Stagecoach chief Souter says bus probe a waste of time

Published on Thursday 2 December 2010 14:20

STAGECOACH chief executive Brian Souter will this week launch a blistering attack on the Competition Commission's inquiry into the UK bus industry, dismissing it as a waste of time and energy.

&#149 Brian Souter

The transport boss will use the occasion of Stagecoash's interim results presentation to claim the investigation is an unnecessary diversion of companies' attention as the Commission prepares to publish its initial findings next month.

Souter, who is expected to unveil robust interim results for his firm, has argued previously that Britain's bus industry is highly competitive and that the Commission fails to take into account bus operators' main form of competition: private cars.

Final submissions have to be submitted this month before the Commission publishes its provisional findings in January. The deadline for its final ruling is January 2012.

A source close to the transport heavyweight said: "Souter has been very vocal on this issue and he is unlikely to let it go at this key staging post in the investigation. The other bus operators are likely to be cheering him on from the wings."

The Office of Fair Trading referred the bus industry to the Commission last January on concerns that operators might be earning excessive profits because of strangleholds on local markets where it is alleged that there might be unofficial non-competition agreements between operators.

But a recent note from broker Deutsche Bank says: "It may be the case that one third of local transport authorities have just one operator because they cannot profitably sustain two. It should also be remembered that the private car remains a formidable competitor."

Souter is also expected to urge the government to protect concessionary bus fares in the face of its swingeing austerity programme. He argued at Stagecoach's annual profits presentation in June for the axe to fall on road-building and infrastructure instead.

Souter has recently said: "I would cut road building before I cut concessionary fares. There are big social implications (for the latter]."

However, many in the City expect an eventual 10 per cent cut in local authority funding for concessionary fares for old and disabled passengers.

The argument over concessionary fares follows a 20 per cent cut in fuel rebates from the government for transport groups in its spending review from 2012/13.

Stagecoach has the highest industry exposure to concessionary fares, which comprise 25 per cent of its UK bus revenues and 11 per cent of its group revenues. It has been estimated that if there was a 10 per cent cut, the Scottish company would take a 15m hit according to its market share.

Meanwhile, Stagecoach is expected to say profits have motored ahead in its first trading half when it reports on Wednesday. Deutsche Bank forecasts an interim pre-tax profit up nearly 40 per cent at 105.3 million.