Western Cape Business News

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TRANSPORT: Golden Arrow Just Keeps Rolling Ahead


Recent Western Cape Business News

WHEN Golden Arrow celebrates its 150th birthday next year, Cape Town will have enjoyed a bus service that ratepayers have never had to fund for an equally long time. Bus services in most South African cities are provided and funded by the local authorities, but Golden Arrow and its predecessors have always been in private hands, most recently HCI Consolidated Investments.

Without the benefit of being bailed out by ratepayers’ funds yet having to perform in a constantly changing operating environment, the company has been through some difficult times. Despite this Golden Arrow has enjoyed constant growth for the last decade. Recent turnover has increased from R 659.4 million in 2006 to R938.7 million in 2009 and in the past seven years the company has purchased 450 new vehicles and refurbished 400 in an effort to renew an ageing bus fleet.

Growth may not, however, continue at the same pace. The recession and the concomitant job losses that led to a decline in passengers and the effects of a new dispensation in the bus subsidy system have both had an adverse effect. “The new subsidy arrangement means that the company has to manage with an income that has been reduced by approximately R100 million a year,” explains Golden Arrow CEO, Nic Cronjé, “and we have had to change our business model. Previously each additional passenger carried on a subsidised route meant additional income, but now we are paid per kilometre, and because of the limitation on subsidies, we will not be able to expand our routes if passenger demand increases.”

One of the incentives that has arisen from the change in the subsidy formula is to ensure that as many kilometres as possible are done on subsidised routes while new clipcards can be issued on existing routes to accommodate a variety of passenger requirements whereas previously all clipcards had to be approved by the NDoT.

General manager, Francois Meyer, adds: “The problem we foresee is that because we are at the bottom of a bad economic cycle people have lost their jobs and passenger demand has decreased at the same time that we have cut back services, but our buses are full now and, should the economy improve and passengers come back to the buses, we won’t be able to expand services. There simply isn’t the money – not at national government level, not at provincial level and not at company level.”

While there are difficulties ahead, Cronjé remains optimistic about the future of public transport. “If we are not to kill the entire economy of the bigger metropolitan area, public transport must play an increased role in future. We simply cannot continue to use private vehicles. The cost of expansion is too high. One factor will dominate in future – people will pay more attention to living closer to work and closer to places of education. The availability of public transport in this regard will become very important.”

The three modes of public transport will have to be integrated if we want to provide a good and efficient service. Rail must remain the backbone of public transport. We have a good rail infrastructure but lines must be better utilised, and where we don’t have railway lines, we need buses with right of way in traffic. This is better and far cheaper than BRT systems. Minibus taxis will continue to play an extremely important role in the provision of feeder services. Whether we will achieve the desired integration in my lifetime is an open question,” he concludes.

What is clear is that, despite hurdles and unlike certain other cities, Cape Town will continue to enjoy a bus service that doesn’t cost the ratepayer anything because both Golden Arrow and its holding company, HCI, have made their commitment clear to continue running bus services in Cape Town for as long as possible.

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