Volvo services turn uneconomical

The Bangalore Metropolitan Transport Corporation (BMTC), which had been the first customer for Volvo’s inter-city buses in India, has run into losses by operating low-floor, air-conditioned city buses from Volvo. The corporation’s Volvo bus operations have reported a loss of Rs 24.03 crore between February 2006 and March 2009.

According to CAG report for 2008-09, as at the end of March 2009, the BMTC had 310 Volvo buses in its fleet. Out of average 165 schedules operated during 2008-09, only 13 schedules were profit making, while 33 schedules covered variable cost and 119 schedules did not earn enough to recover the variable cost.

The total loss suffered calculated on monthly cost and traffic revenue earned on operation of Volvo services since induction in February 2006 up to March 2009 worked out to Rs 24.03 crore.

As part of its Metro Bus Pilot Project and to offer eco-friendly transport, the BMTC had introduced Volvo buses. As per the feasibility study, the operations would be viable at 60 per cent load factor. However, it was seen that actual load factor for 2008-09 was 52.3 per cent and the kilometre per litre achieved was only 2.09 against the estimated KMPL of 2.50, which was the cause for loss in Volvo operations, the CAG report stated.

The CAG has recommended giving re-look at the Volvo services and paying attention to passenger load factor in order to enhance it.