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interview adam leishman

One of 380 buses that will begin operating later his year

‘We specialise in franchising’ Adam Leishman talks about Tower Transit’s ambitions in Singapore, and the rest of the UK

2016 will see the 30th If these powers are implemented it will be company as a “franchise specialist”. anniversary of bus a huge change for Britain’s bus sector. Despite The company is a spin-off from Transit deregulation - but will there their opposition to franchising, it seems Systems, a company which won its first tender be a 40th anniversary? For unlikely that the ‘big five’ groups that dominate for bus operation in , , the past three decades, the industry will disappear (they’re happy to in 1995. Today the company operates a fleet Robert Jack private operators have operate within the franchised environments of around 1,000 buses in Australia, with Managing Editor played the dominant role of London’s bus market, the railways and contracts across the country. Tower Transit in planning and providing local bus services elsewhere), but could this revolution open up is a separate business, although it does share in (outside London), Scotland and the market to new entrants? some of the same shareholders as Transit Wales, with local authorities and passenger London-based Tower Transit is one of the Systems. Leishman is one of four Tower transport executives limited to procuring companies that is waiting for this opportunity Transit shareholders, along with chairman Neil ‘non-commercial’ services on the periphery. to emerge. And the group’s Australian chief Smith, who is a co-founder of . Over the past 18 months, however, chancellor executive, Adam Leishman, describes the The pair of them have relocated to London, George Osborne has included bus franchising where the company now operates 430 buses powers in devolution deals with a succession for (around 5% of the of English regions - Great Manchester, “We’re looking at long market). The remaining two shareholders are West Yorkshire, the North East, the Sheffield term partnerships with based in Australia and are actively involved in and Liverpool city regions and Cornwall the Transit Systems business. - and more look set to follow. our government clients” Tower Transit was founded in 2013 when

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PT_Issue125_p32-35 32 06/01/2016 13:02 “We are constantly scratching our head at some decisions made by larger operators”

Leishman and his fellow shareholders Transit is focussed on delivering its contract the culture developing is extraordinary and acquired three London bus depots which commitments, which include moving into there is genuine excitement about the change UK-based PLC FirstGroup had been forced a brand new depot, procuring a fleet of 380 we are already bringing to the community.” to sell off in a fund raising exercise. Unlike buses and hiring 900 employees before Andrew Bujtor, an Australian with a FirstGroup and many of its other peers, operations begin later this year. He is pleased background in finance, has been recruited Tower Transit is not publicly-listed. It isn’t to report that well over 2,000 people recently from outside the bus industry to head government-owned either. Leishman describes turned up to Singapore’s first ever depot open . He is assisted by it as a “family business”. day, exceeding all expectations. operations director Stuart Thomas and “I think bringing the shareholders into the It’s a high profile contract - on the day it was engineering director Satnam Cheema, who management enables us to have a very strong announced the news shared the front page of have each been recruited from the ranks of connection with our staff,” he says. The Straits Times along with the Conservative Tower Transit’s London bus business. “Our staff know who they are working for, victory in the UK general election. Singapore aspires to be a leading global city rather than working for faceless shareholders “Five million people in Singapore are and its leaders felt that its bus network had and that builds a really strong culture.” watching closely and have been tracking our been under-performing. After travelling the Does it also help to be free of the demands to progress,” says Leishman. “It’s unlike any world to look at examples, the LTA found hit short term profit targets that PLCs face? contract we’ve been a part of so far. London and Perth to be the best delivery “We are constantly scratching our head at “We’re 100% committed to executing that models. They then took the best elements some decisions made by larger operators based to perfection because not only Singapore, the of both of those models and customised it on analysts’ three-month reports in an industry whole world’s watching it. This in my opinion for the Singaporean environment. Whereas that requires significant infrastructure and is probably the most exciting bus project in London’s network is tendered out on the basis capital investment over long periods of time,” the world - not only just to win a contract but of individuals routes, Singapore has opted he responds. “We are looking 10, 20 years out.” actually to transform a system. for area franchises, based around a depot. Leishman cites the example of the group’s “And being focussed has paid off - with And while London’s bus operators own their capture of the first contract awarded by 900 positions to fill in an industry with depots, Singapore’s LTA will lease these Singapore’s Land Transport Authority to run staff shortages we have had almost 6,500 facilities to the franchisees. buses in the city state. Singapore is moving applications for jobs so far, with many new to Leishman believes that Singapore has come from a concession-based system, where two the industry, and we are still five months out up with a bus franchising system that will operators effectively had their own monopolies, from commencement, the depot is outstanding, deliver huge improvements over the coming to a franchising model, and he believes that the years and will come to be regarded worldwide company’s long term investment horizon is vital as an example of best practice. to making the venture a success. “They came up with a model which I think “We are not looking at that as a short term will rival London as the world’s best,” says contract,” he says. “We are doing things to Leishman. “I think they’ve really nailed it.” invest in a city’s system and redefining it, and They key to success, he says, is getting the that takes a long term perspective on things, right balance between the government and the and that’s how we run our business in the UK. private sector, to get the best out of both. We’re looking at long term partnerships with “We’ve seen a lot of models out of balance,” our government clients.” he says. “I think that sets us apart from companies “If it’s too much government sided, it doesn’t that have to report to thousands of shareholders work as well as it should for the community on a regular basis,” he adds. “They’re focussed and it’s not good value for money. on much more short term horizons.” ADAM LEISHMAN “And if it’s too lop-sided to the private side, The expansion of Transit Systems in Adam Leishman’s father, Graham, was one which I think is the issue here in the UK at Australia, and latterly Tower Transit in London of the three co-founders of Transit Systems. the moment, then ... the community is not and Singapore, has been through steady, At that time, in 1995, Adam Leishman was getting the service to levels that they could if incremental growth rather than a big bang heading to university to study commerce. there was a very strong partnership between approach. “We are a very risk averse company,” He later worked as banker before moving into government and private with clearly defined Leishman explains. “Whilst we are ambitious business development for a retirement living and balanced powers, which I believe only the we always want to over-deliver to our clients, so company and running a student accommodation franchising model can offer.” we make sure we don’t over extend ourselves.” business. He joined Transit Systems as business He adds: “Franchising is a framework and it For example, having won the first Singapore development director in 2008 and became chief can be customised to the unique environment contract, Tower Transit chose not to bid for executive of international spin-off venture of each city, and that’s the beauty of it, whilst the second, which has since been awarded Tower Transit in June 2013. ensuring competitive tension which is necessary to the UK’s Go-Ahead Group. Tower to get the best out of private operators.”

