Is competition law actually negative in commercial bus operations?

[Bletchleyite]

I personally believe competition law should be removed entirely from public passenger transport, because a single operator or cartel is almost always of benefit, not disbenefit, to the passenger, like pretty much no other line of business. It needs to be accepted that even outside of a regulated system the competitor is the car and taxi, and the omnipresence of those modes mean it is basically impossible to overcharge to excess for fares in a monopoly situation*. Added to that, small operators rarely bring benefits to the commercial bus market - most often they just provide low quality, low price services which damage the overall product in many different ways. They only really bring benefits for tenders or where the big boys aren't interested, and again whether there was competition law or not the big boys would leave them alone on routes they don't care about, as they do in rural Wales for instance.

Also worthy of note that the German Verkehrsverbuende, often held up as excellent models of integration (though not perfect), mostly came about by way of operator cartels which later became statutory organisations and did not start out as a Government thing.

To me it would be good if it was easier if bus companies could, legally unencumbered, work together to achieve things like unified ticketing, cross acceptance of tickets and that a rail franchisee like FirstGroup should be allowed to fully integrate its buses with its trains if it so wishes.

* Arriva Milton Keynes is for example a bus monopoly, but it doesn't charge excessive fares, indeed they are lower than many other places. Taxis and cars keep them in check.

 

[RT4038]

To me it would be good if it was easier if bus companies could, legally unencumbered, work together to achieve things like unified ticketing, cross acceptance of tickets and that a rail franchisee like FirstGroup should be allowed to fully integrate its buses with its trains if it so wishes.

But I don't think that they would want to. If they lose the franchise they will be have ended up discounting their bus product to someone else for little gain, and the railway ticketing system does not really allow for only First Group subsidiary rail ticket flows only to be connecting to their bus tickets. Not going to happen now anyway. The DfT would not want to receive less ticket income because of the through bus ticket, and the bus subsidiary does not want/ cannot afford to shoulder the entire discount on its tickets by itself. (If there is no discount then there is little point in the through ticket).

As we have discussed many time already, the funding of both modes has to comes from the same pot in order to get decisions based on the best overall for public transport (whatever that is).

 

[Dai Corner]

Something like what has happened in Oxford, as related by Roger French?

Oxford’s bus routes rationalised again

Saturday 8th January 2022 This week has seen further rationalisation between Go-Ahead owned Oxford Bus and Stagecoach Oxford simplifying which bus company operates which routes. Long gone are the d…

busandtrainuser.com

This week has seen further rationalisation between Go-Ahead owned Oxford Bus and Stagecoach Oxford simplifying which bus company operates which routes. Long gone are the days of intense head-to-head competition between the two operators, now there’s sensible cooperation and coordinated timetables making for an attractive bus network to entice passengers.

 

[Bletchleyite]

Something like what has happened in Oxford, as related by Roger French?

Oxford’s bus routes rationalised again

Saturday 8th January 2022 This week has seen further rationalisation between Go-Ahead owned Oxford Bus and Stagecoach Oxford simplifying which bus company operates which routes. Long gone are the d…

busandtrainuser.com

I believe that's led by the Council, isn't it? Competition law would cause issues with bus operators just deciding to do it themselves.

One very notable recent example is that it would be of considerable benefit for National Express to own part of Citylink (so the two could be better integrated), but they were forced to divest it twice, once when they got ScotRail and once more as part of their purchase of Stagecoach.

 

[TheGrandWazoo]

believe that's led by the Council, isn't it? Competition law would cause issues with bus operators just deciding to do it themselves.

Such deals, as also done in the West of England, are brokered by local councils as an independent body so competition law is not breached

One very notable recent example is that it would be of considerable benefit for National Express to own part of Citylink (so the two could be better integrated), but they were forced to divest it twice, once when they got ScotRail and once more as part of their purchase of Stagecoach.

Ok, so how do you stop businesses exploiting their dominant position?

 

[Kremlin Stooge]

Added to that, small operators rarely bring benefits to the commercial bus market - most often they just provide low quality, low price services which damage the overall product in many different ways. They only really bring benefits for tenders or where the big boys aren't interested, and again whether there was competition law or not the big boys would leave them alone on routes they don't care about, as they do in rural Wales for instance.

