Tuesday, April 14, 2009

Volvo buses drain on BMTC

Volvo buses drain on BMTC

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● TRANSPORT BODY INCURS LOSSES FOR THIRD CONSECUTIVE YEAR According to sources, in 2008-09, 310 Volvo buses earned Rs 52.56 crore as revenue.

But the operational cost of these buses was Rs 55.84 crore leading to heavy losses for the Corporation.

Experts have sug-gested that the Bengaluru Metropolitan Transport Corporation revamp the Volvo bus service, which has run under a loss for the third consecutive year.
Prof. M.N. Srihari, traffic consultant to the BMTC, has in his report submitted to it recently, suggested that the corporation increase the number of seats on Volvo buses from the present 35 to 45 to increase their occupancy rate.

He has also suggested that the Volvo fleet be run only during the peak hours to ensure better demand for them. According to Prof.

Srihari, the Volvo services must be withdrawn from loss making routes and used more in the IT/ ITES hubs of the city.

Concern about the viability of the Volvo service has risen due to the huge operational losses the BMTC is suffering from running them. Although it came out with a number of new schemes including the gold monthly and daily passes, reduced the bus fare and gave a Re 1 travel offer to make the Volvo service more popular and affordable, it suffered an operational loss of Rs 3.28 crore in 2008-09 from running it.

According to sources, in 2008-09, 310 Volvo buses travelled over 1.30 lakh km and earned Rs 52.56 crore as revenue. But the operational cost of these buses was Rs 55.84 crore leading to heavy losses for the Corporation.

The BMTC launched the Volvo bus service in 2006 in the city with an eye on commuters from the higher income group and those using two and four-wheelers. But things have not gone exactly according to plan. Experts blame the heavy operational losses on the poor occupancy rate.

Says Prof. Srihari, “Improving the occupancy rate is the only way to make the Volvo buses profitable.The Corporation will come out with a number of strategies soon.” Several commuters, however, feel the BMTC should re-think its decision on purchasing more Volvo buses due to the losses it is incurring from running the service. Says Rajesh Sharma, a commuter, “Although the BMTC is aware that it is not easy to make the Volvo bus service profitable, it is still increasing its Volvo fleet every year. This is nothing but bad investment. The government must direct the BMTC to stop buying more of the buses immediately”.


At Tuesday, April 14, 2009 at 4:57:00 PM GMT+5:30, Blogger outspoken said...

The Idea that the Volvo buses are loss making and should be scrapped is flawed. All new business ideas need time to incubate. The only problem with Volvo buses and the other less frequent special services of the BMTC are low volumes (not of potential passengers, but of buses).
If the frequency of the Volvo bus is once every 1/2 hr. I would not leave my house dreaming of catching a Volvo. If frequency is gradually increased, the bus would attract exclusive passengers who would not like to travel on ordinary buses. Increasing freq. means buying more buses. A 3cr loss on a 55 cr operational revenue is OK because Volvo buses help in brand building of the BMTC.

The same argument can be applied to all of BMTC's schemes like: Womens Special, Pass special, Hospital Spl, Mall Spl. etc. Even BIG10, BLUE&RED (nobody even knows where these buses go how to use them?)

Warning: The Metro (whenever it arrives) will face the same problem in its first few years. Who would use the metro to move a few km and then again shift to bus for the rest of journey? Only when significant stages have been built, a critical mass of passengers will form leading to profitability.


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