Auckland bus companies looking to sell

Bus and Coach Association chief executive Barry Kidd the industry is facing several challenges. Photo credit: File

Auckland's public bus network could be thrown in to turmoil with several operators looking to pull the pin.

Newshub understands four out of the six private bus companies servicing Auckland Transport routes are looking to sell their operations.

Infratil, which owns New Zealand Bus, has already publicly announced a strategic review which could include outright sale.

The company made the announcement last year after losing about 60 percent of its Wellington routes during contract tendering.

Sources within the transport industry have confirmed three others are struggling to make ends meet, and are looking at following suit.

Bus and Coach Association chief executive Barry Kidd the industry is facing several challenges due to the Government's Public Transport Operating Model (PTOM).

"What we're seeing are transition issues," he says.

"It's difficult to say if the problems we're seeing are long term issues or if they'll be a settling down over the next six to 12 months."

The Cabinet in the previous Government approved the PTOM framework in 2011, and it was established by the Ministry for Transport in 2013. The model allowed local councils to award public bus contracts to private operators offering the lowest fee.

Several new companies have since entered the industry, picking up Wellington and Auckland contracts during tendering last year.

Massey University School of Management lecturer Andrew Cardow says the private contracting model is failing.

"If the subsidies are too low to make money, perhaps the private company is better off out of it," he says.

"If we want a sophisticated local transport service, maybe the council becomes the owner?"

Andrew Cardow says the model was initially brought in as bus services were perceived to be inefficient.

"This illustrates that a private company can't do it better if they're prepared to throw in the towel."