The most surprising thing about Stagecoach’s Friday announcement that it’s bought Eastbourne Buses’ competitor Cavendish-Renown is how soon it comes after the Brighton-style Stagecoach/Eastbourne deal.
The demise of both Cavendish and Eastbourne Buses reduces the number of bus operators in Eastbourne (excluding Brighton & Hove) from three to one. What will the competition authorities make of that? With Cavendish in play, Stagecoach’s chances of being noticed were lower. Yet, could Eastbourne support all these operators?
In terms of Cavendish selling to Stagecoach, it again indicates that competition 20 years after deregulation isn’t always easy in small towns such as Eastbourne. Casual observations just a hop and skip along the coast would suggest that 28-vehicle Cavendish’s commercial network is actually more comprehensive and seemingly more sensible than that of competitor Eastbourne Buses. Its fares are cheaper. And as a private operator, it was seemingly at least treading water… rather unlike Eastbourne. That at least one and possibly both were struggling suggests that the market cannot support both. Stagecoach is unlikely therefore to invest some £4mil on a loss maker only to see its returns squeezed by a profitable third party.
For those who wonder why Stagecoach didn’t just buy Cavendish, step up the competition and watch Eastbourne Buses wither on the vine, that would attract considerable unwanted attention.
Cavendish is a young start-up. It’s not yet even three years old. It’s one thing the pale green and cream Southdown-of-the-past-liveried buses successfully competing against Eastbourne but quite another facing off against Stagecoach.
After the Eastbourne Buses deal, Stagecoach promised that no driver or fitter would lose their jobs. With rationalisation likely upon the purchase of Cavendish, can Stagecoach keep that promise?
Monday, 12 January 2009
More from Eastbourne
Subscribe to:
Post Comments (Atom)
3 comments:
It is said that Cavendish wasn't making any money. The deal to purchase is supposed to be for the book value of the Cavendish vehicles plus the amount of accumulated losses during the company's short existence. There is no payment for goodwill or similar.
The owner of Renown/Cavendish is in the plant hire business, so presumably he is struggling to make much money from that venture in the current climate.
Stagecoach presumably wouldn't have brought Eastbourne unless they were fairly certain that the competition would go away.
And as for the route network - Shinewater is the 'pot of gold' in Eastbourne, and Cavendish cut that area from their network in their last change. Not what I would call a sound business decision.
Well it didn't take long for Stagecoach to make changes, with the announcement 10 days after buying Cavendish that it is to be shut down with the loss of all jobs although 23 jobs will be available at Eastbourne Buses.
As both businesses are loss making, they need to be brought into the black asap. The best aspects of both businesses operations are being incorporated into Eastbourne Buses with network changes taking effect from March 2009.
Essentially Cavendish is an asset purchase, and I understand the coaching/bus service contract operations remain with Renown.
Was Cavendish's fight with Stagecoach? It was with a municipal operation that a previous MD felt had lost its way, so naturally they will seek to exit as soon as is possible given their business was not intended to compete with a large group.
Renown sold Bexhill Bus to Stagecoach in the 90s, at a time when the then owner's son did not want a bus operation.
Post a Comment