Knutsford sees silver lining in high gas prices

Oil prices are still flirting with US$100 per barrel, leading to more expensive petrol for motorists around the world.

In Jamaica, gasolene prices are near or touching $200 per litre, but for Knutsford Express Limited, notwithstanding the expected impact on its operating costs, the cross-country luxury bus service is bullish about business.

The reason: It expects more motorists to park their vehicles and opt for its buses instead, to save on the cost of long-haul trips.

That’s the proverbial silver lining for Knutsford, which has just reported its highest quarterly profit since 2018, despite the lingering effects of the COVID-19 pandemic on travel.

“Surging oil prices have been taking a toll, as evidenced by the growing pedigree of cars that await the return of their owners at our facilities from a day trip on our bus,” said CEO Oliver Townsend, explaining that a return trip using a small car could cost $14,000 to $16,000 when factoring in fuel, toll, and wear and tear. That figures jumps to $19,000 to $25,000 for larger vehicles.

“Our customers comment that driving has … those minimum costs, not taking into account stress of driving and [traffic] ticket costs,” he added.

Effective April 4, the company increased fares by 10 to 12 per cent. It now costs $3,800 each way for a trip from Kingston to Montego Bay. That’s still half of what it would cost the self-driven commuter, based on Townsend’s cheapest estimate.

“Recent global events have significantly pushed the price of fuel to record highs,” the company said in its earnings report for the quarter ending February 2022. “While this has impacted us, we also view this as a great opportunity to increase ridership and revenue, as motorists have the opportunity to enjoy the huge cost savings and benefits in travelling cross country with us.”

The ongoing war launched by Russia against the Ukraine on February 24 has upended commodity markets, including energy, leading to a recalibration by large economies regarding their sourcing of oil and gas from Russia.

It’s expected that oil prices will remain at elevated levels for the rest of the year, rising as high as US$130 per barrel.

Knutsford Express’ operating expenses were already being pressured by the pandemic, rising by 38 per cent in the February third quarter, and the war is expected to exacerbate that in the periods ahead.

Still, the bus company noted that business has been recovering alongside improvements in the international travel market.

“We anticipate that while the pandemic has redefined consumer behaviour, there is a vital need for humans to physically connect, reconnect and travel,” said Townsend in the earnings report. “Ongoing global recovery in travel is proving sustained.”

Knutsford grew revenues by 63 per cent to $301 million during the third quarter. It also spun from a loss of $1.67 million to profit of $37 million in the period, similar to the $37.3 million in the 2018 quarter.

Over nine months, its earnings totalled $45.4 million, recovering from a loss $60.6 million.

business@gleanerjm.com