JUTC earnings lag expenditure

• Operating expenses, subvention $20b, revenue $6.9b

McPherse Thompson, Assistant Editor - Business

Revenue generated by the state-owned Jamaica Urban Transit Company (JUTC) has not kept pace with its multibillion-dollar operating expenses, in addition to billions more poured into its operations through government subventions.

During the three fiscal years to March this year, the JUTC earned just under $6.9 billion, about 34 per cent of its combined operating expenses and government subvention over the period, according to data tabled in Parliament last week.

However, urban and suburban working-class people have benefited from its operation, evidenced by the ridership over the same period, totalling 150.24 million, using on average 285 buses per day mostly in the Kingston metropolitan area, covering the capital city, St Andrew and parts of St Catherine.

The JUTC is projecting revenue of just over $3.65 billion for the current fiscal year based on ridership of 65.3 million passengers, using an increased fleet of, on average, 425 buses daily.

But, consistent with the trend over the last three years, its cash subvention from the government has again been reduced - by $150 million to $450 million this year - but with more buses it is expecting expenses to grow to $4.84 billion, from $3.66 billion during the last financial year.

The data are contained in a document tabled by Transport and Works Minister Mike Henry based on questions asked by his opposition counterpart, Dr Omar Davies, in Parliament back in May.

According to the document, of the three years the highest revenue was earned in the 2010-2011 fiscal year when the JUTC's income totalled $2.83 billion, but that was associated with a fare increase granted in April 2010.

Advertising earnings slip

Of the three years, 2010-2011 was the only one in which earnings from advertising used to supplement its income slipped - 86 per cent from $13.75 million in 2009/2010 to $1.86 million - because it did not have an advertising contract in place that year. Notwithstanding, the 2009-2010 advertising revenue also represented a decline of $2.03 million, from $15.79 million earned in 2008/2009.

Revenue for fiscal year 2009-2010 was $2.08 billion, a $131.56-million increase over fiscal year 2008-2009, attributable to a four per cent increase in passenger lift from 49 million to 51.94 million year-on-year. However, in fiscal year 2010-2011, ridership fell to 49.29 million, just above 2008-2009 levels.

The data show that operating expenses for the JUTC totalled $10.08 billion over the three-year period, climbing from $3.29 billion in 2008-2009 to $3.66 billion in 2010-2011. However, there was an almost $185-million decline in expenses during 2009-2010 when compared with the previous year, the result of a redundancy exercise which saw the elimination of the need to pay salaries to conductors.

Apart from salaries which went from $1.19 billion in 2008-2009 to $1.01 billion in 2009-2010 before a marginal rise to $1.04 billion in 2010-2011, the biggest line item, as expected, was fuel, which fell by $71 million from $838.4 million in 2008-2009 to $767.38 million, before climbing by $169.73 million to $937.11 million in 2010-2011. The JUTC is projecting that fuel will cost the company $1.53 billion in fiscal year 2011-2012.

The document on the JUTC said the fuel expenditure was directly related to the number of buses dispatched over the three-year period - on a daily basis, on average 285 in 2008-2009, 274 in 2009-2010 and 298 in 2010/2011.

The transport minister also provided data to show that over the three-year period, $2.18 billion in direct cash transfer was made from the Ministry of Finance to the JUTC. In 2008-2009, that amounted to $933.55 million, including funds used to offset loans of $80.71 million from RBTT Bank (now RBC Royal Bank), and $285 million in redundancy payments.

In 2009-2010, direct cash transfers to the bus company were reduced by $280.78 million to $652.76 million, and further reduced in 2010-2011 to $600 million.

Indirect financial support from the Ministry of Finance totalled $6.68 billion during the 2010-2011 fiscal year, a $5.03-billion increase over the $1.64 billion the previous year, largely the result of the acquisition of 200 additional buses, construction of a body shop, and the introduction of a new fare collection system. In 2008-2009, indirect financial support totalled $1.79 billion.

Apart from the expenditure for the buses, the biggest payments were for spare parts, which cost $389.71 million in 2010-2011, $134.6 million in 2009-2010, and $324.93 million in 2008-2009.

mcpherse.thompson@gleanerjm.com