operational review / diversified logistics passenger … to long-term contracts with government, ......

Operational review / Diversified logistics

Passenger transport

1 350 revenue-earning vehicles

4 095 employees

10.4 million passengers per annum

Revenue increased by 7%

72 KAP Integrated Report 2017

Specialised service offering focuses on innovation, safety, service and cost optimisation, and has resulted in the division’s positioning as a market leader providing world-class passenger services to customers in southern Africa’s fast-growing markets.

A complete transport solution to customers in the commuter, personnel, intercity and tourism markets

Revenue spLIt

8% Gautrain bus feeder

25% Intercity

55% Commuter and personnel

4% Rest of Africa

8% Tourism

Depots

Servicing terminals

Intercity destinations

Bulawayo

Harare

MaputoBeira

TeteNacala

Nationally

25

19

143

KAP Integrated Report 2017 73

Megabus operates in the commuter and personnel markets under mid to long-term contracts with government, as well as with large corporate entities. The Megabus service remains the mainstay of the passenger transport division with its long-term contractual business model. The intercity business operates in southern Africa under the Greyhound and Citiliner brands, transporting passengers between cities and towns daily. Mega Coach and Magic Transfers service the inbound tourism markets and the South African corporate market. The intercity and tourism operations are leaders in the coach segment and offer a high standard of safety, service and reliability. Mega Express operates and manages the Gautrain feeder and distribution service, which was the first of its kind in commuter transport in South Africa.

Passenger safety is a critical element of management in the passenger transport division. The division has, over time, reported low incident rates due to diligent driver training and control procedures, and disciplined vehicle maintenance in an environment where road safety is often affected by third-party behaviour and road surface conditions. Vehicles are also equipped with tracking devices and speed control and monitoring equipment.

business environment

Passenger transport

CitilinerSemi-luxury coach service transporting more than 500 000 passengers annually over 10 million kilometres.

Mega BusOperating in the commuter and personnel markets under mid to long-term contracts with government, as well as with large corporate entities.

Bonjala BusServicing the North West Province, catering mainly for commuters staying in the surrounding rural areas, with platinum mining as the main economic activity.

Mega CoachWith a fleet in excess of 80 expertly driven and well-maintained vehicles, Mega Coach is rated as one of the leading coach companies in southern Africa, servicing the corporate and tourism markets.


services

Magic TransfersChauffeur-driven transport from Johannesburg, Durban and Cape Town International airports. This exclusive service is available 24 hours a day, 7 days a week, 365 days of the year.

GreyhoundLuxury coach operator transporting more than 800 000 passengers per annum over 17 million kilometers.


“We strive to be the preferred passenger transport service provider, differentiated by high standards of safety and reliability.”

nico boshoff, CeO: passenger division

R212 million capex invested in new fleet

39 million litres of fuel used per annum

112 million km travelled annually

10.4 million passengers per annum

Staff turnover remained low at 2% (FY16: 2%)

R8.7 million investment in employee training

R638 million spent on salaries and employee benefits for the year

Fleet size increased from 45 vehicles at start of contract in Mozambique to 90 vehicles

Additional work secured with existing customer

key factsGroup strategy

Market leadership

High barriers to entry

Leveraging our African base

Industry diversification

Adding value through specialisation

The passenger transport sector is highly regulated in terms of operating licences, vehicle maintenance and safety.

The passenger division has a balanced exposure to the commuter, personnel, intercity and tourism sectors.

The passenger division consistently invests to remain at the forefront of technology in passenger transport and safety, in order to improve the customer experience and operating efficiencies, which enhances margins.

The passenger division has effectively leveraged off the Unitrans footprint in Mozambique to secure a 90-bus personnel contract.

Greyhound and Citiliner are market leaders in intercity travel, while the commuter and personnel operations are leaders in the regions within which they operate. The economy of scale benefits of a large national business facilitate continued investments in order to effectively compete with regional competitors.


The operations within the passenger transport division delivered mixed results for the year. Revenue increased by 7%, while operating profit decreased by 5%, primarily as a result of a particularly challenging intercity transport environment.

The commuter transport operations performed well as commuter numbers stabilised, and the impact of prior period rationalisation initiatives were realised. The personnel transport operations showed a marked improvement with increased activity levels and the commencement of a significant new contract.

