• Abstract and Figures
• Public Full-text

1 Portland St Manchester: Tel 0161 279 6109 TravelWatch Email: [email protected] Website: www.travelwatch-northwest.org.uk Correspondence address – 11 Harvelin NORTHWEST Park, Todmorden, OL14 6HX promoting quality public transport.......... Jennifer Harvey Office of Fair Trading Fleetbank House 2-6 Salisbury Square London EC4Y 8JX 18th December 2012 Dear Jennifer, Anticipated acquisition by Greater Manchester Buses (South) Limited, a wholly owned subsidiary of Stagecoach plc, of Bluebird Bus & Coach Anticipated acquisition by Greater Manchester Buses (East) Limited of the business and assets operated from Lockett Road, Wigan of First Manchester Limited TravelWatch NorthWest (TWNW) is an independent Community Interest Company representing all public transport users in North West England. Our comments on these issues are as follows. Whilst there are some similarities between both references there are also significant differences. When bus services were deregulated (Transport Act 1985) it was widely and correctly predicted that after a period of unbridled competition the supply side of the bus industry would settle into a de facto oligopoly. Of the “big five” operators in this oligopoly, First Bus and Stagecoach Holdings (SCH) are currently the largest and next largest bus operators in the UK. A number of significantly sized independent operators have survived, emerged or ceased to trade, in some cases as a result of take- overs or predatory behaviour. Bluebird were amongst a number of successful smaller businesses built up both before and since deregulation (including surviving small operators in Greater Manchester such as Lancashire United Transport, Maynes, Bullocks, BuVal, South Lancs, Jim Stones etc.) Bluebird’s sale to SCH appears to have been between a willing buyer and a willing seller. However, we note that Bluebird's operations have historically been in North Manchester whereas SCH have largely operated in South Manchester. First Group have made no secret recently of the fact that some of their subsidiaries have performed less well than others, and they have announced North West Public Transport Users’ Forum Community Interest Company trading as TravelWatch NorthWest Company No. 6181713 Registered Office: 11 Harvelin Park, Todmorden, Lancs OL14 6HX 2 their intention to offer for sale a portfolio of under-performing companies. The potential acquisition of First’s assets in Wigan appears to be as a direct result of this ongoing “fire sale”. In this instance there is the danger that if First’s agreed sale to SCH is not allowed they could simply walk away allowing SCH to purchase their redundant assets and employ their staff to fill the vacuum. This is what seems to have recently happened in the case of SCH’s proposed purchase of First North Devon. In that case, though, after the initial disruption, we understand the reaction of passengers has generally been one of delight at the change, especially with lower fares and more modern vehicles. The biggest losers were the First staff, who lost their TUPE entitlements when taken on by Stagecoach. Going back to deregulation in 1985, when Greater Manchester Buses Ltd was created as two (North and South) separate companies both of which GMPTE were required to privatise, there has since been a unique de facto duopoly in Greater Manchester. Competition has been mainly “on road” with very weak (as the Competition Commission’s (CC) report on the bus industry found) “off road” competition by tender to run subsidised services. If both the complete and proposed acquisitions go ahead that will further reduce the pool of potential operators competing for tenders, as well as probably raising tender prices. SCH’s two proposals can also be seen as attempts to create or strengthen territorial monopolies. Up to now there has been, in Greater Manchester, little invasion of one duopolist’s territory by the other. In the case of Bluebird SCH are establishing a base (at GM Buses East) within First’s historical operating area North of the city centre and concentrated within suburbs extending from there to Oldham. The proposed Wigan acquisition is different, as although it gives SCH a foothold in South Lancashire, it is adjacent to SCH’s existing territories in that area. However the First Wigan depot does provide the buses and staff to run some trunk services to Manchester City Centre, principally from Wigan and Leigh. Whilst area monopolies may appear undesirable to OFT they can have benefits for passengers. Ticketing, and especially Multi Operator Ticketing (MOT), is a competition issue identified by the CC as requiring attention. Provisions in the Transport Act 2008 now make it much easier for operators to co-operate in voluntary partnerships where fares and timetables can be aligned by agreement with the Local Transport Authority (TfGM), and MOTs made valid on two or more operators’ services. Examples like Oxford (SCH and GoAhead) and South Yorks (SCH and First Bus) show what can be done particularly along corridors served by both partners. Fares are another competition issue and in the cases of the acquisitions being considered there are obvious interchange penalties where passengers are suddenly forced to use services operated by both of the duopolies because they travel within, from, or to an enclave of one duopoly within the other. For example a journey from within what was Bluebird territory to Oldham would North West Public Transport Users’ Forum Community Interest Company trading as TravelWatch NorthWest Company No. 6181713 Registered Office: 11 Harvelin Park, Todmorden, Lancs OL14 6HX 3 use both SCH’s (previously Bluebird) and First’s buses. A passenger in Wigan going to Bolton might likewise have to purchase a single, return or day/week ticket from both the duopolies. Conversely however there might be some benefit to passengers travelling into Wigan on a single SCH ticket bought on bus in South Lancs. OFT will therefore need to evaluate the overall passenger benefits or disbenefits of each acquisition. A recent campaign within Oldham Metropolitan Borough succeeded in persuading First to lower the fares they charge in North Manchester to a level corresponding more closely with SCHs lower fares in South Manchester. However information about fares is difficult to obtain, especially before travel (see TWNW Report “Information about Bus Fares” June 2009), and, without knowledge of price, perfect competition cannot exist. The acquisitions, by balkanising the duopolies’ de facto territories will not improve matters per se without some caveat (if OFT approve the “mergers”) requiring the two dominant operators to agree Multi Operator Ticketing and safeguard existing services for a defined period. It should be noted that de jure there is a day/week/month “System 1” MOT made available through TfGM and GM Ticketing Ltd, but this is much more expensive than the two operators’ own equivalent single operator ticket. TWNW has argued that for operators to agree a high fare for such a ticket and then price their own equivalent product so far below that price is not in passengers’ best interests. The desire by TfGM for Integrated networks is not helped where there are enclaves of one dominant operator within the territory of another. As a general comment we have always stressed that the major competition bus operators face in Greater Manchester (and elsewhere) is from the private car rather than from other operators of bus or rail based local public transport. Thank you for the opportunity to respond Yours faithfully John A Moorhouse John Moorhouse Company Secretary Response prepared by Paul Fawcett MPhil FCILT North West Public Transport Users’ Forum Community Interest Company trading as TravelWatch NorthWest Company No. 6181713 Registered Office: 11 Harvelin Park, Todmorden, Lancs OL14 6HX .

Load more

  3

Copy Link