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Stagecoach's Manhattan transfer

Douglas Fraser | 16:57 UK time, Wednesday, 16 February 2011

Stagecoach is used to operating effective monopolies in British urban bus services, so it probably comes as a bit of a shock to be told to hop off its own sight-seeing bus operation in New York.

In the land of the free market, a regulatory, anti-trust stop is being put to a merged joint venture of the two companies - one of them the Perth-based transport giant, which runs 59 buses under the Gray Line brand.

Together with CitySights NY, and its 70 buses, they operate around 89% of what the regulator calls "double-deck, hop-on, hop-off" services. And they neglected to get regulatory approval before joining forces.

In one of the stranger regulatory rulings, this is to protect others in the sector including those who offer tours of the Big Apple by bicycle, rickshaw, Segway, helicopter or "New York's iconic horse-drawn carriages".

The US federal regulator of surface transport says Stagecoach had no right to form the alliance with its main rival. That's particularly as it runs what appear to be separate services with suspiciously similar routes and prices that rose sharply around the time the joint venture was formed.

Route ahead

So it's being refused permission to keep operating as a joint venture. The current set up means it can raise prices without concern about competition, and that it describes as "a hallmark of unrestrained market power".

Having formed the joint venture in March 2009, the following year delivered £8.5m of profit to Stagecoach Group's results.

So in Perth, chief executive Brian Souter is mulling over what to do next. He could easily get out from under the federal regulator's jurisdiction by axing the joint venture's interstate bus lines. They only account for 1% of business, so that's easily done.

But that could put him into the New York regulator's patch, and there's no guarantee it won't take the same approach.

Makes you wonder how bus services might change in Britain with a similarly robust regulatory approach.

Comments

  • Comment number 1.

    Brian Souter is the unacceptable face of deregulation.

  • Comment number 2.

    You guys just wait and see cause Brian Souter will not be out-done by the none-to-clever Yanks you just watch him!!!!!!!!!

  • Comment number 3.

    Were Cameron serious about his 'Big Society', then addressing our people's exploitation by such monopolies would surely figure high on his agenda. All citizen-consumers suffer from the disposal of public property to monopolies, intent upon extracting maximum tax-take, and adding to our burden of living costs. Let the PFI scandal and UKplc's highest rail fares in Europe bear witness, not to mention the vulture banks.....

  • Comment number 4.

    "Makes you wonder how bus services might change in Britain with a similarly robust regulatory approach."

    That actually is a really BIG British problem. We seem unable to write public sector contracts effectively, or to regulate provisions efficiently.

    Just one current example of that is the nonsense about provisions for the unemployed. The DWP is pulling some provisions for the 18-24 year olds who have been unemployed for over 6 months - Gateway To Work, for example. But they're pulling that months and months before the new provision, "Work Programme", is up and running and ready to go. In fact, currently the main contractors have not even been selected. So there will be a significant gap.

    So by the time they get some help with CVs, interviews and similar, some of the 6 month plus unemployed will have become one year plus unemployed. But isn't the idea to reduce the long term unemployed, not increase their numbers? But perhaps this is really all about some senior civil servant 'looking good' to his/her political bosses and not about the end users of services at all.

    Other countries do seems less influenced by some such of British, civil servant mandarin, sort of organisational culture which repeatedly stops the delivery of effective outcomes, or delays them, or causes them to become more and more expensive. The true service agenda just gets way-laid.

  • Comment number 5.

    Planes, trains & buses read- RIP OFF! Simply because they can in our part of the world. This yank hiccup will not stop this particular mega bucks individual....

 

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