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PT_Issue125_p32-35 33 06/01/2016 13:02 Although he’s a businessman, Leishman says requirement for more buses.” competitive advantages to some companies that it’s important to recognise that public The Singapore contract and the existing over others,” he says. “If those issues are not transport offers things that are not measurable London operation remain Tower Transit’s addressed the benefits won’t be optimised.” purely by profit, and therefore the government primary focus, but, as a ‘franchising specialist’, However, Leishman says that Tower Transit has a key role to play. “If those broader public the company is watching events elsewhere in and its Australian cousin, Transit Systems, policy issues are not addressed, and in a full the UK with interest. have been very successful in breaking into deregulated model they are not addressed, or “Everybody [around the world] looks new markets when the odds are against them. they are addressed in a way that is not optimal, at London as the leading example. It is The company was the first operator to win then you miss out,” he says. exceptional what has been achieved there,” says tenders to operate bus services in Perth, Tower Transit’s aim is to be a problem solver Leishman. “It’s surprising that the rest of the , Darwin and Singapore. In Sydney it for governments, working hard to understand UK is so vastly different from the experience was not expected that Transit Systems could what their objectives are and find the best in London. It’s kind of baffled us a little bit but win because the incumbents had the depots ways of helping to deliver them. we see the winds of change have finally arrived. and the buses, giving them a huge advantage. “We specialise in franchising,” Leishman It’s well overdue, I think, because it’s widely However, in late 2012 the company became explains. “If you look at the Australian accepted, certainly in the academic world and the only non-incumbent operator to win a business, if you look at Tower Transit, the in our experience in the rest of the world, that contract, and today it operates a fleet of 230 vast majority of our business is franchised the trend towards franchising is for a very good vehicles from three depots in the region. operations, so our mindset is ‘what does our reason and that it certainly delivers better “I think we’ve proved it’s possible,” says government want?’ ... and coming to the outcomes for the community. Leishman, “but my strong advice to authorities government with solutions, not problems.” “So, it’s an exciting time to be in the UK going down this route is make it as competitive For example, after taking over a contract in with what is happening ... and we would be as possible by levelling the playing field Perth, Transit Systems reviewed the network keen to play a key role.” because this is a long term play. Governments and timetables over an 18-month period and While the introduction of bus franchising need to be thinking [about] not just the first then went to the government with unsolicited appears to have George Osborne’s backing, round of tendering, the second round, the proposals to revise these operations to better there are still many unanswered questions. third round of tendering. This is a long term meet the needs of that community. The result What will the process be? What tests will cities play to get the best results for the community, was patronage growth of well over 20%. have to pass? What will be their preferred and to do that you need competitive tension In London, the group is also focussed franchising model? Will the incumbent which is what really, realistically, does not exist on being a good long term partner. It has operators bid? And if they do bid, will they in most of the market today.” expanded since entering the market in 2013, have an unfair advantage over new entrants? What are the deficiencies that Leishman securing a new depot in Enfield in addition to Leishman says that the recent rejection of believes that franchising will address? its initial three bases (Westbourne Park, Nexus’ bus franchising plans for Tyne & Wear Integration? Easier ticketing? What elements Atlas Road and Lea Interchange). by the Quality Contract Scheme Board shows are missing in cities like Manchester? “Both Commenting on the London business, that “it is not always easy to bring change, of those things,” he responds. “Don’t get me Leishman says: “I’m really pleased with where no matter how obvious that change is”. wrong, there are some good operators out we’ve come in almost three years. We took over “I think if this did not go ahead, the there, but the problem is the structure doesn’t a business with very low morale at the time, commuters of the UK would be far worse bring about the best results for the community. with a lot of very poor performance, and we off,” he adds. “It is very obvious that there are “There’s a pendulum between public and turned that around significantly. The culture deficiencies in the UK and commuters would private,” he adds. “At the moment it’s very within the business is [now] exceptional.” be far better off with a franchising model; much on the private side, which means He adds: “We’ve given opportunities to I am absolutely of that belief.” you miss out on benefits to the community people that a lot of other companies probably If the hurdles are overcome, he stresses the like the social welfare and other city vision wouldn’t have given that opportunity to this need for cities to create a healthy, competitive items - joint ticketing, network planning, all of early in their career - and they’ve done nothing market for contracts, and offer equal access to these kind of things.” but . That’s the philosophy we take.” assets and information. “They [cities] need to “Governments shouldn’t have to be trying Tower Transit’s new garage in Enfield has be thinking on the key issues that would give to fight for these things that are so obviously capacity for over 100 buses. Leishman says it’s beneficial to the community. But also very a show of commitment in London’s future. important is value for money, which will only “It takes time to expand into new depots; “It’s surprising that be delivered where sustained competitive you can’t fill those depots right away,” he says. tension exists - franchising delivers this very “It’s an investment over a long period of time, the rest of the UK is so effectively without confusion for customers - but we’ve taken that decision because we vastly different from the which is what deregulated competition brings, are committed to London for the long term, where it exists occasionally. It’s about bringing and we know that over time there will be a experience in London” competition for services, not competition

