Last month, the Office of Fair Trading announced that it has – once again – pressed its nuclear button by referring the local bus sector to the Competition Commission (CC). This decision will not exactly put fear into the minds of the five UK bus companies who dominate the market – Stagecoach, First Group, National Express, Arriva and Go-Ahead. For many in the City, CC enquiries are normally of little interest – they are often dominated by its members poring over out-of-date figures and proposing remedies that are consistently ignored.
Of course, for Stagecoach, the CC – and its predecessor, the Monopolies and Mergers Commission – is a second home. Legendary tales of bare-knuckle competition in Darlington, Thanet and Carlisle will be long remembered. Yet, the fact remains that privatisation of the bus sector has brought considerable benefits, although some rural dwellers would vehemently disagree. In recent years, bus fleets have been modernised, partly due to environmental factors, whilst travelling numbers in major population centres are holding up well.
It should also be recognised that solid bus revenues have helped finance the bids for railway franchises: without them, there would have been precious few bidders for these franchises. Stagecoach was the first credible rail privatisation bidder – for the South Western franchise, whilst National Express – the key bus operator in the West Midlands – has been very active on the railways. Its spectacular over-bid for the East Coast main-line franchise will not be forgotten.
To be sure, 10%+ operating margins on UK bus operations outside London are attractive. But the reality remains that the reform of transport markets would be far better directed elsewhere. The BAA/Heathrow shambles remains unresolved. And, on the railways, urgent action is needed to sort out the much-criticised franchise system and to bring Network Rail under greater financial control.
Are these issues not more important?