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.
On the other hand, Preston Bus’ coverage was admirable, its frequencies high and fares reasonable though some questioned its customer service. And there’s always the accusation that Stagecoach’s actions were in a fit of pique because Preston Bus had previously refused to sell. Certainly, the Competition Commission seems to have revealed that Stagecoach's Preston Citi network was deliberately and heavily loss-making.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
3 comments:
What the CC conveniently overlooked was that Preston Bus was barely profitable, was unable to survive an economic downturn on its less than 7% margins and was losing money 12 months before Stagecoach registered its network.
Hence Stagecoach's (generous given the history with failing firms) offer to buy Preston Bus which was refused by people who wouldn't sell 'on principle'. Yet there is a better service under Stagecoach than PB ever provided.
I recall my old local route was PB's dumping ground for old Atlanteans/Lynx/Olympians and service quality was dire for a 7/8 minute frequency.
I remember the day when all four of the PVR turned up together - no service supervision, no response to customer complaints and a bunch of drivers who couldn't have cared less about the customers who paid their wages.
One never had to wait for a Stagecoach bus, as there was service supervision in place to ensure people didn't have to wait for a bus home-important to consider.
And then there was PB's irritating policy of exact fares, so beloved of municipal operations.
Can you imagine going to a shop and being told by a miserable employee to have the right money? I think most people would find another shop....so why do we accept such daft policies from bus companies?
More than likely why most people chose to drive in Preston was the barriers to travel put in place by Preston Bus.
The sad thing is that a local, independently owned company should be more in touch with the customers than a big five PLC bus operation was in Preston.
Clearly, the precedent now exists that there is no point purchasing 'for sale' businesses due to competition concerns, cheaper to register competitively, wait for it to go into administration and gain the market share that way?
It's handy that First have begun to compete in Plymouth as that now opens the market for Stagecoach to now buy PCB....
More intriguing how the Competition Commission's page shows the approved merger of two health food chains 'competing' in the same marketplace...
In the bus world the CC will only react if one of the parties concerned is based in Perth.
Where were they when Brighton and Hove bought out the municipal Brighton Buses and carved themselves a virtual monopoly in Brighton?
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