Dunedin City Holdings, the city council's commercial arm, has decided to sell Citibus, its bus operation. This follows recurring financial losses and most recently loss of several routes in tender rounds. Citibus purchased 17 new buses back in 2008 which may have added to its vulnerability and reduced its flexibility in putting forward competitive tenders. As with Redbus's major route losses in Christchurch it seems firms making big steps to upgrade fleet quality lay themselves open to losing contracts to those who can come in with, or take over, an older fleet.
I am not familiar enough with the nitty gritty of public transport in Dunedin to add much by way of intelligent comment but my guess would be the comment by Dunedin Mayor Dave Cull in today's Otago Daily Times is perhaps the most pertinent [my bolding]
"....Mr Cull rejected any suggestion ratepayers were about to lose a valuable asset.
"It's a public asset that's losing us $800,000 and the profitability of which is overwhelmingly ... in the hands of another body, another jurisdiction [the Otago Regional Council]," Mr Cull said when contacted.The council was not in control of the service, and was effectively "just a bus company" with no control of whether the service succeeded". **
Just about every City Council in NZ (including Christchurch and Timaru) has its share of Councilors and Mayors who think the Council could run public transport better, assuming it is simple art! However on track record Dunedin City may have more cause for its grievance than most. The record of the Otago Regional Council in running an effective bus service has long been under fire, to the extent the Otago Daily Times made no bother with diplomacy in a 2008 editorial saying bluntly "The regional council......has made such a poor job of running the city's bus services". Certainly patronage levels are not overly impressive, particularly for a university city.
** Read all ODT reports about the Citbus sale proposal here