BUS ÉIREANN has written to sub-contractors from whom it hires private buses, asking them to agree to a 20 per cent reduction in contract prices. The company, which included a form for acceptance with the letter, said the reduced prices would apply from September 14th.
However, the move has angered members of the Irish Coach and Tourism Council (ICTC), which said profit on some contracts amounted to just 3 per cent.
The Bus Éireann letter sent by the company’s materials manager at its Broadstone base refers to the “adverse impact [of] the economic downturn”.
“Bus Éireann is now seeking a 20 per cent reduction on the current contract price in respect of your provision of passenger transport services in order to meet the challenges now being faced and your co-operation is now being sought to assist us in achieving the necessary cost reductions. The said reduction shall apply from Monday 14th September, 2009.”
The letter does not state what will happen if sub-contractors do not agree to the reduction in price.
Most of the sub-contractors who will be affected operate on Bus Éireann Expressway services.
Economist Colm McCarthy recently recommended to the Government that Expressway, which he found to be profitable, should be sold off by Bus Éireann. In advance of a decision on any sale, the company is implementing “a range of initiatives” to reduce costs.
However, Gerry Mullins, chief executive of ICTC, said: “No operator in the country is making 20 per cent profits, so if a bus company accepts this cut, they will be running their services at a loss.”
He said the industry was so weak, with many operators heavily in debt, that some would accept the cuts “just to have some form of income during the winter”. The move by Bus Éireann presented “a dreadful dilemma”.
“These rate cuts will ultimately lead to job cuts. What’s more, the jobs that will be lost are rural jobs, where replacement work is harder to find. The Government talks about supporting small businesses, yet it allows a State company to behave in this way.”
According to 2007 figures, there were 8,500 licensed public service vehicles, of which 1,200 were registered to Dublin Bus. Some 700 were registered to Bus Éireann with the remaining 6,600 belonging to private operators.
Last night Bus Éireann said it had “written to all of its suppliers including private bus operators requesting a reduction in their charges in order to get the best value for money as possible while maintaining high standards”.
