Transport for London to face funding squeeze as journey numbers will ‘never hit pre-Covid peak’
The hastily-agreed Transport for London bailout extension agreed this month will unlikely be the last cash injection for TfL from government coffers, if analysts’ passenger number predictions are correct.
The number of journies on London’s buses, Tubes and commuter rail services will never recover to pre-Covid levels according to analysts at Moody’s.
London’s tube services have been eerily quiet for more than a year as the work-from-home era abruptly ended the dreaded commute for thousands of City workers.
Lockdowns reducing permitted leisure and shopping options, as well as tourist numbers dropping to a trickle, have also slashed the number of journeys suring evenings and weekends.
Around one in five Londoners who previously used Transport for London services will no longer require them according to the Moody’s report, which said London’s public transport body has been worse-hit than peers in New York, Vancouver and Paris.
Moody’s analysts said TfL will lose around 12 per cent of its operating revenue because of the long-term hit to passenger numbers.
“The shift to remote working, coupled with the increased use of online leisure and retail services, will lower demand and permanently reduce farebox revenues for mass transit systems in Europe and North America,” says Zoe Jankel, a senior analyst at Moody’s Investors Service.
The analysts at Moody’s however also suggested that cuts to services to save on costs may not be worth it to reap savings, due to high fixed costs and fewer services damaging the potential for future earnings.
Transport for London is more vulnerable to a fall in journey numbers compared with New York, Paris and others because of its dependency on fare income. Over 70 per cent of TfL’s costs typically come from fares. This compares with just 35 per cent in New York and Paris, which fund services through local taxes and central government budgets.
L:ast week the public transport body agreed to an emergency seven-week extension to its current funding deal to keep it going amid the pandemic.
TfL had been hoping to strike a long-term funding agreement with the government to begin fixing its finances, but transport secretary Grant Shapps pulled the rug out from under the current talks by offering the £500m extension on the same terms.