Splitting and selling its Preston city services to former Preston Bus employees will no doubt be Stagecoach’s second favoured option. It’s not, however, the one Stagecoach prefers—this is not to sell at all. For Stagecoach is still appealing against the Competition Commission’s forced sale decision but we assume Stagecoach will be unsuccessful.
Reports locally suggest the setting up of New Preston Bus (aka Preston Transport Ltd) is possible. Why, for Stagecoach, might this be the next best thing? It poses fewer problems for Stagecoach, when compared to one of the large groups. New Transit suggests that Arriva & Go Ahead have expressed an interest. The issue, though, is whether either sees this as a good investment, given Preston Bus’ history of under-performance. Know doubt the price will reflect such concerns.
An employee-led operator would be less likely to go head-to-head with Stagecoach, whereas a group subsidiary just might, if only at the fringes. A locally-owned “independent” would probably not have the resources to do so, or the profitability, in any case.
Local politicians and the media seem to trumpet local control. This may yet be a good thing but what it will probably do, given that New Preston Bus will really be no different than it once was, is fragment the market such that there will be an immediate loss of network ticketing and benefits. Given a probable lack of competition, Preston will end up with two operators on two largely separate networks, with the smaller one unable to take advantage of back office and engineering economies of scale. Will New Preston Bus be any less fragile than then old one?
And is this segmentation—whether New Preston Bus, Arriva or Go Ahead—good for the passenger and the fares they have to pay, when compared to the current situation?
New Transit speculates that Stagecoach will close bids on 4 June 2010, with a decision expected soon afterwards. Get down to Ladbrokes now, and open a book as to the potential winner.
Thursday, 20 May 2010
New Preston Bus?
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11 comments:
I bet there no one wanting to buy it!
once again the CC GETS it wrong
There's no doubt the services will be worse off when Stagecoach sell half off.
But unlike Eastbourne, you can't say the Competition Commission was wrong. In Preston, Stagecoach clearly acted in an aggressive manner, and the CC can't let them get away with it.
Acting aggressively?
The numbers don't lie - Preston Bus was loss making 12 months prior to Stagecoach's network being launched in the city.
If PB had innovated, done away with the old municipal concept of exact fares which were customer unfriendly and had drivers who delivered decent customer service, then Stagecoach wouldn't have been able to get that foothold. One normally suspects that the independent company is the one that is more with it when it comes to customer service and innovation.
Stagecoach took a look at the accounts, realised PB was unable to survive on low margins past a certain number of years and made an offer to buy a business. As that offer was refused, one would then assume they were talking to the competition. They have said as much in their CC submissions.
As a former resident of Preston, I was pleased when Stagecoach started their services, as new low floor buses consistently ran on my local route, I never had to wait for a bus because the services were regulated, and they gave change.
If Preston Bus had done some of those things, then Stagecoach would have done what they have done with Fishwicks, which is to leave them alone. And they'd still be in business.
PB got what they deserved, lose touch with your customers, and then they will go elsewhere. Increase your costs, then you will be going out of business faster.
Competition is allowed by the rules, so why the CC has an issue is beyond me? Customers had a choice of service, just like when I visit a supermarket. Unlike Darlington, Stagecoach actually offered to buy this dead duck business rather than leave it to go into receivership.
I've lost count of the number of enthusiasts, who haven't lived in the city or have had to use PBs routes day in day out, who just don't get what a bad business it actually was. Which is sad, as the local operator, owned by the *employees* should be the one that is more in tune with what the customers want.
What happens if, no other company makes an offer?
It pretty clear PB company is a loss maker so why would any other company want to buy it then have to compete with Stagecoach on top of that.
If New PB's owner/employees find the going a bit tough in a couple of years time, will they be able to sell up to Stagecoach? If not, is there any incentive for them to invest at all, if their exit options are so heavily restricted?
