NZ Bus has locked out its drivers and suspended bus services in a dispute over the drivers' contract negotiations. Photo / Richard Robinson

NZ Bus has locked out its drivers and suspended bus services in a dispute over the drivers' contract negotiations. Photo / Richard Robinson

Auckland's main bus company has until 5pm to come up with answers on how to resolve its conflict with 875 drivers and cleaners who have been locked out of their workplace since Thursday.

Auckland Regional Transport Authority head Fergus Gammie has written to the company threatening to start cancelling contracts worth over 58.5 million a year to Infratil owned NZ Bus.

"It is critical that this dispute now be resolved as soon as possible and that service levels be fully restored immediately. In addition to the impact on customers we need to restore the confidence in Auckland's public transport system," Mr Gammie said.

Mr Gammie also warned NZ Bus that it is in breach of fulfilling its contract with ARTA.

The NZ Bus fleet has now been off the road for six days.

Auckland Regional Council chairman Mike Lee said the effect of a lockout by NZ Bus has spread to harassed parents who had to take time off work to drive children to and from school on the first day of term.

Although roads remained largely uncongested, trains carried almost 50 per cent more passengers than normal yesterday morning, and transport officials fear disruption may worsen today as people who might have taken an extra day off to see how the bus dispute panned out return to work.

Attempts by the Employment Relations Authority since Thursday and through the weekend to "facilitate" a resolution have failed to break the impasse, leaving authority chief James Wilson considering whether to recommend terms for a settlement.

But any recommendation will be non-binding, apart from being used to exert moral pressure towards ending a five-month pay dispute.

Mr Lee has written to the Auckland Regional Transport Authority asking the authority - a subsidiary of his council - to issue a notice to NZ Bus to rectify its failure to deliver services for which the company receives $58.5 million a year in subsidies from ratepayers and taxpayers.

"As I understand it ... if the failure is not remedied within five days, ARTA can move to terminate the contract - this in our opinion needs to be done as soon as possible," he told authority chairman Rabin Rabindran.

Authority spokeswoman Sharon Hunter said it could take two months to terminate contracts according to dispute resolution processes, but the chief executives of the authority and bus company had begun talks yesterday on the crisis.

Mr Lee told the Herald the lockout was "nothing short of a disaster" for Auckland's campaign to develop public transport.

He feared lost public confidence would cause a decline in patronage, after a 7 per cent increase last year.