A report prepared for CIÉ has suggested private operators could enter the bus market by subcontracting routes from Dublin Bus, rather than via the franchise model proposed by the Minister for Transport, Mr Brennan. Emmet Oliver reports.

The report suggests an alternative to the Minister's plan to franchise out 25 per cent of bus routes to various private operators. It points out that many European cities have tried a subcontracting model instead.

"An approach by a number of German cities and by a region of Belgium is to introduce the private sector in the market but subcontracted to state companies."

Mr Brennan's model involves private companies tendering to run various Dublin bus routes. They would hold a licence for a specific route and this would be reviewed every few years.

Mr Brennan previously said that Dublin Bus itself might be able to tender for routes, but he was eager that at least initially new operators would be given a chance.

The CIÉ report, written by two experts commissioned by CIÉ,says a subcontracting approach has many benefits and could be done while also expanding the Dublin Bus fleet.

"Dublin Bus could increase its fleet by at least an additional 150 buses and subcontract a further 150 buses for the same annual cost of change and reduce current subvention requirements," it says. "This increase in fleet would deliver a quantum increase in its services to customers."

Instead of going for franchising, the report suggests its proposal could be achievable within 18 months, would deliver immediate customer benefits and would grow passenger numbers.

"The rate of return of franchising is significantly negative and results in no payback in the short, medium or long term," it suggests.

The report claims one of the biggest costs would be setting up a new transport authority to oversee the new franchised operations. It claims a lot of this is already in place in CIÉ. "Much of this is already in place within the CIÉ group of companies, such as websites, journey planners, scheduling and systems."

It says the authority will need supervisors to monitor the services being provided by the new operators. It says a centralised call centre to give out customer information may also be needed.

It says estimates a few years ago put the cost of a call centre (staffed by 100-120 people) at €12 million. "This would be duplicating existing CIÉ customer information services," it says.

The report says the Minister would have to reduce the size of Dublin Bus by at least 10 per cent under the franchising model. It puts the cost of running a new transport authority to oversee Mr Brennan's franchising structure at €14 million.

It suggests voluntary severance of €35 million will be needed for about 350 Dublin Bus employees leaving the company, plus €31 million for a "one off" agreement with all staff. It says, in contrast, the franchising model would produce only an annual saving of €2 million.