Unused tour buses should be mothballed

TOUR buses have ceased running since the implementation of the movement control order on March 18, and most will remain unused for the rest of the year. Next year, we may get only around one-third of the 26.1 million foreign tourists we received last year, according to projections.

If so, demand will be poor for most of the existing tour buses, and any financial aid given to maintain them would be throwing good money after bad. Perhaps tour bus operators should take a leaf from the many hoteliers who have closed hotels and stop operating instead of incurring further losses.

Many tour bus owners are holding dearly to their vehicles. A vice president of a travel association is urging its members to sign a petition for submission to the government asking the Finance Minister to intervene. He claims that 98% of tour vehicles are financed through hire-purchase loans provided by finance, credit or leasing companies, and wants the loans to be restructured and refinanced at minimal interest and repayments from January 2021.

However, I believe this request does not take into consideration the possible legal ramifications. A more practical proposal would be to set up a national asset management company – like Danaharta, in 1998 – but with a twist: Instead of taking over non-performing loans from financial institutions, the Finance Ministry could work with banks and leasing companies to mothball tour buses for one to two years. During this period, owners may choose to surrender or retake possession of their buses. While mothballed, monthly repayments are to be suspended. When demand for tour buses picks up, owners could retake possession of the vehicles by paying a deposit and then continuing with monthly instalments, with amounts jointly set by asset management and leasing companies.

Should owners fail to redeem the buses from mothballing within a stipulated time, the vehicles can be sold off at market value with owners given the right of first refusal. Such an arrangement will free tour bus operators from continuing to pay for unused assets.

However, the scheme should be limited to tour buses that are less than 10 years old. It should exclude other tour vehicles such as tour vans and those registered under “hire and drive”, which are mostly saloon cars and sports utility vehicles. This is because tourists who use such options would be travelling mostly on their own, with few joining tour groups. Also, tour vans will start running long before tour buses while self-drive vehicles are popular for motoring holidays and are used by expatriates working in the country.

But before resorting to this, tour bus operators could create new and interesting tours that would be popular with locals if they are innovative enough.

The fact is, almost all of the 302.4 million domestic trips taken in 2018 did not use tour buses. Just 1% of that number would come to 3,024,000 trips, or 120,960 bus trips based on an average load factor of 25 passengers in one tour bus. This would require almost 500 buses running at 70% utilisation for the entire year.

Likewise, 10% of all trips would keep 4,800 buses busy. But without expert assistance to help tour bus operators think outside the box, they will remain clueless. If they are unable to reinvent their business model, the petition will serve as a last resort and they may eventually fade away, just like taxi drivers.

The scheme should be limited to tour buses that are less than 10 years old ... and exclude other tour vehicles such as tour vans and those registered under “hire and drive”, which are mostly saloon cars and sports utility vehicles.