A source of intrigue to the coach industry is growing interest shown by large bus operators in purchasing small- and medium-sized coach businesses. Four – Dartline, Pulhams, York Pullman, and now Eve Coaches – have gone that way since late 2022, with speculation that at least one more will soon follow.
That all those operators are also active in buses is no doubt an influence, and at least two were retirement sales. The latter is also true of several coach company purchases by Andy Scott’s REL Capital in South East England.
Mr Scott has made clear that he is not finished on the acquisition trail, and bus operators that have done deals for coach companies have largely highlighted that their core coaching work is key to the attraction.
All legacy buyers (so far) have existing coach interests, but why the heightened keenness to grow those now? Current strong margins in coaching will be a factor, while contracted revenue and a flattening of seasonal peaks in tourism-related work coupled to increasing awareness of coach by business customers will smooth the way further.
Longer-term scope for scheduled coaching to continue its growth trajectory will also be attractive, although bus operators by definition have long demonstrated that a background in traditional coach work is not necessary to deliver scheduled services competently.
Against recent deals should be seen change at National Express, where the mood music is that its interest in purchasing independent coach businesses is firmly over. Much earlier, many bus operators closed or sold their legacy coach undertakings during the 1990s.
However, the desire of some large bus companies to now expand their coaching presence may ultimately come down to a wish to widen revenue bases and spread overheads.
The bus sector in many areas does not know what its long-term future holds. Full patronage recovery for some locations is a way off, if it ever happens at all without major policy intervention. Losing territory to others via the unpredictability of franchising is a risk that will increase.
Meanwhile, the coach segment is generally in good health, with strong forward bookings and rates, although it is not without its own clouds in the form of poor political understanding, no clarity over the decarbonisation direction, and a still-tricky driver situation.
But in most cases, 2024 is expected to be a good year for coach. For bus, it will largely represent more transitional time. Should the latter’s growing interest in the former thus be a surprise? Probably not.