That seems to be an unfair generalisation, small operators can and do grow into significant businesses; as an example look at D&G, without them growing from small origins large parts of Staffordshire and Cheshire might well not have any bus services at all.

As for competition more generally, we have had times when local services were run by private monopolies that were owned by large groups (Tilling and BET); this was deemed unsatisfactory so nationalisation was used as a solution. In turn, this was found to be unsatisfactory as well, so the option of allowing innovative and entrepreneurial operators to adopt a market-oriented approach was initiated, with regulation to mitigate/prevent market position abuse, and this is where we find ourselves today (with the exception of London, which seemed to be scared of going along this route for some reason).

What other options are there, that haven’t already been tried?

 

[Bletchleyite]

That seems to be an unfair generalisation, small operators can and do grow into significant businesses; as an example look at D&G, without them growing from small origins large parts of Staffordshire and Cheshire might well not have any bus services at all.

But doesn't that describe exactly "where the big boys aren't interested", which is where I said small operators bring benefits?

 

[Kremlin Stooge]

Added to that, small operators rarely bring benefits to the commercial bus market - most often they just provide low quality, low price services which damage the overall product in many different ways.

But doesn't that describe exactly "where the big boys aren't interested", which is where I said small operators bring benefits?

We can all do selective quoting, whether it moves the debate forward is questionable.

 

[Bletchleyite]

We can all do selective quoting, whether it moves the debate forward is questionable.

I don't think it was selective in that sense. I believe small operators bring benefits in the commercial space when they get into business that the big boys aren't interested in because the margin is too low for them, but not otherwise. I don't believe competition between small operators and big operators (or competition between big operators for that matter) is ever of any benefit in local bus operation, it just results in the classic "race to the bottom".

Or in essence back to what I said before - a monopoly or a cartel works better than on-road competition.

(Competition between the big boys does sort of work in coaching, but that's because the market is different and practically allows for a level of differentiation on busy routes, enabled by advance booking being the norm - with buses, you rock up to the bus stop and take the next bus)

Do you have an example of where a small operator has entered a non-tendered market already run by Stagecoach, First, Arriva, Go-Ahead, Wellglade or Transdev (did I miss any of the "big boys"? I know Wellglade isn't massive, but it's dominant in its area of operation, similar to Transdev's UK operations), and in doing so has increased standards and remained in the market, rather than just resulting in a fairly short and harmful round of price-dumping all round? I can't think of one other than Oxford Road, Manchester (Finglands and R Bullock*, neither of which are there now but did last many years - and negatively UK North), and that is almost globally unique in how things worked due to the incredibly high demand.

* Finglands didn't do much for standards but didn't lower them either. R Bullock was the first to introduce a low-floor double-decker onto the route, which I think counts as a quality improvement rather than price dumping, indeed they were the most expensive (ignoring Stagecoach "mainline" services which students didn't generally use unless they had a pass), with Finglands and Stagecoach Magic Bus charging 40p in 1998 from Fallowfield to Manchester, but Bullocks charging 45p. UK North, well, I've never got on a bus anywhere else where the driver was openly smoking a joint as he drove.

 

[Citistar]

In my opinion and experience, current competition law has been hugely preventative in stopping operators who want to work together from co-operating. About seven years ago, we were almost at a postition in the West of England where a multiple operator ticket would have replaced the dominant single operator offering. The dominant operator's local management was enthusiastic about it, but the idea got blown out of the water by their legal team at group level. Many years down the line we're still not really any closer to regaining that momentum, despite it being a key policy requested by the LTAs for the Enhanced Partnership negotiations. Indeed the operator concerned will next week introduce even more single operator products...

 

[Dai Corner]

Do you have an example of where a small operator has entered a non-tendered market already run by Stagecoach, First, Arriva, Go-Ahead, Wellglade or Transdev (did I miss any of the "big boys"?

I do. Cwmbran in south Wales where independent Phil Anslow Coaches competes with Stagecoach.

Does it benefit passengers? Well they enjoy more frequent services than they otherwise would and Stagecoach brought in a fleet of Gold-spec Solos which they may not have done if they had a monopoly. There may be some element of fare competition but I'm not sure as I have a concessionary pass.

 

[Bletchleyite]

I do. Cwmbran in south Wales where independent Phil Anslow Coaches competes with Stagecoach.

