The unique characteristics of the New Bus for London mean that TfL will have to take on the burden of ownership. Andrew Garnett reports

Transport for London has announced plans to procure up to 600 New Bus for London vehicles that will all enter service before the next mayoral election in May 2014. However, it has admitted that it will also have to take on ownership of the fleet and lease the vehicles to operators.

Currently the vast majority of buses operating in the capital are leased to operators by a variety of private lessors with the expectation that the vehicles will find a market outside London at the conclusion of the lease term. However, TfL has admitted that the unique characteristics of the vehicle mean that there is no market for it outside London and so no off balance sheet leasing structure for NBfL. It therefore believes that the most cost effective approach is for it to purchase and own the vehicles directly, taking advantage of its “preferential cost of capital”.

“NBfL is a unique vehicle, which, at the proposed volume of vehicles, may be purchased only from Wrightbus and is intended to be used in London for its full economic life,” said Leon Daniels, TfL’s managing director of surface transport in a paper submitted to TfL board members.

“Because of these factors, the value of the NBfL fleet will have to be included as an asset on TfL’s balance sheet regardless of whether it is purchased by operating companies or TfL. As such it will score against TfL’s borrowing capacity.”

He continued: “The recommended option is for TfL to purchase the buses directly and to supply them to the bus operating companies at a notional lease, rather than for the current model of the bus companies having beneficial ownership of the vehicles.

“The leases would enable TfL to move the buses between operators during their life as route contracts change and would include clauses to ensure the buses are maintained to the required standard for them to be moved between operators without issue.”

Daniels added that maintenance of the vehicles will remain with the relevant operator, but it is expected to be sub-contracted by them to manufacturer Wrightbus. “The contract with Wrightbus provides for this to ensure cost certainty to TfL,” he added.

Bus manufacturer Wrightbus, which has a contract with TfL to supply the first 1,000 vehicles, has indicated that a commitment must be placed before the end of this month in order to ensure that deliveries meet the timescale. Daniels adds that commercial discussions over pricing and supply chain issues have commenced.

It is anticipated that the first route could be converted to NBfL operation in April 2013, with a second route following in August. A total of 93 vehicles would be delivered in 2013 with 208 in 2014, 247 in 2015 and 52 in 2016. However, no firm decision has yet been made on which routes will be converted and this will be made at contract renewal or through negotiation with operators.

Daniels also confirmed that the vehicles will require a conductor when operating in open platform mode and that the cost of  employing and training these staff will be the responsibility of operators. However, these costs will ultimately be borne by TfL through operator contracts.

 

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