May 29 2020
The outbreak of COVID-19 (coronavirus) has been met by swift restriction on movement. This has had a direct impact on public transport operators, including those in the Intercity Passenger Rail Transport, Urban Passenger Rail Operations, Bus and Tramway Operations and Coach and Bus Transport industries, pushing many operators to the brink of collapse. However, government support and intervention is anticipated to help maintain services, with public coffers taking the hit. This has been compounded by the discouragement of public transport usage in favour of private vehicles, walking and cycling, with funding being made available to enable the last two. These changes may have a permanent impact on the way in which UK consumers travel, with the virus bringing about an opportunity to reset movement.
Public transit systems have borne the brunt of the collapse in domestic travel, with passenger numbers beginning to dwindle in early March 2020, with Transport for London (TfL) reporting tube usage was down 19% in the week through 15 March compared with the same period in 2019. The turning point for the complete collapse in domestic transportation usage came with the government-imposed restrictions on movement announced on 23 March. According to data from the Department for Transport (DfT), national rail usage has been affected the most of all types of public transport, with passenger journey numbers down by approximately 95% in April and through 13 May, similar to the level of decline on the London Underground. This compares with a reduction of approximately 90% in buses outside of London and 85% in London buses. As a result, the revenue of public transport companies is expected to contract significantly over the course of the crisis, regardless of mode of operation. This is anticipated to cause profit margins to collapse for most companies, though firms that receive a fixed fee for their services through franchises rather than revenue from passengers, such as London buses and Govia Thameslink Railway, are likely to retain their margins. Additionally, onboard social distancing measures have placed significant pressure on profitability due to the high fixed costs of operation. For example, TfL has stated that capacity on the London Underground to maintain social distancing will reduce to 15%. Although revenue per service is significantly lower as a result, operating costs, such as vehicle leasing and fuel usage, remain constant.
A similar but less marked reduction has been mirrored in private transportation, with DfT data showing an average 65% reduction in car usage between the implementation and slight relaxation of lockdown measures. However, as the rules on driving were relaxed in England on 13 May, road usage increased to just over half of normal levels on average over the five days through 18 May. A reduction in car journeys has positively affected air quality in many of the most polluted areas in the country. According to figures from the Mayor of London, levels of NO2 reduced by an average of 27% in Central London in the first month of lockdown, with NO2 levels on the most polluted roads – Oxford Street and Marylebone Road – dropping nearly 50%. This is on top of a 35% fall in emission levels between 2017 and the start of 2020. This pattern is reflected throughout the United Kingdom, particularly in urban areas, with the data from the Department for Environment, Food and Rural Affairs showing that Edinburgh recorded the most significant drop in NO2, with levels 62% lower than the year before. Similar reductions are likely to have occurred in other pollutants, which is expected to have a knock-on effect to human health, with the Centre for Research on Energy and Clean Air estimating that up to 3,500 lives have been saved in the United Kingdom as a result of improved air quality.
As a result of the coronavirus crisis, the government has implemented a series of measures to discourage the usage of public transport, due to the significantly higher risk of infection. Public transport operators have responded by cutting services to reduce their expenditure. For example, the Confederation of Passenger Transport UK stated that bus operators had cancelled approximately 60% of their services to cope with the lack of demand. Coach travel is expected to have declined more substantially, with National Express cancelling all services until July 2020 and Megabus suspending services in England and Wales. In order to encourage greater reliance on private travel, the government has provided funding for temporary cycle lanes and closed spaces to traffic, with an emergency fund of £250 million made available to local authorities for this purpose, while TfL temporarily suspended its Congestion Charge and all other road user charges until 18 May.
Public transport system operators are anticipated to make significant use of the government support during the coronavirus outbreak. One of the key measures open to the industry is the Coronavirus Job Retention Scheme, which has enabled firms to furlough and remove the wage costs of staff in the face of weak demand. Public transport operators have also received a variety of targeted assistance, such as the £167 million made available to protect essential bus services, and £30 million of funding for trams and light rail operators. However, the larger measures have been focused on TfL, which received a package worth £1.6 billion, and national rail services. The Emergence Measures Agreements for the rail network is unique in terms of support, in that it has no set value but transfers all financial risk to the government, for a small fee. All of this support, however, is contingent on operators increasing service levels to be able to support the economy while providing sufficient safe capacity, with the government assisting where it can by encouraging working from home, staggered start times, and alternative methods of transportation.
Short-term changes to travel habits as a result of the coronavirus outbreak have the potential affect domestic travel in the longer term. Many pop-up bike lanes and expansions of pedestrian walkways into the road, particularly in major cities, may become permanent. While the government has been encouraging greater levels of walking and cycling, the lack of alternatives during the outbreak is likely to have forced people to start travelling in these ways. This transition is likely to be cemented by the £2 billion of funding to improve cycling and walking access announced in 2020 Budget, with an additional £3 billion being made for improving bus services. These funding commitments underline the government’s long-term ambitions to reduce private car usage, though ridership on public transport may be stunted for some time. As the reduction in road space becomes permanent and restrictions to movement are slowly lifted, increased time spent in traffic is expected to lead to car usage falling. As a result, the coronavirus outbreak is only expected to accelerate an existing trend in changing domestic travel habits.
IBISWorld industry reports used in this special report: