Despite Interstate Bus Lines’ (IBL) increase in tariffs increased and government subsidy for the financial term, is it is faced with a prospect to alter its business strategy to cushion the business to provide much-needed service. Both tariffs and government subsidy are lower than three previous years.
The company’s subsidy from government for the current financial year dropped by 0,5%, while the tariff increase is a lower than expected, at 6%.
According to George Mokgothu, chief executive officer, combined, the current increase in tariffs and subsidy is insufficient to offset the 43% increase in fuel expenses.
“Subsidy accounts for 45% of our total revenue, and this year it has dropped by 0,5%, which equates to a R1,1million per month. Fuel increases account for a R4 million month-to-month, and this is over expenditure when compared to last year. These figures exclude the overall increase in spares, such as bus tyres,” said Mokgothu.
Government’s subsidy increased by a mere 3,2% for 2018-’19, while it was 5,2% in 2017-’18.
Mokgothu explained that tyres remained an increasing expense as a result ofdue to the bad conditions of the roads they were using in the greater Mangaung region.
Part of keeping the business afloat, the company’s mManagement must still consider salary increases above inflationary rates.
Mokgothu pointed out that this year’s annual price increases by IBL was still below also below than below the previous three years and also below the 7%, which other bus companies implemented in December 2021, and 8% increase in March 2022.