Does it benefit passengers? Well they enjoy more frequent services than they otherwise would and Stagecoach brought in a fleet of Gold-spec Solos which they may not have done if they had a monopoly. There may be some element of fare competition but I'm not sure as I have a concessionary pass.

How sustainable is it? That is, do both operators have enough business to continue, is it likely to be long term, and does either operator want to get rid of the other to the point of starting price dumping, running 1 minute ahead etc?

If it is sustainable, I would see a lot of benefit in them getting together to agree fares, timetables and interavailability like a classic municipal joint operation, but competition law would make that very difficult.

 

[Dai Corner]

How sustainable is it? That is, do both operators have enough business to continue, is it likely to be long term, and does either operator want to get rid of the other to the point of starting price dumping, running 1 minute ahead etc?

If it is sustainable, I would see a lot of benefit in them getting together to agree fares, timetables and interavailability like a classic municipal joint operation, but competition law would make that very difficult.

It's been the situation for years so I presume both operators are happy.

(I believe Stagecoach have bought out Anslow's bus operations twice in the past but after concentrating on schools, tours and private hire for a while they've come back into the market).

 

[Kremlin Stooge]

In my opinion and experience, current competition law has been hugely preventative in stopping operators who want to work together from co-operating. About seven years ago, we were almost at a postition in the West of England where a multiple operator ticket would have replaced the dominant single operator offering. The dominant operator's local management was enthusiastic about it, but the idea got blown out of the water by their legal team at group level. Many years down the line we're still not really any closer to regaining that momentum, despite it being a key policy requested by the LTAs for the Enhanced Partnership negotiations. Indeed the operator concerned will next week introduce even more single operator products...

And that IMHO is the most useful and informative post on this topic.

Freely admitting to some slight nitpicking; is it current competition law, or current interpretation of competition law that is the obstacle here?

 

[GusB]

Added to that, small operators rarely bring benefits to the commercial bus market - most often they just provide low quality, low price services which damage the overall product in many different ways. They only really bring benefits for tenders or where the big boys aren't interested, and again whether there was competition law or not the big boys would leave them alone on routes they don't care about, as they do in rural Wales for instance.

Evidence, please.

 

[Bletchleyite]

Evidence, please.

UK North is probably the finest example of a small operator bringing disbenefits through cut throat cost cutting type competition, though others do come up on here from time to time I can't remember other specifics. I am however interested in specific cases, one of which has been highlighted above, where such operators have brought benefits and long term stability in operating alongside a major incumbent on the same or a very similar route.

Small operators do bring benefits when they operate on tight margins and so make services work that the big boys won't, of course. But the point was more related to the thread title than an anti-small-operator rant - is it to the passenger's benefit that competition law protects them by e.g. preventing First and Stagecoach forming a cartel on a route to their exclusion? And I find it hard to say anything other than "no".

 

[GusB]

UK North is probably the finest example of a small operator bringing disbenefits through cut throat cost cutting type competition, though others do come up on here from time to time I can't remember other specifics. I am however interested in specific cases, one of which has been highlighted above, where such operators have brought benefits and long term stability in operating alongside a major incumbent on the same or a very similar route.

Small operators do bring benefits when they operate on tight margins and so make services work that the big boys won't, of course. But the point was more related to the thread title than an anti-small-operator rant - is it to the passenger's benefit that competition law protects them by e.g. preventing First and Stagecoach forming a cartel on a route to their exclusion? And I find it hard to say anything other than "no".

Evidence, please!

Provide examples of smaller operators bringing disbenefits. If you can't, please don't make such sweeping statements. There are numerous small operators out there who I am sure are doing their best to provide the best service they can. You seem to be under the impression that small = cowboy, and while that may well be the case in some circumtances, I don't think it's fair that you should tar everyone with the same brush.

 

[Simon75]

Isle of Wight still (as far as I'm aware) still has a monopoly with Southern Vectis (Go Ahead)

 

[RT4038]

That seems to be an unfair generalisation, small operators can and do grow into significant businesses; as an example look at D&G, without them growing from small origins large parts of Staffordshire and Cheshire might well not have any bus services at all.

