2 Catch 22s

First is in a classic Catch 22 position. That’s the simple conclusion regarding today’s full Ugobus Phase 3 launch, which sees a significant escalation in the Plymouth Citybus v First Devon & Cornwall bus war. And, so close to knowing who’s actually submitted bids for Citybus.

Yes, First is truly in an invidious position. How so?

• First managers expect Plymouth council to sell its Citybus operation (though, actually, this isn’t a foregone conclusion. Mind you, if I were a betting man I’d stake my entire fleets on it).


• First expressed an interest but, with half an eye on the post-Preston Bus competition authorities, knows it will need to divest, especially since it already owns Truronian down the road.


• First has therefore withdrawn, leaving the road open to a competitor.


• Who knows who that may be. Whoever it is will have the muscle and funding to destabilise First.


• Stagecoach may be that competitor. In Devon, First is already engaged in battle with Stagecoach.


• Hence Ugobus Phase 3 that steps up the competition to such an extent that the new owner of Citybus would already be at a competitive disadvantage.
  

That this will undoubtedly affect the final Citybus sale price is now an unavoidable consequence of First’s actions. Council tax payers might criticise First for effectively reducing the bid price but, in the circumstances, what else is First to do? In other words, it’s Catch 22.

Plymothian Transit reports that First Devon & Cornwall’s managing director and Bournemouth man Marc Reddy is calling the handling of the sale “a total disaster”.

While you might argue that he would say that, won’t he, because Citybus is a softer target than one of the Big Five, Reddy may yet be genuine with his words. Quoted by Plymothian Transit, said Reddy, “If it’s such a good asset, why are they selling it—particularly in a recession?” Even now, they “could decide to keep the asset and let it pay a dividend every year. They don’t have to sell. There’s no shame in that.”

Of course, one reason why the council chose to sell was because of possible actions such as First’s. Now it’s happened, the dividend will go down, owing to passengers spread between two operators and the increased costs of Citybus retaliatory action. A reduced capital sum if it sells Citybus, a reduced dividend if it keeps it. Plymouth council also finds itself in a Catch 22 position.

Meanwhile, for First, it’s on with Ugobus Phase 3. Whatever you think of this move (competitive strike or defensive counter measures), since April 2008, Ugobus is reported to have grown ridership by seven per cent. Routes are simpler and frequencies consistent, now offering choice. And, when Citybus goes on the offensive in a fortnight, the choice—including along First’s Plymstock corridor—widens still further. How long can both parties keep this up?

i Plymothian Trasnit