Yesterday was a mixed day for Stagecoach. Its shares surged upon news of a possible tie up involving National Express’ bus & rail operations should the Cosmen deal to buy NatEx involve a bus and or rail offload.
On the other hand, the inevitable also happened. Yesterday, the Competition Commission announced it was considering action against Stagecoach following Stagecoach’s activities in Preston, behaviour that resulted in Preston Bus selling to its larger competitor.
One has to speculate that the competition authorities can’t have it both ways. Few markets seem to be able to bear one or more competitors. If the competition authorities really wish to foster competition between operators, the logical conclusion must invariably be the dominant party buying the other, or the weaker going to the wall. A buyout is probably preferable as it offers more guarantees. Few markets seem to hold two operators in equilibrium for any length of time. They come, they go. Witness the collapse last month of Weston super Mare’s new start seven weekday route operator ACL.
Stagecoach’s competition was not the first Preston Bus had to face. In the past, Preston Bus has managed to see off its rivals. Had this happened post Cardiff Bus, would the OFT have accused Preston Bus of being predatory?
And was Stagecoach predatory or was it offering something new & different?
- Stagecoach certainly offered a later evening service than you might expect in a competitive situation.
- A minor point perhaps but it did gave its passengers change as opposed to Preston Bus’ rigid no-change policy.
- Stagecoach provided something of a city network.
- Stagecoach was prepared to operate low floor buses from the start and although Preston Bus was renewing its fleet—with orders starting to arrive around the time of Stagecoach’s initial competition—Preston Bus had been slow to invest in recent times.
- And Stagecoach in buying Preston Bus has offered the workforce and the public some guarantees. Many Preston Bus shareholding employees gained through a windfall.
Was the take-over in the passengers’ interest? That depends upon your point of view. It’s difficult to stress the network benefits of an enlarged Stagecoach when Preston Bus already offered it within the city though Stagecoach and its antecedents have served Preston & Lancashire for a century. It’s now possible to include the out-of-city suburbs in that network, e.g. Penwortham.
What Stagecoach has probably brought is stability and sustainability where once there was some uncertainty at Preston Bus, that would only have been heightened in a recessionary market such as today’s, where ridership is no doubt falling.
Additional information by Omnibuses' Northern Correspondent