China’s bus operators seek new cash routes as subsidies dry up and commuters opt for cars, Didi or underground

[Hamartia Antidote]

China’s bus operators seek new cash routes as subsidies, passenger numbers fade

Public bus companies turn to fare increases, charter services and borrowing to stay afloat as local governments cut back on support and middle-class Chinese increasingly prefer more convenient forms of transport.

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• Public bus companies have turned to fare increases, charter services and borrowing to stay afloat as local governments cut back on support
• Middle-class Chinese increasingly prefer to drive or turn to bike-sharing and ride-hailing apps

Ray Wang, a bus driver in eastern Anhui province, has something new to look forward to when he goes to work.

After moving passengers around the city of Bozhou for over 10 years, he has recently started driving his company’s “wedding bus”. He said he loved the sweets and packs of cigarettes he sometimes received from newlyweds as tokens of appreciation.
In China, the groom and his groomsmen traditionally pick up the bride at her parents’ house on the morning of the wedding.

Hailed as “the greener and more affordable way to pick up your bride”, the wedding bus is among the new charter services China’s public bus operators have started to offer as they seek new sources of revenue. Others include providing catering buses for company outings and family tomb-sweeping trips to honour ancestors.
According to Wang, couples pay about 1,500 yuan (about US$207) for a basic service package on their wedding day – about half the rental price of a typical wedding fleet in the city.

The bus companies’ search for new ways to make money has become increasingly urgent as city funding runs dry and underground railway systems, bike-sharing and car-hailing platforms erode their customer base.

According to data from the Ministry of Transport, the number of passenger trips by bus has continued to fall after peaking at 78.2 billion in 2014. The figure dropped to 35.3 billion in 2022, mainly due to lockdowns in Chinese cities to contain Covid-19.

But even before the pandemic, buses were falling out of favour with as China’s growing middle class chose to drive, take the underground or use ride-hailing and bike-share services. In 2019, passengers took 69.2 billion bus trips, a drop of more than 10 per cent from peak levels.

Many Chinese bus companies have also had to cope with rising labour costs. Ageing staff, higher fuel prices and growing maintenance costs have made them increasingly dependent on financial support from local governments.

But with the current economic downturn causing tax and land sales revenue to plunge in many Chinese cities, regional governments have been forced to cut expenses, including subsidies to local bus operators.

Last week, a bus company serving over 1 million residents in Pidu district of Chengdu, the capital of Sichuan province, apologised to its staff for delaying salary payments.

The delay was “due to various factors that have caused difficulties in the company’s financial turnover”, the company said in a memo circulating on Chinese social media platforms.

An official at Chengdu’s transport department confirmed that the memo was genuine, adding that the company had managed to pay all staff members after the local government stepped in.

“The government has bought some transport services from the company, so it has money to pay its staff. Pidu district’s bus services are now operating normally,” the Chengdu official said over the phone.

He declined to give his name or details of the government’s financial support.

In September, employees of Tianjin Transportation Group, the bus operator in the northern port city, complained on social media about delays in their pay since June, sparking concerns over the financial viability of state-owned public bus companies in China.

According to an announcement in April, the Tianjin bus operator, which is owned by the municipal government, borrowed 20 million yuan from Shanghai Songzhi Investment Co Ltd.

The lending firm said the bus company posted net losses of 689 million yuan and 694 million yuan in 2021 and 2022, respectively. It was being kept afloat by huge government financial aid, which totalled 3.3 billion yuan in 2022.

Its current liquidity crunch was temporarily resolved as the Tianjin Municipal Finance Bureau pumped 700 million yuan into the company on September 18. Many employees said they received their salaries and social insurance after the cash injection. But it is not clear how the company will stop the bleeding.

Some Chinese cities have started looking for ways to rescue their bus operators. The southern metropolis of Guangzhou and the city of Lanzhou in northwestern China have announced they will increase bus fares from 1 yuan to 2 yuan. Some cities also plan to charge more for longer and dedicated routes.

Many cities in the Yangtze River Delta are using big data technology to optimise bus routes and operating hours. Some cities like port and industrial hub Ningbo have also experimented with better bus and underground connections.