As for competition more generally, we have had times when local services were run by private monopolies that were owned by large groups (Tilling and BET); this was deemed unsatisfactory so nationalisation was used as a solution. In turn, this was found to be unsatisfactory as well, so the option of allowing innovative and entrepreneurial operators to adopt a market-oriented approach was initiated, with regulation to mitigate/prevent market position abuse, and this is where we find ourselves today (with the exception of London, which seemed to be scared of going along this route for some reason).

What other options are there, that haven’t already been tried?

Pardon me, but there is some re-writing of history here - nationalisation was certainly not seen as a solution to the unsatisfactory private monopolies owned by large groups. There was 20 years between the nationalisation of the two groups - Tillings were inadvertently nationalised in 1948 when the Railways were nationalised. Both groups had railway owned shareholdings, but Tillings were owned more than the percentage where the other shareholders have to be bought out, when the railway came under common ownership. 20 years later BET approached the Govt. to buy them as they didn't want to carry on, due to falling traffic and rising costs and no other prospective buyer. No doubt if Tillings had not been nationalised in 1948 they would have done the same, probably slightly earlier as their companies had a greater proportion of green fields. The 1930 Road Traffic Act, establishing the Traffic Commissioners, had effectively brought the private monopolies under control (and extended them).

UK North is probably the finest example of a small operator bringing disbenefits through cut throat cost cutting type competition, though others do come up on here from time to time I can't remember other specifics. I am however interested in specific cases, one of which has been highlighted above, where such operators have brought benefits and long term stability in operating alongside a major incumbent on the same or a very similar route.

Small operators do bring benefits when they operate on tight margins and so make services work that the big boys won't, of course. But the point was more related to the thread title than an anti-small-operator rant - is it to the passenger's benefit that competition law protects them by e.g. preventing First and Stagecoach forming a cartel on a route to their exclusion? And I find it hard to say anything other than "no".

There are/were fairly small numbers of operators such as UK North, and they hardly represent the small bus operators across the country. There are plenty of respectable small operators providing tendered and commercial services. Some of the big operators hardly cover themselves in glory either.

Be careful what you wish for - it is not only fares and services, but it is standards of reliability, presentation etc that can easily fall to rock bottom when you have a monopoly (Bristol LH, MCW Orion body??) You might think that operators would view that private car travel as competition to be fought for, I am not so sure that it is really viewed in quite that way by operators.

 

[Doctor Fegg]

I believe that's led by the Council, isn't it? Competition law would cause issues with bus operators just deciding to do it themselves.

It's assisted by the County Council, certainly. I wouldn't go as far as to say they lead it.

The Oxford model generally works very well. If there's a downside it's that the bus tail does tend to wag the transport dog in Oxford, which is arguably one of the reasons why the city's pedestrian and cycling infrastructure is so sub-par. But that needn't be an issue in cities with less constrained streets.

Added to that, small operators rarely bring benefits to the commercial bus market - most often they just provide low quality, low price services which damage the overall product in many different ways. They only really bring benefits for tenders or where the big boys aren't interested

That's a pretty big "only"... vast swathes of the country are covered by small operators.

IMX the good local operators vastly outnumber the cowboys. A cowboy operator causes problems for good local operators, too (as when the late, unlamented RH Transport underbid the long-established Worths for the Witney–Chipping Norton route; RH unsurprisingly went pop a few years later, and Stagecoach picked up the retender at a much greater subsidy. It's now with Pulhams, who are an excellent local operator).

 

[Bletchleyite]

It's assisted by the County Council, certainly. I wouldn't go as far as to say they lead it.

The Oxford model generally works very well. If there's a downside it's that the bus tail does tend to wag the transport dog in Oxford, which is arguably one of the reasons why the city's pedestrian and cycling infrastructure is so sub-par. But that needn't be an issue in cities with less constrained streets.

I'll be honest - I'd take the bus tail wagging it rather than the car tail wagging it as it does anywhere else other than London and maybe Cambridge!

That's a pretty big "only"... vast swathes of the country are covered by small operators.

IMX the good local operators vastly outnumber the cowboys. A cowboy operator causes problems for good local operators, too (as when the late, unlamented RH Transport underbid the long-established Worths for the Witney–Chipping Norton route; RH unsurprisingly went pop a few years later, and Stagecoach picked up the retender at a much greater subsidy. It's now with Pulhams, who are an excellent local operator).

