Call for more competition on the buses

6th May 2011 09:48

The Competition Commission (CC) has spoken out at the UK bus industry, proposing that the market should be opened up to increase competition for the larger operators.The CC said that while there are some 1,245 bus companies across Britain, the majority of routes and local areas experience a "high degree of concentration". Additionally, the report claims that in more rural areas, the larger firms are able to operate amidst little, or in some cases, no competition."Many passengers are dependent on the bus and do not have a realistic or desirable alternative, such as getting into a car or a train, if fares rise or services deteriorate," the report said."The CC has also concluded that the way local authorities tender for supported services-necessary services which would not be provided without public subsidy-and the limited number of potential bidders in local areas can restrict competition and increase the cost of supporting these services."The five largest bus operators - Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach - provide 69% of local bus services and have tended to make profits above the cost of capital over the last half-decade.The CC has proposed restrictions on aggressive behaviour within the bus market, such as 'overbussing' and obstructive actions that can reduce a rival's ability to compete. Also suggested are measures to ensure fair access to bus stations for all operators, as new entrants are sometimes faced with difficulties in accessing stations and depots on fair terms.Jeremy Peat, chairman of the Local Buses Inquiry Group, said that limited competition has "evident risks of disadvantages for passengers when there is little to keep local operators on their toes.""We are aware that head-to-head rivalry on particular routes has resulted in destructive short-lived 'bus wars' and other behaviour that doesn't benefit passengers. We have found that head-to-head competition can be unstable...and this instability has the effect of preventing competition taking root over a longer period," Peat added.