Council chiefs and transport bosses have locked horns with one of the country’s major bus operators in a row about rising fares.
The Local Government Association along with Passenger Transport Executive Group (pteg), which represents the six strategic transport bodies in the largest city regions outside London, has attacked First Group for suggesting it would not lower fares despite the falling price of crude oil – reaching around $50 a barrel.
First Group has confirmed the firm will continue to raise bus fares in line with inflation as its hedging policy meant it was committed to buying fuel at higher prices until next year.
Cllr James Lewis, chair of the Local Government Association's City Regions Transport Special Interest Group, said: ‘It beggars belief that at a time when energy firms are lowering their prices and petrol prices inch closer to £1 per litre that First insists on raising fares, punishing bus passengers for its own failings in agreeing to hedge their fuel purchasing at too high a price.
'While I accept bus companies need to make a profit, fuel is not the largest cost that bus operators face and lower fares reflecting lower costs would be a good opportunity to attract new customers and reverse falling patronage.'
'However as I have said previously, I suspect these on-going fare hikes are more about the way the company assured City investors last summer it would increase profitability and share prices and nothing to do with the services it provides.'
A spokesman for First said: ‘In order to protect our business from fluctuations in the oil price, particularly increases, we take a very long term approach. We typically 'hedge' our fuel purchases many months and often years in advance. Therefore, we are seeing only very limited cost benefits at this stage and are not currently benefitting from the low prices at the fuel pump that motorists are enjoying.
'We do keep our fares as low as possible and always seek to minimise any increases that we do have to apply. Although fuel is not our biggest cost, it is welcome news that the price is reducing. Unfortunately almost every other cost associated with operating buses is increasing. As a result we have no current plans to introduce a wholesale reduction in fares, however we will continue to closely monitor our cost base, including the price of fuel.’
He added that the group would continue to invest in its service including in initiatives such as bringing Wi-Fi on board our buses and mobile ticketing across all networks.
First has enjoyed passenger volume growth for 19 consecutive months.
In November Transport Network reported that bus and rail fares would not be reduced to reflect falling fuel prices after speaking to major operators Stagecoach and Arriva.