I think I will explicitly retract what I said to make clear the point I was aiming to make, as I think what I said has come across as unfair on good small operators. I suspect my view has been clouded by not just UK North who were in a league of their own in irresponsibility and plain law-breaking, but also by the general poor quality of the group of inter-related Aylesbury-based small operators who I mostly come across round here, as well as Express Motors in North Wales wilfully competing with rather than complementing* the Conwy Valley Line (among some law-breaking that resulted in them being closed). Certainly there are good quality small operators around here such as the long-established Grant Palmer, and the "quirk" that is Universitybus/Uno.

So, to make my view clear and move this away from a "small operators? good or bad?" type discussion which wasn't my aim:

Small operators running their own stuff where the big guys have no interest: good (and competition law isn't really needed to protect this, and it might help if removed competition law enabled those small operators to work together to build better rural and low-demand networks in this sort of area).

Small operators competing directly with established urban networks: bad (and so I don't believe competition law should protect a small operator wishing to do this).

A big operator coming in and running a small operator off a lower-margin urban route because they are interested in it: good for the passenger due to the gain of ticket interavailability, bad for the small operator (this is a difficult one)

A big operator coming in and running a small operator off a lower-margin urban route because they don't want that route to exist because it abstracts a few passengers who would otherwise walk to their major route along a nearby main road: bad (question is, how would you modify competition law only to protect against this specific one?)

* The Conwy Valley runs a three hourly clockface (or very close to it) timetable. Even if they perhaps couldn't collude on fares (which would be best), Express could have grown the overall corridor's public transport market markedly by operating their service in the two out of three hourly slots when there is no train rather than just going head to head on a similar timetable. This is what I believe the new electric bus service is going to do.

 

[Doctor Fegg]

I'd agree with pretty much all of that!

A big operator coming in and running a small operator off a lower-margin urban route because they are interested in it: good for the passenger due to the gain of ticket interavailability, bad for the small operator (this is a difficult one)

Obvious answer but:

Nationwide interavailable smart ticketing would level the playing field here, and would make the bus a much more viable choice for everyone, boosting small and big operators alike. It baffles me how we, as a nation, have been pratting around with ITSO for 14 years and still don't have anything close to this.

 

[Bletchleyite]

I'd agree with pretty much all of that!


Obvious answer but:

Nationwide interavailable smart ticketing would level the playing field here, and would make the bus a much more viable choice for everyone, boosting small and big operators alike. It baffles me how we, as a nation, have been pratting around with ITSO for 14 years and still don't have anything close to this.

Yes, true. One thing that could have been considered for a semi-deregulated environment would be a structure more like that of black cabs (or the old Malta buses) where anyone could register a bus service, but there would be minimum standards and fares would be fixed, so the only effective way to compete would be to make your bus somehow nicer to travel on than the other ones. Standardised fares are pretty much needed for a ticketing system like that (though admittedly the Netherlands only has them in the sense we have them for energy prices - the structure is fixed as "starting price once per multimodal journey plus each operator's kilometric rate", but not the kilometric price which operators can set themselves).

It's interesting that we will do that for energy (where companies can only set prices of "£X per day standing charge plus £Y per kWh" - no other formats are allowed other than fixed time-based variation of Y for Economy 7 and Economy 10 - the reason being to ease comparison) but not for bus travel.

But that isn't quite where I was going with the thread - I'm more going down the line of "if we're going to have deregulation, how about removing some of the remaining generic regulations that appear to act against the passenger's interest", namely competition law that prevents collusion on fares and timetables, as the ability to overcharge is basically prevented by the presence of taxis (which have fares effectively capped by way of the local Hackney rates even if they aren't themselves Hackneys) and private cars in the market, and integration and interavailability of timetables and fares are without doubt to the passenger's benefit.

 

[johncrossley]

Indeed the operator concerned will next week introduce even more single operator products...

I thought single operator products are supposed to be a good thing!

 

[TheGrandWazoo]

I thought single operator products are supposed to be a good thing!

Has the whole concept of price segmentation escaped you?

I know it's been explained to you before, but let's try again. I think all posters on here would like multi-operator tickets, and in many places, they exist. The question is whether they should attract a premium as, in most walks of life, something that has more functionality usually attracts a price premium. Surely you recognise this as a thing?

