Stagecoach Takeover Discussion

[CN04NRJ]

There seems to be an assumption that it would be Fluxbus that would take over Megabus if the merger goes ahead and it is sold off. I would have thought that, as they are already the major shareholder in Megabus, and CityLink, in Scotland, and would appear to want to expand in the U.K., they are in pole position to be the likely purchasers.

Why would a company acquire their main competition only to sell the entire (Megabus) business off to their next nearest rival?

I'm not sure how it would work as Megabus is very well integrated into Stagecoach - where would this new Flix/Megabus operate their vehicles from as I'm damn well sure NatEx wouldn't allow them use of depot facilities.

 

[LOL The Irony]

I personally see Megabus being kept as a budget brand and National Express as the premium brand. As for the buses, it really depends. The Stagecoach brand is stronger, so logically speaking, you would have all the bus operations under the Stagecoach brand. But would the effort be worth it?

 

[Mwanesh]

They will still keep the brands. Flixbus are actually finding the UK market challenging.

 

[JonathanH]

They will still keep the brands .Flixbus are actually finding the UK market challenging.

I think part of the problem for Flixbus is establishing a visible presence that attracts passengers. Where I have taken Flixbus services there have generally been more passengers on the equivalent National Express service.

I see National Express as being the only nationwide coach brand in England in a very short time frame with perhaps Citylink getting back onto Anglo-Scottish journeys but no more.

 

[MotCO]

I personally see Megabus being kept as a budget brand and National Express as the premium brand. As for the buses, it really depends. The Stagecoach brand is stronger, so logically speaking, you would have all the bus operations under the Stagecoach brand. But would the effort be worth it?

I agree to both points - I just hope they scrap the awful new Stagecoach liveries.

 

[LOL The Irony]

I just hope they scrap the awful new Stagecoach liveries.

Agreed. Beachball is instantly recognisable and could still look modern as the MMC version showed.

I also meant to add that the buses could all be branded as Stagecoach but the NX operations could still keep their current OpCo license.

 

[chorleyjeff]

Who would want First at this point in history?

"at this point in history?" = "now" ?

Another ginger

 

[TheGrandWazoo]

I agree to both points - I just hope they scrap the awful new Stagecoach liveries.

To be honest, I'm no fan either but I suspect that vehicles will continue to be repainted in them for some considerable time. In fact, it might be that Stagecoach (with the greater brand recognition) is retained for UK buses but even if it isn't, there are simply much more pressing concerns behind the scenes to put right, like rationalising payroll systems etc.

I also meant to add that the buses could all be branded as Stagecoach but the NX operations could still keep their current OpCo license.

I don't think there's a likelihood of any operators license changes. As has been mentioned already, many Stagecoach firms O licenses and legal lettering still reflect the old names of acquired operators.

 

[A0]

Why would a company acquire their main competition only to sell the entire (Megabus) business off to their next nearest rival?

Because the acquisition / merger may get referred to the Competition and Markets Authority. Who in turn may stipulate that a sale of Megabus is a term of the merger going ahead. Wouldn't be the first time such actions have been taken, for example when Lloyds TSB took over HBOS they had to divest themselves of a number of branches which was why they spun off TSB and sold it. The only reason the likes of Barclays or HSBC didn't go for it, is they wouldn't have been acceptable to the CMA. Going further back when Morrisons took over Safeway they had to sell a number of sites which were taken on by various competitors, usually where that competitor didn't already have a local presence.

I'm not sure how it would work as Megabus is very well integrated into Stagecoach - where would this new Flix/Megabus operate their vehicles from as I'm damn well sure NatEx wouldn't allow them use of depot facilities.

Again, it may be part of a ruling by the CMA which states for a period of time support must be provided thereby allowing Flix time to put something else in place. Similar thing happened with TSB whereby Lloyds had to provide support for systems for a fixed period of time after the transfer of ownership to allow the new owner time to set up independent systems / support.

 

[JonathanH]

Because the acquisition / merger may get referred to the Competition and Markets Authority. Who in turn may stipulate that a sale of Megabus is a term of the merger going ahead. Wouldn't be the first time such actions have been taken, for example when Lloyds TSB took over HBOS they had to divest themselves of a number of branches which was why they spun off TSB and sold it. The only reason the likes of Barclays or HSBC didn't go for it, is they wouldn't have been acceptable to the CMA. Going further back when Morrisons took over Safeway they had to sell a number of sites which were taken on by various competitors, usually where that competitor didn't already have a local presence.