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Tower Transit operates transit timeline 650 1995 Transit Systems wins its first tender for bus operations in the Midland area of Perth. The company operates as .

2000 Transit Systems is awarded a major contract to operate bus services in the metropolitan area, trading as .

2005 Transit Systems acquires the Bay Islands Transit ferry service in Southern Moreton Bay, .

2011 Transit Systems begins transporting workers to Curtis Island, off the coast of Gladstone, Queensland, in support of the construction of two significant Liquefied Natural Gas projects, and purchases Stradbroke Ferries.

2012 Transit Systems is awarded the Sydney Metropolitan Bus Service Contract for the Liverpool, Hoxton Park and Fairfield local council areas. Operations begin in October 2013 and the company now operates a fleet of 230 buses from three depots across the region.

2013 Tower Transit, a spin-off from Transit Systems, is formed with the acquisition of FirstGroup’s London bus operations. Tower Transit currently employs over 2,000 staff in the UK and in services. This is where the secret is - the for the community’. Where you don’t have a operates 650 buses. strengths in both government and private franchising model you tend to find there’s a lot harnessed for the community with value for more conflict between government and private 2014 money ensured over the long term. ” and, in fact, even though the term partnership is Tower Transit acquires -based Prior to the introduction of franchising in thrown around it’s not a genuine partnership.” bus firm Go from its family owners. Australian cities, Leishman says there was a lot Summing up Tower Transit’s philosophy, Transit Systems’ subsidiary Territory Transit of conflict between the government and the Leishman says: “We have an ambitious wins the Darwin Urban Bus Services contract operators, who were each pulling in different target of being the most respected public from the Northern Territory Government. directions. Once franchising was brought in, transport operator in the world. That sounds the conflict ended and the government and crazy but the reason that is our objective is 2015 their contracted operators began working because we pride ourselves on excellence. Tower Transit is awarded the first bus contract together to improve the network. He believes What we want to do, we want to do to a very tendered by the Singaporean Government’s that the same could happen in the UK. high level and we believe strongly that if we do Land Transport Authority for 26 bus routes “The focus changes,” he says. “You have things well our business and reputation operating from the new . the strong competition to win the contract. will just grow naturally. Transit Systems announces the sale of its As soon as you win that you move into “That’s proven over the last 20 years to be marine operations to the SeaLink Travel Group. ‘let’s deliver this and maximise the benefit spot on.”

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