Incentive offer as bus service goes to tender

The Napier and Hastings bus services contract is out for tender.

Hawke's Bay Regional Council is putting its Napier and Hastings bus services contract out for tender and is offering a financial incentive if the successful bidder grows passenger numbers on routes between and around the two cities.

Bus companies have until August 21 to submit a tender for the nine-year contract to run the 10-route service.

The current contract, which does not expire until the end of July next year, is held by Go Bus, a national bus company with a number of council contracts countrywide.

The Hawke's Bay service carried 744,000 passengers in the past year, generating $1.4 million in fares (excluding gst).

Under a "financial incentive mechanism" proposed by the council in its tender documents, the contract winner would get a bonus of up to $50,000 a year if it increased passenger numbers on the services.

Under the incentive scheme, which will pay 60 cents for each additional passenger fare above the numbers carried the previous year, the bus company would need to increase passenger levels by about 12 per cent from current numbers to qualify for the full bonus in the second year of the new contract.

Go Bus commercial director Craig Worth said incentive conditions were not unusual in these types of contracts for public bus services. Passenger numbers on the Hawke's Bay bus services have grown strongly over recent years, although they dipped last year after reaching a high in the 2013-14 year. The council has said recent falling petrol prices are one factor encouraging commuters back off the buses and into private cars.

Mr Worth said reliability was a key to maintaining patronage.

"If the bus is generally pretty reliable every day, passengers have confidence in it," he said.

Asked if Go Bus would bid to renew its contract in Hawke's Bay, Mr Worth said the company was pleased with what it had achieved under the present contract and would be reviewing the tender documents as a first step.

The council said in the tender documents "substantial improvements" had been made to the service since the contract was last tendered in 2009. It was open to tenderers submitting alternative proposals that provided a more efficient, economic, or higher quality service.