Coach industry COVID-19

The impact of the coronavirus COVID-19 pandemic on the coach industry has already been well documented. But soon, attention will turn to recovery from the current standstill. What will that look like?

As with much else relating to the crisis, nothing can be said for certain. But some operators are considering what recovery may involve. Marchants Coaches of Cheltenham is among them. It expects a rate of growth that will vary across workstreams, says Managing Director Roger Marchant.

The current situation for the coach industry and COVID-19

Like most operators, Marchants has seen its business hit hard by the pandemic. 30 of its 35 vehicles are off the road. Of those that are still available for use, three are buses for a contracted service and two are mid-range coaches. Most staff have been furloughed.

That impact is disappointing, explains Transport Manager Craig Robb. “We turned a corner in 2019. There can be an issue with undercutting, but we were seeing rates increase.

“We’d adopted an approach that our price is our price, and that we would not undersell ourselves. That was starting to be successful.”

Two new coaches were on order for 2020, but both have been cancelled. Marchants is positioned to ride the storm, but Craig notes that the timing of the crisis could not have been worse. A strong summer’s income sees operators through the quieter days of winter, but there has been no such boom before the current bust.

Is a gradual recovery in store?

Roger believes that the coach industry should receive more government support, noting that the bus sector across Britain has been given substantial cash injections to help it through the crisis. However, he believes that the Confederation of Passenger Transport is being “proactive”.

Suppliers have worked with Marchants to help cushion the blow. It has received a payment holiday for newer coaches from two of its finance providers.

That is appreciated, Roger notes, but he is mindful that those outgoings, along with the wages of furloughed staff and other costs that are not currently mounting, will return eventually.

Coach industry COVID-19
Roger Marchant believes that different worksreams will return at different rates

“I predict we will see a gradual recovery, and that is when things will become a struggle.

“Money will be going out, but there will be much less coming in than normal for the first month or two. Factor in fuel, and that’s when support will be needed.”

The question of whether the fleet will be reduced slightly after the pandemic has various factors to consider.

While work is likely to ramp up steadily rather than immediately, that is tempered by the possibility of reduced resource supply from other operators. Difficulties that may come with selling surplus coaches amid a potentially depressed market are other considerations, Roger adds.

Variable rates of business return predicted

It seems likely that home-to-school services will return to a semblance of normality first, although how any ongoing social distancing requirements will influence the way in which they are delivered remains to be seen.

Marchants undertakes no home-to-school contracts for local authorities (LAs). It is thus outside the government’s recommendation that LAs continue to pay operators while educational establishments are closed. Instead, it serves private schools where services are funded directly by parents.

“We have seen some understanding there, but it is not universal. There is no clarity on exactly what we will be paid,” says Roger. As an example, some parents have children that will leave at the end of this academic year. Their interest in seeing a sustainable service continue may thus be negligible.

Educational trips are likely to be a slower burner, he continues. Schools’ time to plan and organise this year’s has been lost, and so it will be 2021 before that part of an operator’s diary returns in a major way.

During the busy months that workstream provides valuable revenue, underlining Craig’s earlier point about there having been no financial cushion ahead of the current malaise.

How volumes on day trips and holidays bounce back is tricky to predict, again given the possible need for ongoing social distancing. But that aside, both Craig and Roger hope they will return strongly as people take the opportunity to put long periods of movement restrictions behind them.

In fact, concerns around the spread of viruses on cruise liners and other complications surrounding foreign travel in the medium term could see demand for UK coach holidays exceed previous levels, Roger believes, particularly among the retired market.

Private hire and incoming tourism: Difficult sectors

In the private hire and incoming tourism worlds, Roger believes things will return to normal slowly.

Coach industry COVID-19
The coach industry continues to push clients to rearrange, and not cancel, trips

While there is a push in the industry for holiday and day trip bookings to be rescheduled and not cancelled, Marchants’ belief is that most private hire work that was to have taken place during the crisis period has been lost entirely.

Demand for private hires in the future will return, but Roger adds that it is likely to start as “a trickle”. Hirers, like operators, have no certainty over what the future will look like, impacting on their willingness to commit.

Perhaps the sector that will take the longest to recover is inbound tourism. “I don’t expect that to return until 2021. Even then, it will depend on the global situation,” says Roger. A lot of what Marchants does in that regard involves students.

An operator in the North West of England adds fuel to the suggestion that the incoming market may be the slowest to recover. Not only that, but it has already been approached by such a tour operator asking for reduced rates, and to hold its prices for 2021.

What of the industry in the medium-term?

To sum up how the overall picture looks, Roger says 2020 is already “a write-off.” But while much remains unknown – including the extent of social distancing and restrictions on movement – there is already a flicker of positivity around 2021. Key now is reaching that point.

Light at the end of the tunnel is seen not only by Marchants. The North West operator mentioned above has used time and resource freed by the current slump to turn its hand to starting work on 2021’s holiday programme, although it reports that some venues and hotels have indicated that prices for 2021 will increase by more than may have been expected.

When each of the above points are combined, they deliver a mixed message about coach industry prospects once it is rid of the coronavirus COVID-19 crisis.

There are suggestions that some segments will return quickly. While other factors may remain in play, it is possible that the domestic coach holiday market could see a spike in interest. But incoming tourism may take time to recover. The key summer months are already dead and buried, and that will leave a revenue hole.

A suggestion that Westminster has asked the Local Government Association to retract its earlier advice to LAs in England that coach operators should be considered part of the leisure sector is also worrying. When all is considered, only one thing is certain for the coach industry after COVID-19: Continuing uncertainty.