ICONIC Cape Town passenger transport company Golden Arrow Bus Services (GABS) is cutting down risks of traveling with cash onboard.In terms of key strategic imperatives GABS has deemed the handling of cash as a method of payment on buses, kiosks and at depots a “high riskfactor” in the company’s business model. Consequently, the company has decided to procure a state of the art automatic fare collection system at a cost of R85m.
According to the annual report of holding company Hosken Consolidated Investments (HCI), the automatic fare collection system “will be smartcard based and will provide considerable detail associated with travel patterns across the full spectrum of the commuting experience.”
GABS anticipated that the data unlocked by the system’s functionality will serve as a rich source of management information. This could be used to further refine efficiencies across the company’s revenue base. GABS has also invested in other key areas to ensure appropriate efficiencies are maintained.
HCI argued that the ongoing recapitalisation of the bus fleet – which saw the replacement of 74 buses at a cost of R136m – had undoubtedly been a positive influence in achieving an enviable operating efficiency ratio of 97% of all first time departures being on time.
HCI said the GABS fleet currently boasted an average age of 9,6 years. During the financial year to end March, the GABS Technical team reduced the number of breakdowns by 18% to achieve an industry best practice rate of 3,5 breakdowns per 100,000km.
HCI CEO Johnny Copelyn said the achievement of consistently high operating efficiencies formed the bedrock of the company’s results.
He added, “Despite lingering legislative constraints inhibiting the organic expansion of its service footprint, GABS posted one of the more formidable operating performances of its chequered 155-year involvement in public transport services in the City of Cape Town. Buoyed by an extraordinarily long cycle of depressed oil prices and the company’s forays as a Vehicle Operating Company in the expanding MyCiti IRT services provided a solid platform for the creditable performance.”
In terms of financial performance, GABS managed to increase revenue 7% to R1.5bn in the year to end March with reduced passenger numbers being offset by new routes.
Gross profits were up 16% to R376m - mainly as a result of lower fuel prices and reduced overhead spend. The headline earnings contribution was R185m – which more than justifies HCI’s (at the time ‘contentious’) decision to acquire GABS for R257m in 2004.
By Jenni McCann