COMMENT: Merger is no surprise

The formation of The Coach Travel Group from seven of the coach industry’s heavyweights is only a mild surprise, given the mergers and buy-outs we’ve already seen, notably by Go-Ahead.

I suspect it comes after two very good trading years which have been long overdue for the coach industry, though tempered by costs rising at a shocking rate; insurance has doubled for many operators, along with huge hikes in parts prices.

Whether the merger will work (and I’m wishing it every success) may depend on whether it’s a top-down management enterprise. We all have every right to be sceptical, having seen similar groupings struggle, most prominently National Express Transport Solutions, which had a rough ride according to the group’s own annual reports.

Every company in the new consortium has huge expertise in their region, with a deep understanding of the shape of coach hire and of corporate opportunities around them. Pooling that expertise may seem to be a no-brainer, but the reality is that what works in Swindon won’t necessarily work in Manchester. In the past, we’ve seen the top tier of management, having seen a local success, try to replicate the idea nationally. That is fraught with problems.

The coach industry has stubbornly refused to be melded into bigger trading units not only because of the regional trading differences, but because customers actually like buying locally; I often cringe at the anachronistic coach liveries I see travelling our roads, but the fact is, those age-old local brands are known and trusted. Subsuming them in a corporate cloak robs them of the local connection, and even affects the employees.

The additional buying power, savings in centralised management systems, and additional clout for borrowing when needed are powerful incentives to merge. So, indeed, is the value of the combined expertise of the management. It’s no surprise to me that H2 Equity Partners has pitched in with the capital, because what has been assembled is an impressive team of successful companies.

Give all those companies the same call centre phone number and an identical livery and there’s the danger that you can rinse a lot of brand loyalty down the plughole.