TfL estimates £500m revenue shortfall amid ridership drop
Transport for London predicts it will lose £500 million in passenger revenue as a result of the COVID19 outbreak.
Passenger numbers on the
Tube are already down by as much as 19% compared with the corresponding days in 2019. TfL said that numbers began to noticeably drop from March 2 as more people became aware of the virus.
“Our best forecast, based on government scenarios, is that the financial impact of the Coronavirus could be up to £500m. We manage our finances prudently, and have reduced our deficit hugely in recent years,” said TfL Chief Finance Officer Simon Kilonback.
“We continue to follow and communicate Public Health England advice, including that there is no specific risk on public transport. We’ve also stepped up our cleaning regime from the already very high standards to give our customers and staff further reassurance.”
TfL said the key drivers appear to be a significant reduction in the number of people visiting London, an increase in remote working, and a continued drop in demand (especially off-peak).
It said it was an evolving situation, and that predicting the financial impact will largely depend on the duration and severity of the outbreak.
In a statement on March 16, TfL confirmed it had been suffering a reduction in passengers since last October, with Tube and bus revenues around 2% lower than the previous year. It added that three storms in February, combined with a prolonged period of poor weather, further affected revenue - although that was within TfL’s usual financial forecasting tolerances.
However, it noticed that from the week commencing March 2, further passenger number reductions were evident, which it said coincided with people’s growing awareness of the virus.
Initially, the drop was around 2% compared with the same days in 2019. But with businesses ordering staff to change their travel behaviour, combined with a large increase in remote working, TfL now reports a 19% reduction in passenger numbers.
It warned that difficult decisions need to be made, and that its financial policies require it to have a minimum cash balance of £1.2 billion to provide liquidity to absorb such financial shocks. TfL also aims to hold a further £600m for other strategic risks.
It expects that by the end of 2020 its cash balance will be more than £2bn, enabling it to manage the initial impact of the outbreak. London Mayor Sadiq Khan and
TfL will look to Government for appropriate financial support to ensure that the core network can continue running.