Bus operators feel higher diesel price pain
With diesel constituting about 30% of operating costs and companies having to pay 9% wage increases, their financial situation is looking bleak.
Reya Vaya Buses parked in Soweto depot in Soweto, 18 April 2018, as a national bus strike affected services in Johannesburg, 18 April 2018. Picture: Nigel Sibanda
The Southern African Bus Operators Association (Saboa) said the latest surge in fuel prices will cost bus companies millions to stay on the road, after the latest fuel price increase of 8.6% at midnight yesterday.
Putco executive director Thys Heyns said: “The diesel fuel price increase of R1.24 per litre will cost Putco an additional R42 million per annum.
“This must be seen against the background of the diesel price having already increased by 34% since September 2017.
“Putco’s fuel bill increased by R133 million since September 2017 due to several fuel price increases.”
Golden Arrow Bus Services executive John Dammert said: “The impact of the diesel fuel increase on Golden Arrow will escalate the fuel bill by approximately R37 million per annum.
“Given that our annual usage of diesel is approximately 30 million litres, it is looking at a consequently significant increase in operational costs, as diesel constitutes 30% of operating costs.”
Ahead of the increase, Saboa said it would also put bus companies under pressure as labour costs could be expected to surge.
The association said bus companies were still dealing with the additional financial burden created by the strike that resulted into the 9% wage settlement in addition to their “higher input costs, lower revenues and [operating] within the context of a subdued economy [which] results in fewer bus passengers”.
Saboa said “the diesel fuel price in September 2017 amounted to R11.71 per litre for the inland at wholesale price and in October 2018, it was R15.64.
“The overall fuel cost increase since September 2017, year-on-year, came up to 34%. In tandem, the labour cost increase for 2018 was 9%. These figures paint a bleak picture of the cost of doing business in the industry”.
It said: “The impact of the latest fuel increase is devastating to the industry. Most companies have already increased their passenger fares in 2018 and will have major difficulty in doing so again.
“This is especially so in the light of the very tough financial situation that many consumers find themselves in and the poor performance of the South African economy.
“Yet, bus companies will in all likelihood be forced to pass on this increase to passengers.”
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