If you then decide that you wish to have the enhanced product at a higher price, should someone that doesn't need that enhanced functionality be able to purchase a lesser product at a lesser price. Essentially, you can have Tesco or Tesco Value but you would seem not to want people to have the choice. Or that Tesco Value didn't exist but that you could have Tesco at the Value price. Hey, wouldn't we all want sirloin for the price of mince!

In this instance, @Citistar is stating First West of England (under James Freeman) wanted the Avon Rider ticket to have primacy (and it did carry a 50p premium on solely First products) but group got cold feet, and it certainly wasn't promoted on First buses. Mind you, some other firms drivers didn't even realise they were in the scheme! As an aside, the First products are increasing in value but don't know if the Avon Rider tickets are changing so some interesting price comparisons.... Another one for @Citistar - was this being brokered by an independent organisation. TravelWest would be the obvious one and would that have got around competition issues?

 

[Bletchleyite]

Has the whole concept of price segmentation escaped you?

I know it's been explained to you before, but let's try again. I think all posters on here would like multi-operator tickets, and in many places, they exist. The question is whether they should attract a premium as, in most walks of life, something that has more functionality usually attracts a price premium. Surely you recognise this as a thing?

If you then decide that you wish to have the enhanced product at a higher price, should someone that doesn't need that enhanced functionality be able to purchase a lesser product at a lesser price. Essentially, you can have Tesco or Tesco Value but you would seem not to want people to have the choice. Or that Tesco Value didn't exist but that you could have Tesco at the Value price. Hey, wouldn't we all want sirloin for the price of mince!

In this instance, @Citistar is stating First West of England (under James Freeman) wanted the Avon Rider ticket to have primacy (and it did carry a 50p premium on solely First products) but group got cold feet, and it certainly wasn't promoted on First buses. Mind you, some other firms drivers didn't even realise they were in the scheme! As an aside, the First products are increasing in value but don't know if the Avon Rider tickets are changing so some interesting price comparisons.... Another one for @Citistar - was this being brokered by an independent organisation. TravelWest would be the obvious one and would that have got around competition issues?

The answer to this is that it makes more sense to offer cheaper passes based on zones rather than on which arbitrary routes a given bus company operates - Merseytravel's long-running area/zone system is one of the best designed in my view. Though in some cases, such as Manchester, split by operator gives you a crude zonal system anyway.

 

[johncrossley]

I know it's been explained to you before, but let's try again. I think all posters on here would like multi-operator tickets, and in many places, they exist. The question is whether they should attract a premium as, in most walks of life, something that has more functionality usually attracts a price premium. Surely you recognise this as a thing?

But as @Bletchleyite always says (so I don't need to) you should segment by geography, not by company. And, unless I've missed it, you've never disagreed with @Bletchleyite on that!

 

[TheGrandWazoo]

The answer to this is that it makes more sense to offer cheaper passes based on zones rather than on which arbitrary routes a given bus company operates - Merseytravel's long-running area/zone system is one of the best designed in my view. Though in some cases, such as Manchester, split by operator gives you a crude zonal system anyway.

Even in zones, the premise remains. You can have a Bristol Zone - First only used to cost £4, Avon Rider was £4.50, back in the day.

== Doublepost prevention - post automatically merged: 21 Jan 2022 ==

But as @Bletchleyite always says (so I don't need to) you should segment by geography, not by company. And, unless I've missed it, you've never disagreed with @Bletchleyite on that!

Because it wasn't me making that point, was it...

 

[Bletchleyite]

Even in zones, the premise remains. You can have a Bristol Zone - First only used to cost £4, Avon Rider was £4.50, back in the day.

The premise, however, is flawed in the context of an urban transport system, and is particularly inconvenient to those whose route is operated by two or more operators.

It comes down to whether you believe cities should have a collection of independent public transport routes or a single public transport system.

 

[TheGrandWazoo]

The premise, however, is flawed in the context of an urban transport system, and is particularly inconvenient to those whose route is operated by two or more operators.

It comes down to whether you believe cities should have a collection of independent public transport routes or a single public transport system.

You buy the more expensive version obviously.

The point the poster concerned (might have been daodao?) made is whether you then want to spread that financial pain to people who don't need a multi operator ticket