Increased tourism activity provided strong support for the Mega Coach operations, which resulted in an improved performance. Mega Express, the Gautrain bus feeder system, performed to expectation with stable passenger numbers.

Both the Tete and Nacala operations in Mozambique exceeded expectations as a result of good project execution by the implementation teams, as well as contract volume increases.

The results of the intercity operations were disappointing. Revenue and operating profit decreased as a result of lower recorded industry passenger numbers and increased competition from low-fare airlines and competing bus operators.

Passenger transport

Commentary

Revenue increased by 7%, while operating profit decreased by 5%.



The division remains well positioned in terms of its modern and well-maintained asset base; diversification and strong cash conversion to sustain above-average returns on capital employed; and to competitively pursue expansion opportunities. The intercity operations will be an area of increased management focus during the upcoming year.

Outlook


the passenger transport division transports more than 10 million people over more than 112 million km annually. with such high volumes, it is key to the sustainability of the business to ensure that passengers are safe when using any of the services, and that third-party road users are considered when buses are in transit.

To implement road safety successfully, a holistic approach is taken – managing all aspects from vehicle maintenance and safety tocontinuous driver training. Highly skilled people are employed andentrusted with taking care of equipment and people’s lives, whichmakes this a highly specialised and high barrier to entry business.

Key elements to this strategy include:

Sophisticated and advanced 24/7 vehicle monitoring control roomsThrough tracking devices, the team monitors driver speed to ensure that the required limit is maintained throughout the journey. Should a driver exceed the company set speed limit (a maximum of 100 km/h), they are contacted by the tracking team to initiate immediate corrective action. Impact alerts are sent to this department for immediate follow-up. In addition, pre-loaded no-go areas are activated by alarms for scheduled routes and monitoring is managed through trip scheduling with automated reporting on driver, vehicle and trip performance.

Diversified logistics / Passenger transport

Pre-trip inspectionBefore any departure, all buses are fully inspected, including all roadworthy and critical safety checks.

Preventative and regular maintenanceAll vehicles undergo weekly workshop inspections. All workshops are accredited by major OEMs of the bus fleet, including Volvo, Mercedes Benz and MAN. A strict preventative, predicative and component life management programme is followed, with advanced administrative maintenance control systems to support road safety. When tyres are scrapped and removed from vehicles, they are inspected for root causes. A preventative plan is then implemented to eliminate the root cause to ensure tyre safety.

DrivecamsTo manage unusual driver behaviour or reactions, such as hard braking or sharp cornering, drivecams send alerts to operation managers. Unusual behaviour is recorded and corrective measures can be put in place immediately.

Helivac emergency servicesA 24-hour medical call centre can provide drivers and hostesses with emergency medical advice, emergency medical response to the scene of an accident, medical transportation and trauma counselling.

Case study

Public safety – a key focus area

Market leadership

High barriers to entry


Ongoing training • Drivers: Training is conducted with driver trainers and drivers to

ensure that the rules of the road are adhered too, correct drivinghabits are followed and all safety aspects are considered whenon the road. Intercity is a registered Transport Education TrainingAuthority (TETA) and manages all driver training for the business.

• Hostesses and hosts: Training includes basic first-aid training,fire evacuation training and preventative measures training forincidences such as breakdowns and safety procedures foraccidents.

• Technicians: Training includes daily communication withworkshop staff on safety priority elements and weekly themes thatdirectly support safety aspects.

Vehicle featuresVehicle safety features include lane guard assist, emergency brake assist, seat belts and adaptive cruise control.

Member of regulatory boardsMembers of management are active on regulatory boards that advise on and implement the Occupational Health and Safety Act and guidelines of the National Occupational Safety Association (NOSA), the leading global supplier of occupational risk management services and solutions.

RoadworthinessAll vehicles have to undergo a six-monthly ‘certificate of fitness’ test with the national roads authority. Without this, a vehicle is deemed unroadworthy. Although this is an expensive test, at R30 000 per vehicle, it is a non-negotiable requirement.

Case study

Scarce raw materials

Skills and talent management


operational review / diversified logistics passenger … to long-term contracts with government, ......

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