trans Island Bus Services or TIBS, started in 1982, while SBS was formed in 1973.

As for the two foreign players, this is the first time they are entering the Singapore market, although Go-Ahead has 26 years' experience in Britain, and Tower Transit's parent firm, Transit Systems, has operated for 20 years in Australia.

That these foreign competitors - both relatively younger and with no experience here - are outgunning local players shows they are hitting all the right notes with the Government's transport planners.

But what are they offering that's better? And how will this improve commuters' journeys?

The Land Transport Authority said Go-Ahead won because it had the highest total score among the eight short-listed bids, reflecting a "high quality proposal with competitive price".

When asked what their proposal offered, Go-Ahead Group chief executive David Brown said his firm's expertise lay in bus scheduling, route management, maintenance regimes and employment practices.

Meanwhile, Tower Transit, which is already in the middle of ramping up its Singapore operations, recently announced a number of changes to the way it will run bus operations, compared with the incumbents.

Tower Transit's Singaporean bus drivers will receive a monthly wage of $1,865 - that is 15 per cent more than SMRT's $1,625, and 5 per cent more than SBS' $1,775.

Most striking was the 26 weeks of paid maternity leave it was offering female staff - more than the 16 weeks offered by most employers. Its bus drivers will also not have to refuel, wash and park the buses when they return to the depot.

It remains to be seen if SBS, SMRT or even Go-Ahead will match these terms, but in a labour market where bus drivers are hard to come by, this may soon be the new benchmark for employment terms.

Commuters, hopefully, will benefit from a trickle down effect, where more satisfied bus drivers lead to better service, and a more pleasant commute. Go-Ahead is planning to use high-tech ways to manage routes and carry out maintenance, giving hope that the operator will meet the new service standards set by the LTA in this new contractual system and, possibly, go above and beyond them.

But more importantly for commuters, the entry of these new players means new best practices, and new ways of working, with the operators constantly finding better ways to compete with their rivals, beyond price.

On Monday, when Go-Ahead won the contract, Mr Brown said: "People will learn from us... there's no question of that, and they will most probably put those things in their tender bids."

Already, operators seem to be getting a feel for what is required of them, and at what price.

For the Bulim tender, the difference between the highest bid (Go-Ahead's $693 million) and lowest bid (SMRT's $453 million) was $240 million.

For the Loyang tender, it was $133 million, between Busways Group's $631 million and Go-Ahead's $498 million,

This could be an indication that operators are looking at ways to be more cost effective while offering the required level of service LTA is looking for.

After all, LTA, which uses a two-envelope process for evaluating bids, on Monday said all the proposals were almost even, in terms of quality.

With the tender for the third package likely be called in the first half of next year, all eyes will be on Tower Transit as it starts operations in the second quarter of next year.

No doubt, the transport operators will watch closely how successful their operations are, as well as what their shortfalls are.

These will provide valuable lessons for all parties as they work out their plan for subsequent bids.

New bus contracts

BULIM BUS PACKAGE: TOWER TRANSIT

Contract: $556 million for five years, awarded in May

Operating from: Bulim depot; and Jurong East, Bukit Batok and Clementi interchanges.

Number of routes: 26

Bus services: 41, 49, 66, 77, 78, 79, 96, 97, 97e, 98, 106, 143, 173, 177, 183, 189, 282, 284, 285, 333, 334, 335, 941, 945, 947 and 990.

When: Progressively, from second quarter of next year.



LOYANG BUS PACKAGE: GO-AHEAD

Contract: $498 million for five years, awarded in November

Operating from: Loyang depot; Changi Airport and Changi Village terminals; and Pasir Ris and Punggol interchanges.

Number of routes: 25

Existing bus services: 2, 3, 6, 12, 15, 17, 34, 36, 43, 62, 82, 83, 84, 85, 119, 136, 354, 358, 359, 386, 403, 518

When: Progressively from third quarter, next year.



NEXT BUS TENDER:

Second half of next year