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IN just two months two highly-respected high-profile London area coach businesses have been acquired by two of Britain’s biggest transport groups. In November, National Express bought Kings Ferry, based in Kent and focussed firmly on the London market, with an emphasis on commuter coaching and corporate private hire.

Then in December Arriva announced it was buying the Tellings Golden Miller group. Although the TGM name is most closely associated with London area coaching this is just one facet of a varied operation which includes coach and bus operations in the north-east of England, East Anglia, Surrey and the south coast.

These are the big-name changes affecting the coach industry, but not the only ones. In Scotland, Hutchison of Overtown has just wound up its coach business, after selling its bus operations to First last summer.

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Hutchison has now wound up its coach business after selling its bus oeprations to First last summer.

Veolia has been buying up small coach operators – in 2007 these were Astons Coaches in Worcestershire and Paul James Coaches in Leicestershire. They joined a miscellaneous collection of business spread across England and Wales, from Durham in the north-east, through Hull, York and Nottingham, to a number of businesses in South Wales now united in Veolia Cymru. It may be hard to see the business logic in buying operators spread across the country, but in doing so Veolia now has a UK bus and coach fleet numbering over 600 vehicles. Its biggest single acquisition was the Dunn-Line business which, although based in Nottingham, had operations elsewhere.

Rotala has expanded in the last 18 months, initially in the midlands with the purchase of Zak’s, North Birmingham Busways and Ludlows of Halesowen, and then into Gloucestershire when it acquired parts of the operations of the South Gloucestershire Bus & Coach Company. In the space of a month last summer Rotala added over 100 vehicles to its fleet. Rotala’s premium coach operation is Flights Hallmark.

There have been small-scale takeovers too, such as the autumn purchase by Bakers of Biddulph of the operations of Niddrie of Middlewich.

And there are known to be other family-run businesses which are in discussions with possible buyers about selling out.

So what does it all mean? Is this the start of some continuing consolidation of Britain’s coach operators, or just a blip as individual owners decide to retire or to realise some of the equity in their businesses?

That coach operation is more challenging now than ever before is certainly true. Fuel is becoming an ever more significant component in operators’ costs, and will continue to do so. Driver recruitment is another issue. Coach driving is, generally, not a job which attracts young people, and the current generation of drivers is ageing. Changes to working time rules impose constraints on how drivers work – and can restrict their earning capacity, making the job even less attractive.

The vehicles themselves are increasingly complex, and ever-stricter emissions legislation will further add to that complexity. And, of course, there’s the London Low Emission Zone, which comes into force this summer. Operators should just be thankful the M25 is not included.
Indeed, just imagine for a moment than you had absolutely nothing to do with the coach industry and your fairy godmother tapped you on the shoulder and gave you £200,000 to invest in any sort of business that took your fancy Would you invest it in a coach? Not if you wanted to maximise your investment and minimise your headaches.

Whatever consolidation may – or, indeed, may not – be taking place, nobody is predicting the demise of the family-run coach business. Many serve high-quality niche markets such as corporate charter or upmarket touring, which benefit from the personal touch only a small business gives. Others enjoy operating coaches, whatever the hassles, and in the end there’s more to running a business than simply maximising your profit.

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Is the 2012 Olympics driving NatEx's interest in acquiring premium coach operations such as Kings Ferry?

Could there be some long-term planning in the two recent London acquisitions by Arriva and NatEx? In four years’ time London’s coach fleet will be working flat out to support the Olympics. Having bases in Greater London which are established, and are run by professional management teams, must be an attraction. It’s a once-in-a-lifetime opportunity.

For Arriva, the TGM takeover is about more than London coaches. The TGM group operates NatEx contracts, and also owns Classic Coaches in County Durham and Burtons of Haverhill.

The relationship between TGM, Classic and Burtons dates back to the 1990s Status group, an affiliation of coach and bus operators backed by Julian Peddle which included other businesses in the north-east of England and the midlands. Classic operates in an area already served by Arriva, but in which Go-Ahead is the main operator.

Burtons was later acquired by TGM, and it took over Arriva’s bus operations in Colchester in 2004, now operated under the Network Colchester brand. So, in buying TGM Arriva finds itself back in Colchester. Will it stay this time? Presumably it will, if under TGM control the operation has been made sufficiently profitable.

For NatEx, the Kings Ferry is a logical extension of one arm of its business. But it’s different for Arriva. The group does run coaches, but it is not a big player in the private hire market which makes up a significant part of each of the TGM group’s subsidiaries’ businesses. Think of Arriva and coaching and you come up with Green Line, and other interurban express operations rather than private hire.

It will be interesting to see just what they make of TGM. It is noteworthy that in announcing the takeover David Martin, Arriva chief executive, specifically commented: “We appreciate the specialised skills and experience of Tellings Golden Miller’s management and employees.” That statement could be seen as recognition of the difference between TGM’s operations and those of Arriva, rather than just part of the standard corporate takeover announcement.

While some coach operators may be waiting for the nice man (or woman) from Veolia, NatEx or Arriva to knock on the door with a briefcase full of £50 notes, others are disappearing as costs rise faster than revenue. In the last few months we have seen the closure of Focus of Preston and Gibson of Moffat. Focus was a young business; Gibson was in its fourth generation. Both aspired to offer high-quality services.

Yet despite the changes, there are always signs of hope. Britain’s postwar baby-boom generation is at retiring age, and is significantly better off than any previous generation of retired people. Wallace Arnold with its Grand Tourer programme led the way in showing how a premium service can attract premium rates from a generation used to travelling by car. Look at the growth in sea cruising. Some of the people who for the last 30 years have driven everywhere on holiday are less enthusiastic about being behind the wheel as they get older and traffic conditions get worse.

The challenge facing those who want to run coaches, and to run them profitably – for there is no other way – is not just to contain costs, but to maximise revenue. That’s where your focus should be in 2008, as in any other year.

And if you can make more money by selling your business and investing the proceeds, than by actually running coaches – well, it’s your call…

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