The likelihood that coaches will see long-term change following the coronavirus COVID-19 pandemic is high. New threats have presented themselves over recent weeks, but so too have opportunities. That’s the view of Andrew and David Jeakins. They run associated businesses Jeakins Coach Travel and Lianne Coaches, based in Surrey.
Both operators specialise largely in education-related duties. The pandemic has had a major effect on that workstream, and it came early. “We haven’t had a vehicle on the road since 20 March. It will be a slow recovery for us,” says David.
Taking positives from a difficult situation
However, a reliance on pupil and student movements also brings a positive. Business is not as heavily peaked for Jeakins and Lianne as it is for operators that rely heavily on tourism. As a result, Jeakins and Lianne went into the current difficulties in a stronger position than many of their peers. That is helped by a relatively minor exposure to vehicle finance.
Perhaps most importantly, Andrew and David acted quickly to plan for a worst-case scenario before the true extent of the pandemic became known.
“We started to prepare well before the virus took hold and when some people still thought it would amount to little. A couple of fellow operators were warning a long time ago that it was going to have a major impact. We took heed of what they said.”
The first indication of what was to come arrived with the cancellation of a large international sports competition, which was to occupy a lot of the Jeakins and Lianne fleets for a week. That was a bombshell. “We were spooked by it,” says Andrew.
Loss of that booking, and the subsequent effects of a total business mothball, have been significant. Although school work is less peaked than much of the rest of the industry, Jeakins and Lianne serve only private establishments. Those schools have no obligation to continue payments for transport.
Two of them terminated their contracts with Jeakins and Lianne over the Easter period. One other has continued to make payments – something that David says will not be forgotten.
The effect on educational trips has been equally pronounced, and it has worsened as the crisis has deepened. “Schools were initially cancelling and saying they would likely rebook trips for June. Now they have realised that is not going to happen,” says Andrew.
Will a recession hurt private school numbers?
Operators that work for private schools are further exposed by the seemingly inevitable pending recession. Parents may elect to remove children, or to cut the number of trips they are willing to pay for. “We might have that to contend with,” says David. “But we don’t know anything for certain until we return to operating.”
For the general private hire that the two businesses undertake, the picture is similar. Many groups are awaiting confirmation from the attraction in question of when it will reopen. Using the theatre world as an example, October looks to be the earliest time that some events will be staged.
Although Andrew and David take a pragmatic view of the situation, they have had to make changes at both businesses.
Two vehicles due to join have been cancelled as part of a freeze on spending and all staff are furloughed.
A further concern is the potential impact of ongoing social distancing requirements.
It is not clear how that will apply to coaches and buses, but the impact could be major. Parents may be reluctant for their children to go on trips, or they may choose to drive them to and from school.
David also notes that other industries’ policies could pose a challenge. He points to suggestions that car manufacturers in the United States are already mounting campaigns promoting the social distancing benefits of private transport. If that approach transfers to Europe it could influence the appetite for discretionary travel, he says.
Uncertainty is the biggest problem
As already articulated by Roger Marchant of Cheltenham operator Marchants Coaches, a continuing lack of certainty despite recent suggestions that movement restrictions will soon be eased makes planning for the future very difficult.
Even planning for the moment is tricky. David points out that full information about loan schemes for businesses is not always easy to come by. Additionally, the net benefit of a loan, which clearly must be repaid, is difficult to quantify. Such an arrangement is much less favourable than a grant.
It goes without saying that both Andrew and David would welcome grants being made available to the coach industry. But David questions whether the government understands the sector as well as it should.
“It is difficult for politicians to grasp that we do so many different things each day. They could have perhaps done a lot more for coaches, but when all factors are considered, the government is not doing that bad of a job, considering what has been thrown at it.”
Both men believe that Jeakins and Lianne will eventually return to the positions they were in before the pandemic, but they share the view that the industry collectively will see long-term change.
In the shorter term, rates may come under pressure. There is a train of thought to suggest that as the supply and demand equation changes as some operators leave the industry, rates could increase. David believes that they will go the other way, at least temporarily.
“Sadly, I can see an element of fighting over work in the future. Some operators will be looking at finance bills and be willing to run for less than they would otherwise do if the alternative is for coaches to remain parked earning nothing.
“Some operators may already have pushed themselves hard with Euro VI and PSVAR, and the current situation could push them further.”
Domestic tourism hopes continue to be strong
But on a positive note, Andrew lends further weight to the idea that domestic tourism could see a spike once the pandemic has gone and movement restrictions and social distancing requirements are lifted.
“Incoming tourism will dip for some time. That will be felt worldwide. But if people trust their own country more than others, many of them may want to get out to the seaside and to other places. It could change that part of the industry. Coaching has always been good at adapting quickly.”
Like the remainder of the sector, for Jeakins and Lianne the remainder of 2020 will not be plain sailing. It will be difficult. Much remains unknown and the coaching landscape is still unpredictable.
But by taking a sensible and pragmatic approach, and quickly, the two businesses are as well positioned as could be expected for the restart.
David says that the best result for Jeakins and Lianne would be for schools to remain closed until September, and for the Coronavirus Job Retention Scheme to be extended until the end of August. How likely either of those are to happen remains to be seen, but they would minimise costs until the two operators are ready to come back strongly for the 2020/21 academic year.
That outcome, if it happens, would not suit every operator. But it represents a further view in a crisis that quickly showed it would have a different impact on almost every coach operator in the country.