Again, it may be part of a ruling by the CMA which states for a period of time support must be provided thereby allowing Flix time to put something else in place. Similar thing happened with TSB whereby Lloyds had to provide support for systems for a fixed period of time after the transfer of ownership to allow the new owner time to set up independent systems / support.

All of this comes down to whether National Express can argue that their competition is railways and cars or whether there actually needs to be competition in the coach industry itself. It may be able to argue the former and that there needs to be one operator to compete effectively with road and rail.

 

[Bletchleyite]

All of this comes down to whether National Express can argue that their competition is railways and cars or whether there actually needs to be competition in the coach industry itself. It may be able to argue the former and that there needs to be one operator to compete effectively with road and rail.

It does seem to be accepted that there is no need for customer-facing competition on rail because of that reason, though the structure is different and competition exists at the point of tender.

 

[hst43102]

I agree to both points - I just hope they scrap the awful new Stagecoach liveries.

With all of this acquisition talk, I'm starting to suspect that the new (mostly white-based, with vinyls on top) livery was chosen so that rebranding would be easy following the takeover.

 

[A0]

All of this comes down to whether National Express can argue that their competition is railways and cars or whether there actually needs to be competition in the coach industry itself. It may be able to argue the former and that there needs to be one operator to compete effectively with road and rail.

I think they'll look specifically at the long distance coach market, because that would effectively be merging #1 and #2 to the detriment of competition and consumer choice.

The bus market is a bit different, nationally Stagecoach is the largest, National Express only has West Midlands. The CMA might take a look at areas where there is an overlap - so logically Stagecoach's Warwickshire operation. But the question will be whether this removes competition - and I'm not sure that it will, because what you've effectively got is the same split that existed between WMPTE and Midland Red. Stagecoach don't seem bothered by operating city services in Coventry instead their markets are Rugby, Leamington, Stratford and Nuneaton, which NXWM don't bother with. The only thing which might affect it is if one of the other large groups (First, Arriva or Go Ahead) raise concerns - that might lead to a requirement to sell a depot or something similar. If we look back some years to Blazefield's sale of Sovereign Stevenage to Arriva, the authority's report basically said they'd approached the other major groups - Stagecoach, First and Go Ahead - all of whom said that they weren't interested in operating in the area and wouldn't be looking to buy Sovereign, so the authority's view was either Arriva bought it or Blazefield would run it down to the point of closure, at which point Arriva would step in anyway.

The only possible interest I could see would be Go Ahead for Leamington and Stratford as an extension of their Oxford operations and possibly Arriva for Nuneaton and maybe Rugby for their Midlands operations.

With all of this acquisition talk, I'm starting to suspect that the new (mostly white-based, with vinyls on top) livery was chosen so that rebranding would be easy following the takeover.

I think you can put the tinfoil hat away.

It's a trend across transport, be it train, bus or plane to go for a white base livery and then to apply vinyls as the livery - it makes it far easier to update the livery, it makes it easier when selling them on as they are in a plain colour which isn't obvious who the previous owner was and easy for a new owner to apply their livery. And the base coats are often subject to a warranty, so removing or repainting that can often invalidate such warranties - that was the reason the Class 365s retained their NSE livery for so long after privatisation.

 

[RomeoCharlie71]

With all of this acquisition talk, I'm starting to suspect that the new (mostly white-based, with vinyls on top) livery was chosen so that rebranding would be easy following the takeover.

Small point of order, but that's just not correct. The new livery is applied using paint, not vinyl (with the exception of the gold swoops on the Distance livery).

 

[Bletchleyite]

It's a trend across transport, be it train, bus or plane to go for a white base livery and then to apply vinyls as the livery - it makes it far easier to update the livery, it makes it easier when selling them on as they are in a plain colour which isn't obvious who the previous owner was and easy for a new owner to apply their livery. And the base coats are often subject to a warranty, so removing or repainting that can often invalidate such warranties - that was the reason the Class 365s retained their NSE livery for so long after privatisation.

In any case "beachball" is also primarily white and could be (but wasn't) done with vinyls.

 

[Goldfish62]

It's a trend across transport, be it train, bus or plane to go for a white base livery and then to apply vinyls as the livery - it makes it far easier to update the livery, it makes it easier when selling them on as they are in a plain colour which isn't obvious who the previous owner was and easy for a new owner to apply their livery. And the base coats are often subject to a warranty, so removing or repainting that can often invalidate such warranties - that was the reason the Class 365s retained their NSE livery for so long after privatisation.

