UK: Transport for London has issued an update on how the coronavirus has affected passenger numbers and how it intends to utilise its reserves to manage the forecast initial financial impact of £500m.
On March 16 TfL said it had seen an underlying softness in demand and passenger revenue since October, ‘largely caused by economic uncertainty’, with London Underground and bus revenues around 2% below the previous year. Revenue was further affected by bad weather during February.
Further reductions in ridership became apparent in the week commencing March 2, coinciding with growing public awareness of Covid-19. This started with ‘modest’ reductions in ridership of around 2% compared to the same days the previous year.
Since then, a growing number of companies and individuals have changed their travel behaviour, with greater numbers of people working from home. This has led to an acceleration in the reduction in passenger numbers in the last week to around 19% on the Underground and 10% on buses compared to the same week the previous year.
TfL said this was made up roughly equally of fewer people travelling, and those travelling making fewer journeys. The key drivers appear to be:
- a significant reduction in visitors to London;
- companies asking staff to work from home;
- continued underlying softness of demand, especially off-peak. This is likely to relate to consumers remaining cautious about expenditure given the subdued economy and now the impact of Covid-19.
TfL’s financial policies require it to keep a minimum cash balance of £1·2bn to provide liquidity to absorb sudden financial shocks. It aims to hold a further £600m for other strategic risks, such as a sudden reduction in passenger numbers owing to a pandemic.
TfL’s current forecast for its end of year cash balance is expected to be more than £2bn, meaning it would be able to manage the initial impact of Covid-19.
TfL will consider further budgetary flexibility to ensure it maintains its financial resilience, but said the Mayor of London and TfL would ‘also be looking to the government to provide appropriate financial support to ensure that the core transport network continues to operate safely and reliably to the benefit of the UK’s entire economy.’
TfL’s Chief Finance Officer Simon Kilonback said the best forecast, based on government scenarios, was that the financial impact of the coronavirus could be up to £500m.
‘We manage our finances prudently, and have reduced our deficit hugely in recent years. This means that we can manage the impacts on our passenger numbers and finances that are currently envisaged. But, given the nature of the situation, we will be looking to the government to provide appropriate financial support’, Kilonback said.
‘We continue to follow and communicate Public Health England advice, including that there is no specific risk on public transport. We’ve also stepped up our cleaning regime from the already very high standards to give our customers and staff further reassurance.’