Now that the National Express West Midlands bus strike is on, causing disruption and misery for thousands of bus passengers across the region, is it time to consider some “what if” scenarios that could happen to the National Express bus operation in the West Midlands? One thing I’ve learned over the years is that change can come rapidly and unexpectedly.
UNITE argue that National Express PLC Is immensely profitable, so should be able to afford to pay its drivers and stuff in the West Midlands bus operation a substantial pay rise. National Express PLC though is a now a group with operations across the globe, with the UK bus and coach operations making a small chunk of its business. It is a much different group to that which brought employee owned West Midlands Travel Limited in 1994. Many of the shareholders of National Express PLC are not based in the UK either and there must be very few shareholders who worked for West Midlands Travel Limited when it was employee owned who still own a shareholding in National Express PLC.
When the then West Midlands Passenger Transport Authority were planning the sell off of West Midlands Travel Limited In the early 1990s, I recall there were stories in the national press saying that it was the most profitable bus company in the world. It was seen to be a big prize for a number of the groups that were being formed at that time and Stagecoach, under Brian Souter, coveted it.
Thirty odd years later:
- While National Express PLC is profitable, its subsidiary that runs buses in Birmingham, the Black Country, Solihull and Coventry West Midlands Travel Limited is heavily dependent on government subsidy to pay its way, thanks to the coronavirus pandemic. This government subsidy will finish at the end of June 2023.
- Patronage was going down before the coronavirus pandemic, thanks to a reducing number of concessionary pass users, societal changes like the move to home working and online shopping, coupled with the negative image of buses portrayed by the West Midlands media who are no friends of bus services or bus drivers. Patronage has not rebounded back to the level seen before the pandemic, with only a base load of key workers and those who do not have alternatives to bus and no choice other than continuing to use the services offered.
- The bus industry has become reliant on subsidy partly due to the “Do not use Buses” messaging that was propagated by government during some of the pandemic, even when it was still possible to use buses to make essential trips for work or food shopping and where mitigations had been made. There was also negligible messaging by government or health authorities for the measures that were being taken to keep buses clean during the pandemic, to minimise the transmission of the virus.
- The other big bus operating groups that formed during the 1980s and 90s privatisations are also restructuring and are not all are in a strong position. Arriva have disposed of a number of unprofitable operations and Deutsche Bahn would like to dispose of its English patient. First has retrenched, selling off unprofitable operations to smaller companies or as in the case of Southampton closing them and there is a possibility of a demerger taking place of the UK and US operations in the future. Stagecoach is under new private equity management, Brian Souter having retired. Stagecoach have of course commenced the operation of TfWM tendered services in the Birmingham area for the first time. Go-Ahead have expanded in some parts of the country but have cut services in their North East heartland and are now owned by an Australian/Spanish consortium meaning it is under different management and culture.
So where does this leave National Express West Midlands, aka West Midlands Travel Limited?
I think, in a very bad position. I would not be surprised to see if the strikes drag on for weeks West Midlands Travel Limited were put up by National Express PLC for disposal, probably to some private equity/venture capital outfit who might want to take advantage of the fact that West Midlands Travel Limited, thanks to the way it was privatised in the early 90s has a near monopoly position in the West Midlands and a captive market. West Midlands Travel Limited also has its garages inherited from the old PTE days. Buses have to be housed and maintained somewhere, but the likes of Acocks Green and Yardley Wood garages as well as Birmingham Central are prime pieces of real estate ripe for redevelopment. It could be that the real estate proves to be the most attractive asset, with a smaller bus fleet being operated from fewer depots that are more spread out.
If private equity did come in with an asset stripping and profit maximising agenda, I reckon it may end up being bad news for WMT staff and bus passengers in the West Midlands. Just like some operators have done around the country already, any new brooms will come in and cut things down to main corridors only, with the extensive network that we’ve got in the West Midlands at the moment being severely pruned. It could mean that large parts of Birmingham and the Black Country end up with next to no buses. You only have to look at First Potteries or First South Yorkshire to see how grim that would be for the people of the West Midlands. Network cuts also mean fewer buses, fewer drivers needed to drive them, fewer staff needed to maintain them and ultimately job losses. As Compulsory Redundancy is often based on last in first out any redundancy pots for staff who were dismissed on Compulsory Redundancy grounds would be minimal and would only tide you over for a short length of time. It certainly would not be enough to enable someone to set up their own small bus company, like many PTE managers and drivers did with their redundancy money in the mid 1980s!!!
Private equity is also not known for long term investment in businesses. Macquarie, when it bought the London bus operations of Stagecoach had to invest, because of London regulation underneath to keep securing contracts for TfL the only way you can do that is by continually investing in upgrading your fleet to TfL’s latest spec. Would a private equity owner of West Midlands Travel Limited do that, in a different environment to London? Or they put in the minimum investment they could get away with in order to maximise returns of any future sale, because they were taking a short term view of just a couple of years rather than the long term view of 10 to 15 years? In other words, no regular large scale fleet renewal.
The future for National Express West Midlands is very uncertain and I can see it being cut adrift fairly quickly if the strikes go on and on. And we may well find we’d rather have the devil we know than the devil we don’t!
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