The trend with buses is for ever brighter, more colourful liveries, not white! Planes have always been base white for various technical reasons.

 

[Unstoppable]

I wonder if Megabus could continue just as a sales website for National Express coaches? It effectively already happens in Scotland, where the Megabus and CityLink websites both sell tickets for CityLink coaches.

Some CityLink coaches have some dual branding too, and they are listed as ‘City/Mega’ at Buchanan Bus Station.

Since both Megabus and National Express brands are strong (but probably appeal to different markets), something like this could work, initially at least.

In Scotland the coaches use the Megabus branding but it is actually run by Scottish Citylink. It is called JV (Joint Venture) the M11 and M20 services from Glasgow - London Via both sides are a Joint Venture operation as well opposed to being an official Megabus run. To the naked eye it all looks the same however

There seems to be an assumption that it would be Fluxbus that would take over Megabus if the merger goes ahead and it is sold off. I would have thought that, as they are already the major shareholder in Megabus, and CityLink, in Scotland, and would appear to want to expand in the U.K., they are in pole position to be the likely purchasers.

In Scotland the major share holders are ComfortDelGro and Stagecoach. If Flixbus had major shares wouldn't this be a conflict of interest?

 

[TheGrandWazoo]

Small point of order, but that's just not correct. The new livery is applied using paint, not vinyl (with the exception of the gold swoops on the Distance livery).

Another point of order - the Stagecoach rebrand has been an ongoing saga for years. It was Feb 2017 when it was first mooted!

 

[xydancer]

But the question will be whether this removes competition - and I'm not sure that it will, because what you've effectively got is the same split that existed between WMPTE and Midland Red. Stagecoach don't seem bothered by operating city services in Coventry instead their markets are Rugby, Leamington, Stratford and Nuneaton, which NXWM don't bother with

National Express West Midlands (NXWM) might not compete much with Midland Red in Leamington (except between Sydenham and the town centre, and along the Kenilworth Road), Nuneaton and Rugby, but they do compete between Coventry and those towns.

Between Coventry, Bedworth and Nuneaton via the main road there's NXWM route 20 - not that long extended to Nuneaton - and Stagecoach 48.

There's long been competition on the Coventry-Warwick University-Kenilworth-Leamington corridor, especially between the city and Leamington; and between the university, Leamington centre and the main student accommodation areas. Routes vary with some via Kenilworth and some via the A46. NXWM routes 11/12X, Stagecoach U1, U2, U12, X17, X18.

There's also in-city competition on the routes in the Holbrooks area of the city on Stagecoach 55/56 and NXWM 3/5. Routes do not entirely follow each other but there's a lot of overlap.

NXWM do operate to Rugby but their 25 and 85 follow very different and longer routes to Stagecoach's 86.

Locally, NXWM are thought of highly, somewhat more so that Stagecoach, who in turn trounce Arriva.

 

[A0]

NXWM might not compete much with Midland Red in Leamington (except between Sydenham and the town centre, and along the Kenilworth Road), Nuneaton and Rugby, but they do compete between Coventry and those towns.

Between Coventry, Bedworth and Nuneaton via the main road there's NXWM route 20 - not that long extended to Nuneaton - and Stagecoach 48.

There's long been competition on the Coventry-Warwick University-Kenilworth-Leamington corridor, especially between the city and Leamington; and between the university, Leamington centre and the main student accommodation areas. Routes vary with some via Kenilworth and some via the A46. NXWM routes 11/12X, Stagecoach U1, U2, U12, X17, X18.

There's also in-city competition on the routes in the Holbrooks area of the city on Stagecoach 55/56 and NXWM 3/5. Routes do not entirely follow each other but there's a lot of overlap.

NXWM do operate to Rugby but their 25 and 85 follow very different and longer routes to Stagecoach's 86.

Locally, NXWM are thought of highly, somewhat more so that Stagecoach, who in turn trounce Arriva.

The test will be whether the merger makes it likely that some of these routes would be withdrawn or that fares would go up - in other words the removal of the competition element is to the detriment of the customer.

If National Express West Midlands (NXWM) and Stagecoach can demonstrate they are providing different services or serving different markets then the competition authorities are unlikely to be too concerned. The Rugby ones are as you say, very different routes so apart from the start and end point aren't really in competition with one another, unless there is a huge market for end to end bus travel - which given the journey times is unlikely, especially when there is also the train to consider.

