Hamish Nuttall

nakedbus.com has just announced that its research shows that 32% of its customers have transferred from car to the nakedbus.com service. On one route alone - Hastings to Auckland, this has resulted in an annual saving of 180 tonnes of carbon dioxide (CO2)

Auckland Regional Transport Authority has just announced that bus fares will rise again in the New Year. I comment elsewhere that these rises may be counter-productive. They also show what happens when bus companies do not compete in the market. In New Zealand, most of the competition is for the market - not in the market. What this means is that companies compete for the right to run services. There is almost no competition for passengers once services are running. This means that there is little incentive to reduce prices for passengers. Price rises ahead of inflation several years running do not indicate healthy competition!

The Overlander has been saved for now. Toll has “listened to New Zealand”. But the reprieved service only runs three days a week - Friday, Saturday and Sunday. Meanwhile InterCity has increased its services.

But the interesting question is whether Toll plans to build on the service, or whether they are just running it to prevent another operator onto the tracks.

Time will tell.

This is not supposed to be a cheerleader site for nakedbus.com, the new low cost city to city bus service in New Zealand, but I just wanted to express my thanks for the huge response to our launch. In the first two days we had over 3,000 visitors to the website, and the number is growing rapidly. People see to be staying on the site for a while, with users looking at 8 pages on average. So thanks again, and we look forward to helping you travel across New Zealand at low, low prices for years to come.

Well it has been a labour of love, but I am now proud to announce the arrival of the latest business venture I have been working on: nakedbus.com. Nakedbus is a new very low cost city to city bus service, with fares from $1 (plus 70c booking fee).

Initially we are concentrating on the North Island, but we will be expanding soon. In fact we will be adding Whakatane to Tauranga to our list of services next week!

So how can we offer $1 fares? First of all we have cut out the “frills” you don’t need, such as expensive terminals, paper tickets and agents. Second, not all our fares are $1 - As you get closer to the date of the travel, the fares rise modestly. However, I still think they are outrageously competitive - for instance - here are some average fares:

• Auckland to Hamilton - average fare only $10
• Rotorua to Auckland - average fare only $18
• Palmerston North to Wellington - average fare only $12
• Wellington to Rotorua - average fare only $30
• Taupo to Auckland - average fare only $23
• Auckland to Napier - average fare only $35
• Tauranga to Auckland - average fare only $19

But if you book early enough you will get $1 fares on every trip and every day. This is not just a launch gimmick!

If you register on the website you can email your friends from there also - that means you will get a credit every time one of your friends books as well, so you can save money even if you don’t travel.

So just go to nakedbus.com and register; maybe even buy a ticket if you feel like getting out of town. The majority of our services start on Monday 9 October - and they’re already starting to sell (but of course there will be more of the same the following week…)

But please tell other people so we don’t have to bump up ticket prices to pay for advertising!

All regulation has costs, but some costs are more predictable than others. As Alex Sundakov of Castalia pointed out over the weekend, the Commerce Commission’s decision to investigate Vector’s internal cross subsidy, imposes costs on the electricity industry. But it is not only the electricity industry where these changes hurt the businesses - and ultimately the consumers.

Clearly natural monopolies - and you can’t get much closer to a natural monopoly than an electricity lines company - requires regulation, but that regulation should be predictable.

Those proposing changes in the regulatory environment for bus services should bear that in mind. Otherwise it is the passengers, and ratepayers, who will pay.

So GNER is to ask the Department for Transport to reduce its premium payments for the next few years (see here). Competitors are not surprisingly less than impressed. But maybe those doing well are the recipients of not a little luck. Bidding for these franchises is akin to guessing the difference between two very large numbers. But worse, each of these large numbers depends on events that are not predictable (like terrorist attacks) several years into the future. Like all gambles you might win big or you might lose your shirt. Maybe there are better models for running the railways than a casino.

Coverage of the the latest passenger rail casualty in New Zealand (we’ve already lost Tauranga - Auckland, Rotorua - Auckland, Napier - Wellington and Christchurch - Invercargill has been enlightening. The Overlander will be axed from the end of September. Most commentators have focused on the end to end journey from Wellington to Auckland, when in fact the service also serves 15 other destinations. And while the end to end journey time at 12 hours is bone-wearyingly long, intermediate trips are more reasonable.

Whatever the merits of keeping the service, it is worth bearing in mind that it serves more than the two end points. Now if only Toll Rail had marketed it that way!

Update: the Overlander has been saved … sort of. It will run three days a week until the Summer when it will revert to a daily service… death of a thousand cuts, or a blocking move to stop other operators running a service on the tracks that are now owned by the Government… time will tell.

Update: Brian Fallow of the NZ Herald agrees that online job advertising has been overlooked.

The NZ Herald reports that there are 8% fewer vacancies in July compared to 12 months earlier (Department of Labour survey). The results were collated from newspapers and two IT websites.

However they didn’t look at job ads on Trademe. Maybe the authors don’t understand the impact of Trademe on the job market (they have over 4,100 jobs at the moment compared to 6,351 recorded by the survey). It would be interesting to know how many jobs are advertised on Trademe and not in newspapers - more and more I suspect!

Much of the debate on bus reregulation has focused on whether operators or councils should decide who can operate buses in a particular location, to what standard and for what price. But why is it that we hear repeated calls for reregulation of “vital” bus services and not for (even more vital) food retailers like Tesco? What is different about buses that means they are subject to a perpetual tug of war between pro- and anti-regulators?

I wrote an article in Transit Magazine published in June. It suggests that buses are a monopoly and so the solution applied to network monopolies are appropriate (i.e. “unbundling”). Smart cards available over the whole network are one way that this could be achieved.