Record-high diesel prices hurting bus companies and their passengers

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Bus passengers in the Greater Helsinki area should prepare themselves for hard times, warn bus companies.
      The reason is that the soaring cost of fuel - diesel prices have almost reached the towering levels of those for petrol - has further exacerbated the financial problems facing carriers.
     
The crunch being faced by bus companies could lead to cuts in service, with an obvious knock-on effect for passengers in terms of crowded buses and missed connections.
      As we have reported earlier, the price of diesel has risen by around 35% in just over a year.
      Ari Heinilä of the Finnish Bus & Coach Association (LAL) describes the steepling climb as hair-raising: "In the metropolitan area the battle for market share is already so tough that it makes one stop and think whether there is any sense at all in the whole business."
     
During the current decade, the bus operators in the Greater Helsinki area have consistently made losses in the region of EUR 5 to 10 million each year.
      There are rumours in the market that at least one of the large companies is up for sale.
      The background to the consistent losses is the process of putting routes out to competitive tender launched in the mid-1990s.
      As a result, prices for the hauliers fell by 30-35%.
      The present level of remuneration is estimated to be as much as 10 to 15 per cent below what would be needed to break even or start to make money on the exercise.
     
The large international bus companies Concordia and Veolia also blame rivals and market leader Helsingin Bussiliikenne, owned by the City of Helsinki, for the equivalent of dumping prices to secure routes.
      Ilkka J. Kari, the Chairman of Helsingin Bussiliikenne, vehemently denies the accusations.
     
The carriers are now turning to the state for help in the form of a rebate on fuel taxes or reductions in value added tax.
      If no help is forthcoming, the general view is that public transport services will suffer.
         


Previously in HS International Edition:
  Bus companies fear car tax changes could hurt business (5.11.2007)
  Increased popularity of diesel cars pushes up fuel price (28.5.2008)

Links:
  Linja-autoliitto, Finnish Bus & Coach Association

Helsingin Sanomat