 

[xydancer]

The test will be whether the merger makes it likely that some of these routes would be withdrawn or that fares would go up - in other words the removal of the competition element is to the detriment of the customer.

Agreed completely.

The obvious one for 'consolidation' would be the Nuneaton corridor. The recent extension of National Express West Midlands 20 was widely perceived locally to be an attempt to hit Midland Red where it hurt on a busy route. The university corridor on the other hand seems fairly settled these days with more than enough business for both.

 

[RT4038]

Agreed completely.

The obvious one for 'consolidation' would be the Nuneaton corridor. The recent extension of NXWM's 20 was widely perceived locally to be an attempt to hit Midland Red where it hurt on a busy route. The university corridor on the other hand seems fairly settled these days with more than enough business for both.

The Enhanced Partnership agreements with the Bus Services Improvement Plan are likely to remove the competitive elements on routes like these anyway.

 

[GusB]

Please remember that any abbreviations and acronyms have to been defined the first time they're used in a post. Thanks

 

[ajrm]

All of this comes down to whether National Express can argue that their competition is railways and cars or whether there actually needs to be competition in the coach industry itself. It may be able to argue the former and that there needs to be one operator to compete effectively with road and rail.

The consistent approach of the competition authorities to the bus industry, particularly where Stagecoach is concerned, has been to ignore other modes of transport and focus on the bus and coach market. I'd be surprised if this doesn't end with the divestment of some of the coach operations.

 

[TheGrandWazoo]

The consistent approach of the competition authorities to the bus industry, particularly where Stagecoach is concerned, has been to ignore other modes of transport and focus on the bus and coach market. I'd be surprised if this doesn't end with the divestment of some of the coach operations.

Not always - see the disposal of Citylink by NatEx after they won the Scotrail franchise. They did consider it when NatEx bought Scottish Citylink in the first place

 

[ajrm]

Not always - see the disposal of Citylink by NatEx after they won the Scotrail franchise. They did consider it when NatEx bought Scottish Citylink in the first place

True, though that was a bit of an outlier in that it was a multi-modal deal in the first place, and a fairly egregious example of two national networks coming into common ownership.

 

[A0]

The consistent approach of the competition authorities to the bus industry, particularly where Stagecoach is concerned, has been to ignore other modes of transport and focus on the bus and coach market. I'd be surprised if this doesn't end with the divestment of some of the coach operations.

Which, to be fair, makes sense. Most of Stagecoach's rail operations were longer distance operations. Had there been a debate about their ownership of United Counties or East Midland at the time they ran East Midlands Trains for example, you'd have struggled to argue the local buses in Bedford or Chesterfield were in any way in competition with the London - Leicester - Nottingham / Sheffield train service.

Buses tend to be far more local than trains and tend not to be competing flows - even where they appear to shadow each other.

 

[BayPaul]

I could see the logic in some changes in the National Express and Megabus networks, but keeping both brands. I could imagine routes served by only one operator being National Express branded, whilst the major routes also keeping a Megabus presence as a low price 'competitor' perhaps with poorer flexibility and timings to encourage the use of National Express. Maybe even have Megabus tickets sold on certain NE services as well, again with poorer terms. I could also see some of the longer distance Stagecoach services, like the ex-Falcon Bristol - Plymouth route becoming National Express services

 

[Goldfish62]

It all looks much more like First than the innovative business it was when Souter was actually directly involved.

I'm surprised you named First and not Arriva. These days Arriva and Stagecoach are both typified by bland liveries, awful websites, lack of innovation and centralised decision making that stifles local management.

First (while far from perfect!) has moved leaps and bounds away from all that.

 

[TheGrandWazoo]

I'm surprised you named First and not Arriva. These days Arriva and Stagecoach are both typified by bland liveries, awful websites, lack of innovation and centralised decision making that stifles local management.

First (while far from perfect!) has moved leaps and bounds away from all that.

I thought the same.

It's taken some time but First is certainly much better. They've devolved responsibility locally and that's evident in the approach. First South West and Hants and Dorset especially have been very innovative but aside from West Yorkshire and Oldham, they are beginning to finally emerge from the damage of the Lockhead years and the reluctance of Tim O'Toole to face into some difficult challenges.

It's Arriva that is really the new First with a lack of investment and innovation. In Stagecoach, there are concerns in areas such as creeping centralism but they are still able to spot an opportunity (e.g. Sittingbourne to Maidstone).