Passenger Transport

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

Specialised service offering focuses on innovation,
safety, service and cost optimisation, and has resulted
in the division’s positioning as a market leader providing
fit-for-purpose passenger services to customers in
South Africa, Mozambique and Zimbabwe.

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Business environment

Megabus operates in the commuter and personnel markets under mid to long-term contracts with government and 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 major 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. Disciplined vehicle maintenance in an environment where road safety is often affected by third-party behaviour and road surface conditions is a prime focus area. Vehicles are also equipped with tracking devices, speed control and monitoring equipment.

Commentary

The Passenger Transport division produced a pleasing result in spite of a subdued economic environment and a major industry strike. The division grew revenue by 3% to R2 228 million from R2 160 million in the prior year.

The division’s core operations of personnel, commuter and tourism transport performed well, as did the company’s personnel operations in Mozambique. The intercity operations continued to perform below expectation due to increased competitor activity and lower passenger numbers.

The division grew operating profit by 5% in spite of the significant negative impact of the 28-day industry sector strike and generally subdued commuter activity.

Outlook

While the uncertain political and resultant subdued economic environment impacts negatively on employment in the division’s areas of operation, 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 competitively pursuing expansion opportunities. A strategic review has been initiated in relation to the division’s intercity operations in terms of optimising the allocation of capital.

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B-BBEE transaction provides greater than 51% black ownership and greater than 30% black-women ownership to its South African logistics operations.

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