Fuel costs drive bus company out of school contract
Source: CBC News
Posted: 06/25/08 5:14PM
Filed Under: Canada
A major bus company is walking away from a five-year contract with Nova Scotia's Acadian school board, blaming high fuel prices.
Perry Rand Transportation, operating under the name The Bus Boys, transports 2,700 students a day for the Conseil scolaire acadien provincial. The company is paid per trip, per day.
But the skyrocketing price of diesel is crippling the business, said Rick Spencer, the company's chief financial officer.
"We've operated for three years and we got significantly hammered," he told CBC News on Wednesday. "We suffered significant losses because we're locked in."
In 2006, a litre of diesel was 86 cents. It's about $1.30 now.
The bus company still has two years on its contract with the CSAP, but it's exercising an escape clause, citing financial distress.
"We would not be able to continue with the CSAP," said Spencer. "It would, in effect, bankrupt the company."
The school board didn't fight the move. It accepts that the bus company has run into extraordinary circumstances.
"We didn't see fuel costs increasing at the levels we're seeing today," said CSAP Supt. Darrell Samson. "No one could predict that, and I understand that."
The school board and bus company have been talking about the rising cost of fuel since September.
There was no other solution other than to kill the contract, the CSAP says. The provincial Education Department wouldn't allow the board to alter the deal, and said it must tender the job again to be fair to all bus companies.
The school board has done that. The job covers 56 routes, 9,300 kilometres per day everywhere in Nova Scotia except Clare and Argyle, where the board runs its own fleet.
School board expects pricier deal
The CSAP expects to pay $500,000 more when the buses roll again in September.
"We're probably looking at a half-million dollars more to agree on a contract, and on top of that there will be an escalator clause in case fuel costs continue to skyrocket," said Samson.
The Halifax Regional School Board and Stock Transportation have such an escalator clause in their busing contract. Stock invoked the clause this year and is looking for an additional $600,000 from the HRSB.
Samson said the CSAP expects to award the new bus contract in about a month.
Perry Rand is bidding on the job, as is Stock Transportation.
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