Mr. Martin Nolan:

It is a while since we have been here. We spoke at the Joint Committee on Transport in 2008 and 2009. Most of what we predicted at that stage has come to pass. We have done most of what we promised to do. In 2008, we were worried about the effect the motorways would have on towns and villages. We said we would stick with the towns and villages for as long as we could, while acknowledging that we were likely to have problems on commercial routes in the future.

In 2009, we spoke about the efficiencies we would introduce at Bus Éireann to ensure the State got a better return. We also went through the Deloitte value for money report that was drawn up for the then Department of Transport. The report had come to the conclusion that Bus Éireann was as efficient and effective as its European peers even though it received one of the lowest subventions in Europe. The OECD report that was mentioned earlier spoke about the savings that could be achieved in cities with many millions of residents. Bus Éireann's subvention has been reduced by 25%. Those savings are in the system. The pain has been taken. There are more savings in the system.

The role of the National Transport Authority in the direct award contract is possibly misunderstood. The authority is heavily involved in everything Bus Éireann does with regard to the public service obligation contract. We work together on a daily basis. We have met all of the authority's targets. I will speak later about our high customer satisfaction rating. We have achieved the efficiencies and effectiveness measures that are required for the Exchequer. I will go through them later in the meeting.

The map of Ireland that is being shown to the committee depicts the approximately 350 public service obligation and intercity routes we provide. We also have approximately 6,000 school bus routes, which cover every corner of this country. We serve thousands of towns and villages. I could not possibly have all the information on each of them. That is why I have brought my regional managers with me. I hope that between us, we can answer most questions about what goes on around the country. No other organisation in this country can match Bus Éireann's road transport reach. AA Roadwatch and all the radio stations contact Bus Éireann every morning to ask us about traffic conditions. That aspect of our role came to the fore during the bad weather of recent years. Bus Éireann knows how the roads of this country work.

As a transport management company, Bus Éireann plans all of its routes. I have mentioned our extensive reach. We have inspectors in every locality. We know the schools, the towns and our customers. We are able to bring our local knowledge to bear on a national basis. Our motto is "think local - act national". Bus Éireann has 2,500 staff in 17 locations throughout the country. We have 90 people based in Tralee and 70 people based in Stranorlar, to give two examples. We have smaller numbers of people in many other villages and towns throughout the country.

Bus Éireann has a complex and sophisticated network. It facilitates 78 million passenger journeys every year. It has a turnover of just over €280 million. We have 2,500 employees of our own, as I have mentioned. There are more than 8,000 people in our system as a whole, when aspects of our business like bus hire and school transport are considered. Some 25% of our maintenance is outsourced. The livelihoods of 6,000 people who are not employees of Bus Éireann depend on the company.

We have fixed overheads, in the form of depots, at every one of our locations. Those facilities are shared between the company's three products - Expressway, school transport and public services. Like any three-legged stool, Bus Éireann has to ensure it does not lose a leg so it does not keel over. If that were to happen, the cost of the fixed overheads would fall back on the State. We try to avoid that.

As we predicted when we last appeared before an Oireachtas committee, the opening of the motorways, the sanctioning of new licences and the deterioration in the economy led to a decrease in our revenues and passenger numbers, although they have since stabilised. There has been a slight growth in some provincial cities in more recent times. The 25% decrease in our subvention that I mentioned will be followed by further decreases in the next couple of years. We have always washed our face financially. We made a small profit last year, we will make a small loss this year and we will be back into profit next year. The decrease of €28 million in our operational costs is more than the decrease in our revenue.

The image being shown to the committee at the moment depicts the increase in the cost of fuel, which has affected Bus Éireann and every other transport operator in the country. Our fuel costs have increased from €15.7 million some years ago to €35.9 million this year. That includes the loss of the fuel duty rebate in 2008.

We provide vital social links for communities, many of them at no cost to the State. We employ more than 1,400 contractors throughout the country. Most of them are small contractors with fewer than five vehicles. We contribute in excess of €55 million in Exchequer taxes and excise duties that are returned to the State. We must make sure that return to the Exchequer is maintained in any new regime.

The next slide relates to efficiency and effectiveness. As I have mentioned the Deloitte report, I will not go through it. We are as efficient and as effective as our European peers because we did not receive an extra subvention during the 2000s. When we had to make extra payments under the national pay deals - we did not pay them all - we demanded productivity measures to ensure our finances were right. There has been a 25% reduction in our subvention since then. We have reduced our cost base by over 10%. The National Transport Authority said in a recent report that Bus Éireann's productivity has increased by over 11% in recent years. That is in addition to the savings that have arisen from the reduction of more than 12% in staff numbers in recent years. There has been no major reduction in service levels over that time.

We are working on further efficiency measures. On their own, they will not return us to the position where we need to be. We have to make some changes on our Expressway routes. Some of them have gone through and others will go through in the coming months.

