INDUSTRY EXPERT SO, IS THERE A BRIGHT SIDE?
There always is. We live in a relatively wealthy country with a GDP of c.£2.75 trillion. We have a variable temperate climate. Culturally we celebrate events, weddings, anniversaries, birthdays etc. We have large sports and arts sectors which attract big audiences. People travel within and to the UK. In much of the country we have a creaking transport system and in many parts a dearth of transport options. Taxis/PHVs have an acknowledged place within this landscape. So that’s alright
then.......is it?
WHERE RISK, REALISM & OPTIMISM MEET
Thankfully automation is close to ubiquitous, offshoring is firmly established, all leading to lower costs, albeit at the cost of jobs (UK and offshore) and importantly service differentiation.
Once costs are optimised (the pips have been squeezed), when the last fare increase has been implemented, as overheads rise, and fiscal and monetary policy embeds falling volumes where do we go next?
When we look at other industries can we see any room for optimism? A large restaurant chain stated this week that sales are down 12.5% due to....... “warmer weather resulting in fewer visitors and continued weaker consumer spending”. Whilst no one I speak to in our industry is seeing sales dropping by anything like 12.5% the potential fiscal policy changes have yet to be formally announced and it will be some time before they kick in. A polite way of saying if you think it is bad
now.......fasten your seatbelt!
Do we need further evidence amongst our peers, coffee shops seeing reduced spending, pubs empty, many nightclubs closed down, it’s never been easier to get a table in a restaurant and as for the High Street, let’s not depress ourselves more than we need to. Even universities are being hit by less foreign students arriving.
PHTM OCTOBER 2024
I am generally one of life’s optimists, but I guess the most optimistic I can be at the moment is that downturns always end. One sunny day we will awake to the start of a period where records are once again broken each week, more bookings, more drivers, more fun. However, the evidence against that happening anytime soon appears in spades. Will the benefit of interest rate cuts giving people more money to spend be simply wiped out by tax rises or even the fear of tax rises? Is working from home now embedded in British working practice? Are £5k business trips to the USA going to come back in fashion whilst Zoom and the other virtual tools cost next to nothing? The maxim of ‘hope for the best and plan for the worst’ seems to be the best advice to anyone writing their business plan for next year.
Perhaps once the October statement is out of the way and everyone has had a Christmas break, Britain will return to work with a new optimism and the dial will move. But what if it doesn’t? What if things slow further, slow faster, fares can’t be cut as drivers will simply find another industry that provides better returns for their labour. What if fares can’t increase to make up for reduced volumes? What if substitute services (e.g. buses) see more investment by Government and there is even a modicum of modal change? We are in new space here where things can change very quickly. Sacred cows are no longer sacred. So what do we do?
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