It's all very silly, really. Public transport is a natural monopoly, which is why it makes some sense for it to be operated to tender like in London, or like subsidised services elsewhere. That way there is competition to keep costs down, but the fallacy of on-road competition is avoided.
The bus should be seen as competing with the car, and to a lesser extent the bicycle and walking. Not other buses.
I agree with most thats been said but Stagecoach's image doesnt help either. They have for many years bullied smaller operators and forced them into liquidaton. Weather or not Stagecoach started the Bus War or not, no one can say Stagecoach did not want an outcome whereby they are the sole operator. Some operators have sold to Stagecoach in the past like Mayne in Manchester but lets not forget a lot of companies that have sold to the Stagecoach empire have done so because they have no other choice. And as for Competition issues Stagecoach themselves are mainly to blame attracting so much attention during deregulation through there underhand tactics and bullying attitude.
The Competition Commission will be concerned with more issues than just the on-road, bus versus bus, competition. If there is only one operator in a particular geographical area, then there will possibly also not be any effective competition for tendered services (such as Neil refers to). In such a situation, a monopoly operator could potentially raise the prices it charges to various public sector bodies.
Therefore, while a monopoly situation may be considered beneficial to bus passengers, it may be disadvantageous to the council tax payers in the particular region; and (regrettably) the council tax payers will almost certainly be a greater proportion of the population as a whole than the bus passengers.
Defining what constitutes the 'public interest' is not easy!
The action by The Competition Commission was long overdue.
You only have to look back at Stagecoach actions in Darlington back in 1994, when their actions in putting Darlington Travel Company (the local authority operator) out of business, were described by the Monopolies and Mergers Commission as "deplorable and against the public interest". The punishment was simply a slap on the wrist. Did they take any notice? No they didn't!
What made matters worse was the fact that Stagecoach wanted to cease their Darlington operations as far back as 2001, and they were successful in 2007 when they sold out to Arriva, creating a monopoly with several service cutbacks which followed the takeover. What would stop Stagecoach eventually pulling out of Preston, when they realised it wasn't a viable proposition after all?
I also recall that when Stagecoach eventually got their hands on Preston Bus, they immediately cut services. Am I correct in that assumption?
When Stagecoach got hold of Preston Bus, they only "cut" the directly competing services. For example, Preston Bus 3 was merged with Stagecoach Preston Citi 3, providing the same frequency of service, but from the Stagecoach depot. They used buses from Stagecoach and Preston Bus. The same merge took place with all other competing routes.
It would appear that Preston Bus now has a buyer, and the final papers are awaiting to be signed. I cannot reveal the details buyer, but they will be keeping it operated as Preston Bus. Route 11 will transfer over to Stagecoach operation when the final papers are signed, along with 4 buses from Preston Bus in order to operate it. Preston Bus's stored Optare Solo minibuses are also being taken by Stagecoach for use in Scotland (they were withdrawn by Preston Bus after service cuts a few months ago). The Preston Buses still in Stagecoach livery now carry signs in their windscreen with "Stagecoach" on.
*THIS IS A CORRECTION TO MY PREVIOUS POSTING*
When Stagecoach got hold of Preston Bus, they only "cut" the directly competing services. For example, Preston Bus 3 was merged with Stagecoach Preston Citi 3, providing the same frequency of service, but from the Stagecoach depot. They used buses from Stagecoach and Preston Bus. The same merge took place with all other competing routes.
It would appear that Preston Bus now has a buyer, and the final papers are awaiting to be signed. I cannot reveal the details of the buyer, but they will be keeping it operated as Preston Bus. Route 11 will transfer over to Stagecoach operation when the final papers are signed, along with 4 buses from Preston Bus in order to operate it. Preston Bus's stored Optare Solo minibuses are also being taken by Stagecoach for use in Scotland (they were withdrawn by Preston Bus after service cuts a few months ago). The Preston Buses still in Stagecoach livery now carry signs in their windscreen with "Preston Bus" on.
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