Those playing on the Bridgewater-Brunel server may notice that I have set up a rather extensive 'bus network in the east under the name of the Eastern Motor Omnibus Co. This is partly because I wanted to have a go at playing the game after a long time of just developing it, but I also wanted to have an idea of what the profit margins were especially for road transport, which always seems less popular than rail (although setting up an efficient 'bus network is actually very interesting).
The actual operating margin (i.e. revenue less operating costs) is shown in the finance window: the Eastern Motor Omnibus Co. is currently managing a margin of 34.84%in 1944, which is healthy but modest comapred to some of the well established rail based companies in this game.
However, more important for balancing purposes than the margin over revenue is the return on investment. This is the annual measure of how much profit is generated against the sums invested.
For my 'bus company, I calculated this for the year 1943 by taking the cumulative spend on new vehicles and construction in the years 1942, when the company was founded, and 1943, and expressing the net profits for the complete year of 1943 as a proportion of that. The result was, to two significant figures, 55%.
55% is an extremely high figure for return on investment. By way of comparison, the London, Tilbury & Southend Railway was bought by the Midland Railway in 1913. At the time, shareholders of the LT&SR were earning on average around 6% dividends (that is, they would typically get 6% of the value of their shares in dividends every year). This was considered unusually high for railways: the much larger and more well known Midland Railway that bought it could only manage 3%, and had to give every LT&SR shareholders 2 Midland shares for ever 1 LT&SR share that they owned in the buy-out. Railway profits had been higher in earlier times, but not an order of magnitude higher - perhaps 10-15% at most.
It must be conceded that the 1940s is a very good decade to be running a 'bus company. We do not simulate the war in that decade, but we do use real statistics for private car ownership which remain static for the 1939-45 period as one might imagine. Limited private car traffic means both limited competition and limited congestion. 'Bus technology had matured by the latter 1930s and the road network in towns in the game is generally fairly decent, although a lot of cobbled streets remain, which, given that they were generated before a pakset weight limit change, have a 3t axle load which restricts use of the heavier 'buses (although the AEC Regent II RT proves to be a very good choice in this decade).
In reality, the peak year for UK 'bus traffic was 1948 - rising car ownership reduced numbers considerably thereafter. It remains to be seen how my 'bus company will manage in the 1950s and increasingly challenging 1960s. I anticipate potentially having to close some routes and re-organise others. However, by then, I should have accumulated such a large amount of cash that I could run for decades at a loss and still not go bankrupt.
It should be noted I have had to build roads and in some case bridges, so the return on investment of 55% is after deducting both construction and maintenance costs of this infrastructure, which is far more infrastructural expenditure than any real life 'bus company ever made. It should also be noted that the Bridgewater-Brunel server was created before the recalibration of towns, which increase the proportion of residents in a town and therefore increase the amount of available traffic. Thus, with the revised pakset, less infrastructure investment would be needed as more roads would be suitable for the 'buses, and also traffic would be higher.
I am analysing this to assist with balancing. Much of the cost structure is a long-term affair requiring substantial code changes to vehicle maintenance costs and utilisation rates, which should reduce the return on investment by reducing how much that any given vehicle can be used (i) in any given amount of time; and (ii) before requiring capital investment in the form of overhauls or replacement (the latter was added for ways from 2014 onwards, but is less relevant to an urban 'bus network using public roads than to, for example, a rail or canal network).
It also suggests that there may well be considerable scope for lowering the fares for the "very low" class passengers. Recent analysis has shown that reducing the class on trains to "very low" almost inevitably results in higher profit as lower per passenger revenue is inevitably more than compensated for by higher passenger numbers.
The current fare structure for passengers in the pakset is as follows:
value[0]=55
to_distance[0]=16
value[1]=50
to_distance[1]=500
value[2]=45
to_distance[2]=2500
value[3]=40
to_distance[3]=5000
value[4]=35
to_distance[4]=0
class_revenue_percent[0]=60
class_revenue_percent[1]=100
class_revenue_percent[2]=133
class_revenue_percent[3]=150
class_revenue_percent[4]=200This means that passengers in class 1 (that is, "low") travelling up to 16km pay 0.55c/km, passengers travelling between 16 and 500km pay 0.50c/km, passengers travelling between 500 and 2,500 km pay 0.45c/km and passengers travelling over 5,000 km pay 0.35c/km. These distances are cumulative, which means that, even for a 5,000km journey, passengers will still pay 0.55c/km for the first 16km.
Passengers in "very low" will pay 60% of this, that is, 0.30c/km for 16 - 500km and 0.33c/km for 0-16km.
For my 'bus company, as is the default, all the routes are set to "very low". In 1943, the company earned 634,493.00c in revenue. It expended 274,282c in vehicle running costs, 61,419.00c in fixed vehicle maintenance, 63,922c in infrastructure maintenance and 13,300.00c in access charges to other players' roads and stops, leaving a net profit of 221,539c against total costs of 412,923c. In that year, it transported 950,039 passengers in total.
If the fares for very low wealth passengers were instead 40% of the fare of low class passengers, rather than 60%, the revenue would have been 422,995.33c in total against costs of 412,923c, leaving a profit of only 10,072.33c. Given that the capital investment in the first two years of operation was 405,983c, this would give a return on investment of 2.4%, which would probably be a little low, especially if future code changes will increase the costs. If we were to assume that this 'bus company (as would have been the case in reality) had no infrastructure costs, however, this would give a total cost base for the year 1943 of 349,001c, and a net profit of 73,994.33c, which, against total investment of 405,983c would give rise to a return on investment of 18% - still high, but within the realms of plausibility for a 'bus company in an imaginary war-free 1943. This would leave some margin for infrastructure investment but perhaps not in bridges. It may be desirable slightly to increase the weight limit of some bridges built by default. This will also give a margin for future increases in costs associated with maintenance and overhauls.
How realistic is this 40%? To give some calibration, the fare for a return Megabus journey from London to Oxford is normally £9.00 (see
here).
National Express gives the same price. Both journeys are for week-days (i.e. to-morrow). It is safe to assume that these coach fares are the equivalent of "very low".
By comparison, a standard class off-peak
rail fare from London Paddington to Oxford to-morrow is £27.40, approximately 300% the cost of the coach fare. To put it another way, the coach fare was approximately 1/3rd, or 33%, of the train fare.
Thus, a figure of 40% for the "very low" category would seem entirely reasonable (and I should note that I had picked the 40% figure before conducting the comparison above).
I should be interested in any feedback or analysis from other players on these figures and the general propensity to designate rail transport as "very low" rather than the default "low" in the game. I am keen to have classes realistically balanced.