Bus Éireann is the biggest customer of private operators in this country. We pay more than €114 million to such operators every year. I have mentioned that we work with 1,400 private operators on the school transport scheme and that 25% of maintenance is outsourced. We have some joint products. On the Dublin-Cork route, for example, we are in business with GoBus to bring 15 services between the two cities every day.

The commercial Expressway services provided three benefits to the State. First, they paid for overheads at many depots around the country at no cost to the State, as I have said. Second, they went into towns and villages at no cost to the State.

Many towns and villages only had these commercial services passing through. Third, it provided services which, in turn, were converted to PSO services for the State.

In the case of commercial services, not one cent of State funding is involved. As a result, we have had to withdraw services from many towns and villages. However, that was done as a last resort and it was a sad day for the company. It went against our DNA, but if we had not taken these measures, worse measures would have had to have been taken on these routes. It is a highly competitive market which is regulated by the NTA. Customer demand is for shorter journey times and limited stop services. We have stayed in towns and villages as much as possible, whereas our competitors have moved to serve the bigger population centres. In the intermediate points it is difficult to make a commercial return, hence we have had to make a number of changes, but we have invested in these services. Members may have seen our new higher capacity vehicles, most of which have a Wi-Fi service.

The Minister explained in the House some weeks ago that the Expressway service had lost passengers and revenue because customers had opted for private providers which operated a faster service by bypassing smaller population centres. In order to gain competitiveness and reach a break-even position, Bus Éireann had to redesign its Expressway services, which meant following the routes most passengers want to use. Because the services are commercial, advance consultation is difficult to provide for. If we start to consult beforehand, someone else may receive the licence. In many cases, where we have withdrawn from towns, there is a rail or public transport alternative. In some places we have had a difficulty in providing an alternative service, but we are working with the NTA on this issue. There are benefits attached to the bigger population centres, such as reduced journey times, access to Dublin Airport and an enhanced level of service for many towns and villages. As the Coach Tourism and Transport Council representative said, it has been involved in the same business. It was the first service to opt out on the Dublin to Cork and Galway to Cork routes and all of the towns and villages in question are no longer served by private operators. We serve most of these town and villages.

On the issue of State-funded services and contracts, we work closely with the National Transport Authority. We do nothing on these services without permission from the authority. We design the networks and deliver efficiency measures together. We provide services on 300 routes to villages, towns and cities outside Dublin. We are the largest provider of local and rural transport services. We provide commuter services in the greater Dublin area and city services in Cork, Galway, Limerick and Waterford. This year a large number of networks are being redesigned. The Galway network has been completed and passenger numbers are growing. Many services in Cork have been changed and passenger numbers are also growing. The Limerick network was completed in recent weeks and we hope to report progress in the next few months on passenger numbers.

We have met all of our performance targets and the contract will be up for renewal in 2014. We have a track record of meeting our targets and have improved services with a significantly reduced subvention. International experience demonstrates tendering can lead to increased costs for the State, as well as a reduction in services, increased fares and a reduced level of competition. Therefore, any proposed change must be carefully examined. The subvention for the provision of bus services in London is just under €1 billion. The UK Competition Commission is trying to reintroduce competition after the market was deregulated. The big five private operators in the United Kingdom have much higher profit margins than their smaller rivals. Sweden has abandoned the tendering process as costs exceeded those incurred using the previous approach. Therefore, everything that glitters is not gold. The system needs careful analysis, especially when one is trying to serve a small island economy.

The school transport service is administered by Bus Éireann on behalf of the Department of Education and Skills. It does not have a contract. We transport 113,000 children to and from school every day safely, under guidelines from the Department. All reports indicate it is a significant and complex scheme and that we are the only operator in the country capable of providing it. Some 85% has been subcontracted out to private operators, while 100% of the planning is undertaken by Bus Éireann. We tell people where they need to be at a particular time and the guidelines to be followed. We have people at all locations monitoring the service.

Under the heading of customer improvements and innovation, in conjunction with the National Transport Authority, some of our PSO vehicles have a Wi-Fi service, as do Expressway services. Real time signs are being erected in the provincial cities in conjunction with the authority. The smartcard system will come on stream in the eastern part of the country in the coming months. We have a very successful BeClub online loyalty scheme in place in which more than 25,000 people are involved. The real-time arrival application has gone live. Recently we trialled compressed natural gas vehicles in Cork with great success and will shortly bring the matter to the authority and the Government.

The 2009 Deloitte report stated the company was efficient and effective. We have become much more efficient since, despite a 25% cut in State funding. The value for money report for 2011 states Bus Éireann is the only provider in the country capable of providing school transport services. The changes to Expressway services were critical to ensuring its survival and in protecting jobs. The third quarter customer survey indicates a customer satisfaction rating of more than 90%, while 96% of customers say they would recommend us to a friend. We are a dependable provider of safe and quality public transport services, as signified during the bad weather when we maintained 95% of our services throughout the country.