Lack of competition ‘means bus firms fail to drive up standards’

Many passengers dependent on bus services in local areas can expect less frequent services and in some cases higher fares than in areas where there is more competition, said the commission in a preliminary report.

The commission also said head-to-head rivalry on particular routes had resulted in destructive short-lived “bus wars” and other behaviour that did not benefit passengers.

The CC’s inquiry covers local bus services in the UK excluding London and Northern Ireland.

The commission said the five largest bus operators (Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach) provided 69 per cent of local bus services in the whole reference area.

The chairman of the commission’s local buses inquiry group, Jeremy Peat, said: “There are a large number of towns and cities where bus operators face limited competition and little prospect of significant change.

“In a market that was deregulated in anticipation of widespread competition, that is clearly a problem and there are evident risks of disadvantages for passengers when there is little to keep local operators on their toes.”

He went on: “Buses provide an essential, if unsung, daily service for millions of people in the UK, carrying twice the number of passengers as do trains.

“Many passengers are dependent on the bus and do not have a realistic or desirable alternative, such as getting into a car or a train, if fares rise or services deteriorate.”

He said the CC had seen a number of factors that can prevent new or enhanced competition in local areas and was “looking for practical measures that will address these factors and open markets up to the greater rivalry which will benefit passengers”

Mr Peat went on: “We have found that head-to-head competition can be unstable, given the unusual characteristics of the bus industry, and this instability has the effect of preventing competition taking root over a longer period.”

The CC is seeking views on whether local transport authorities should take measures to encourage competition, including whether franchising (where operators would compete for the right to provide services) might be required in cases where there has been a particularly marked failure of competition.

Simon Posner, chief executive of the Confederation of Passenger Transport UK, said: “The report states that there are 1,245 bus companies in England, Scotland and Wales, which demonstrates to us how competitive and vibrant the market is.

“Importantly for our customers, the report confirms that even where there is a dominant operator, our fares are reasonable.”