Red Bus buys tour bus company to capitalise on Asian visitors

Monday, 7 November 2016

Red Bus is trying to increase earnings from Red Travel by buying a local tour coach company.

Christchurch's Red Bus has bought a local coach company to capitalise on the fast growing Asian tour market.

The purchase of Aaron Travel, a tour bus company focusing on Taiwanese and Chinese visitors, will more than double the size of the Red Bus charter and tourism arm, Red Travel, to about 25 vehicles.

Red Bus is owned by the Christchurch city council through its commercial arm Christchurch City Holdings Ltd (CCHL) and it set up Red Travel two years ago.

Red Bus runs just over 30 per cent of the urban passenger services, about half of what it had in 2009, as a result of losing contracts to competitors.

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Chief executive Paul McNoe said the tourism sector expansion would help replace the drop in urban custom.

'It's not like for like, but it's growing the business in a way that we can.'

He said the amount paid for Aaron Travel was commercially sensitive.

The bus company, which will continue to trade under its own name for at least six months, specialises in tours, transfers and charters throughout the South Island.

It will retain all 15 current staff and former owners Stephen and Candy Ni will remain involved for up to two years.

McNoe said the purchase would complement Red Travel's strengths which lay in the area of corporate, sports and special events. It would also continue to run the Akaroa Shuttle and Rebuild Tour.

The city council dropped Red Bus from its list of strategic assets, leaving it free to sell the business without consulting the public if it opted to do so.

McNoe said this did not alter the company's expansion plans and it had three new coaches on order for the coming summer.

'They are still coming with the possibility of a fourth. With this expansion we may need to look at employing new staff as the season moves into full swing.

'If we can grow the value of Red Bus, it benefits the city council in any case.'

Mayor Lianne Dalziel said the council had no intention of selling Red Bus which was looking to increase its return to the city through expansion.

'This sounds like a sensible approach. This decision doesn't need to come through council, and Red Bus consulted with CCHL during the process.

'I have made it clear that I want a fully integrated public transport system run by the city, Selwyn and Waimakariri, without ECan, therefore there would be no reason to sell Red Bus.'

According to the CCHL annual report, Red Bus' revenue rose to just over $19 million last financial year and it made an after tax profit of $93,000.