TAURANGA – The Bay of Plenty Regional Council is terminating its Baybus OnDemand trial, reverting to fixed-route services after a high-patronage experiment proved financially unsustainable under current subsidy models.
The decision highlights a critical friction point in modern urban planning: the gap between consumer demand for flexible “microtransit” and the rigid funding frameworks of public infrastructure. While the on-demand model significantly increased ridership, the operational cost per passenger created a fiscal deficit that the council determined was untenable without a fundamental shift in long-term funding.
Launched in March 2024, the service operated in Tauranga South, replacing the fixed Route 51 with an app-based, corner-to-corner system utilizing small electric vans. The service operated without a fixed schedule, allowing passengers to book trips across Gate Pā, Greerton, Parkvale, Pyes Pā, Tauriko, and The Lakes.
The operational results demonstrated a clear preference for flexible transit over traditional timetables. In the first three months of operation, the on-demand service recorded 4,600 users, compared to 800 users for the previous Route 51 service. Customer satisfaction was reported at over 90%, with monthly usage eventually stabilizing at approximately 3,700 trips.
The fiscal disparity between the two models is stark:
- Baybus OnDemand: Approximately $1.1 million operating cost for the 2025/26 financial year, requiring an average subsidy of $25 per passenger after fares.
- Route 51 (Fixed): Estimated $320,000 annual operating cost.
Under New Zealand’s land transport funding framework, regional public transport services are generally co-funded by local rates and the National Land Transport Fund administered by Waka Kotahi NZ Transport Agency. The funding mechanisms for these services therefore differ significantly. The on-demand trial was funded through a combination of 90% targeted passenger transport rates and 10% general rates, with no ongoing national subsidy locked in for the higher operating cost. Conversely, the reinstated Route 51 will receive approximately 51% of its funding from Waka Kotahi, with the remainder covered by rates and fares, aligning it more closely with standard public transport funding policy.
Regional council chair Matemoana McDonald stated that the trial achieved its primary objectives by providing data on travel patterns and operating requirements.
“Despite the positive customer results, continuing Baybus OnDemand would require a significant ongoing subsidy and further long-term funding,” McDonald said.
For local government, the choice effectively came down to whether ratepayers should underwrite a premium service model or revert to a more conventional, lower-cost network that better fits current co-funding rules under the national transport programme. Councillors were also mindful that any material increase in local subsidies would need to be weighed against other regional transport and climate commitments set out in statutory planning documents such as the Regional Public Transport Plan and the Long-Term Plan.
The transition represents a retreat from the Demand Responsive Transport (DRT) model, which is increasingly used globally to solve “first-mile, last-mile” connectivity issues in suburban corridors. It also underscores how difficult it can be for regional councils to scale innovative pilots when they sit outside traditional route-and-timetable funding formulas.
Councillor Andrew von Dadelszen argued against the total abandonment of the concept, suggesting that the council should have refined rather than retired the service. He proposed the use of larger electric minibuses acting as neighbourhood feeder routes into the city’s main bus corridors, specifically mentioning suburbs such as Matua, Bethlehem, and Pāpāmoa. That approach, he suggested, could preserve some flexibility while bringing operating costs closer to a standard bus service.
Von Dadelszen noted that the service’s popularity was partly driven by its pricing, stating, “I think it was successful because it was so cheap for what it offered. Even after they increased the fare to $5, it was still incredibly good value.” He suggested that passengers might have accepted higher fares to maintain the premium service, raising the question of whether a different fare-box recovery target could have narrowed the subsidy gap.
The cessation of the trial introduces immediate labor and asset concerns. Reports from service staff indicate that approximately 10 employees may lose their positions. The service operator, Ritchies, has declined to comment on specific job losses, stating that the company will manage the impact of the decision internally. The council has not detailed what will happen to the electric vans used in the pilot, beyond confirming that the vehicles formed part of the contracted service rather than the council’s own fleet.
The council will now apply the travel data gathered during the trial to refine the route and timetable of the returning Route 51, which previously connected Pyes Pā to Tauranga Crossing. Officials say the data gives them a more granular picture of when and where passengers actually travelled, information that is rarely captured on a traditional timetable service.
The regional council is currently finalizing the transition date and the specific parameters of the reinstated fixed service, including service frequency and span. A formal decision on the revised Route 51 is expected to be incorporated into upcoming public transport committee papers, where councillors will need to demonstrate how the redesigned route meets both local demand and the national co-funding criteria that ultimately determined the fate of Baybus OnDemand.
