Patronage first: who is paid to grow the franchised bus network?

01The market will not grow itself

England recorded 3.7 billion local bus passenger journeys in the year ending March 2025. That was 1% more than the previous year, but below the 4.1 billion journeys recorded in the year ending March 2020. Recovery has slowed, so an Authority entering franchising should not assume that market growth will protect its financial plan.

Greater Manchester shows what coordinated action can achieve. Its Bus Strategy set an initial target of 30% patronage growth by 2030 from 2022/23. TfGM reported 14% year-on-year growth in the first franchising areas; a later update recorded 8% in Tranche 1 and 10% in Tranche 2. The Combined Authority has also reported fare revenue above forecast.

The results are encouraging, but no single contract term caused them. Fares, service quality, information, travel patterns and substantial public investment all played a part. Growth needs sustained management across the passenger proposition.

Bus-industry research estimated that each £1 of public funding spent on a representative package of measures could generate at least £4.55 in wider economic benefits, rising above £5 for targeted measures such as bus priority. These are modelled benefits, not a guaranteed return.

02A patronage KPI can still be too weak to matter

Putting “patronage” in a KPI register is not enough. A measure has little effect if its reward is small, its baseline is set after operations begin or the Operator cannot propose improvements. A fixed annual payment in the low thousands, coupled with a 5% band and no payment until Year 2, may carry the right contract effect but is unlikely to change investment or behaviour.

An Operator will put effort where the consequences are clear. If reliability failures bring meaningful deductions while patronage brings only a token reward, reliability will come first.

The Operator cannot be held solely responsible for an outcome it does not control. The Authority may set fares, the network, marketing and passenger channels. The Operator runs the service and brings route knowledge and frontline insight. Ticketing, information and data Suppliers also affect the result.

That route knowledge is often underused. A study of London and Melbourne found that Operators in both cities believed they could contribute more to planning. Only Melbourne used that input.

A credible measure needs shared accountability. It should recognise Authority and Supplier decisions, evidence the Operator’s contribution and provide relief for material outside factors.

03How LiteFranchise™ gives the Operator a growth opportunity

LiteFranchise™ makes patronage a material part of the commercial model.

The proposed structure uses an 85% Base Service Payment and a 15% performance-linked element. Annual Patronage Target Achievement carries a 10% weighting. At more than 5% above target, the maximum bonus equals 15% of the monthly Service Charge: up to £15,000 on a £100,000 charge.

The mechanism is symmetrical. Sustained underperformance of more than 5% below target can lead to a deduction, subject to Relief Events and the agreed cap. As a shared KPI, its assessment can recognise Authority decisions and the Operator’s efforts to mitigate them.

The incentive sits within a practical Operating Model:

• The Year 1 baseline uses at least 12 months, and ideally 24 months, of validated pre-franchise ticket-machine data, refreshed during mobilisation.
• The Operator provides a senior Growth Lead and data-analysis capability and brings at least two evidence-based operational proposals to the quarterly Growth and Innovation Forum.
• A Joint Marketing Fund supports agreed activity, while an optional Operator-funded Innovation Growth Pot can fund faster tests. Initiatives are assessed before investment.
• Monthly review, the quarterly forum and an annual Value Review connect targets, action and evidence.

The model rewards overall patronage rather than each Operator idea. Evidence still determines what to scale, change or stop.

04Customer experience belongs in the revenue plan

The contract incentive cannot grow patronage on its own. Passengers need a service they can rely on, understand and feel safe using.

OneContact reveals recurring customer problems and tracks their resolution. TellUs supports discreet safety reporting and a defined response. IDInsight combines patronage, revenue and operational evidence. 16Dashboard connects performance to contract governance and payment. Redesigned and improved bus stop and station information helps potential passengers understand the service before deciding whether to use it.

Reliable services and sound fares remain essential. These products help the Authority and Operator identify where journeys are being lost, test a response and measure whether it worked.

ITA helps Authorities build patronage growth into franchise contracts, Operating Models and customer products. Please visit the Products and Solutions sections on our website for further information.

05Build the growth model before award

Adding a material patronage reward after award can require commercial negotiation, Change Control and a lawful contract-modification route. The Procurement Act 2023 governs newer contracts; contracts begun under earlier legislation may remain subject to the previous rules. The applicable regime requires legal advice.

Settle the baseline, target, data requirements, shared responsibilities, incentive and governance in the Invitation to Tender and draft contract. Bidders can then price the opportunity and propose the resources needed to deliver it.

06Useful questions

Before an Authority agrees its model and goes to market, it should ask:

• Does the contract place fare-revenue risk with the Authority, the Operator or both, and does the incentive match that allocation?
• Is the patronage reward large enough to influence Operator investment and behaviour?
• Which growth levers sit with the Authority, Operator and Suppliers, and how will shared responsibility be recognised?
• Can Year 1 performance be measured against validated pre-franchise data?
• Who owns the Growth Plan, who can approve a test and what evidence decides whether it is scaled or stopped?
• If patronage rises by 10%, can the Authority explain which actions helped and who the contract rewarded?