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Uk Bus Service Industry Analysis

by Danial
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UK Bus Industry – Overview

UK bus industry was deregulated and privatised in 1985 by the Transport Act in England with a view to reduce public subsidy by reducing the pressure on prices. This was also initiated to induce business-related changes and increasing profits due to large demand for busses (Bond, 2007).

Deregulation called for private players which induced competition in an earlier subsidised monopoly market. Industry grew by a series of cost cutting measures simultaneously followed by volume increasing approaches and a lot of acquisitions in a highly competitive market (Stagecoach Group, 2013A).

UK bus industry having about 9000 licensed bus companies now supports about 170,000 odd jobs. There are about 22000 bus services registered within UK. Stagecoach comprises of one of the largest bus operators in UK. It runs about 8100 buses and employs around 35000 staff. It is also engaged in providing rail and tram services in UK.

Size

The daily travel density across the country is about 2 million people. Major competitors for the concern include  Cowie, FirstBus, Arriva, West Midlands Travel, National Express, First and GoAhead. Other competitors include international bus service agencies and independent operators (Arriva. 2013).

Competitive Structure

Since 1985, the bus industry has seen a growth that is remarkable. Presently, 4 of the major bus operators, namely, Cowie, FirstBus, Stagecoach and West Midlands Travel have more than 50% market share. However, the typical market structure specific to a bus industry is that unlike other manufacturing and service concerns, bus service industry focuses majorly on numerous local markets. The local market is evidently the large urban areas (Tsiotsou, and Goldsmith, 2012).

What is also striking about the market is that each one of the big 4 operators has almost equal market share with none having a significant market presence in all of the regions. If any of these big four operators want to become a market leader, they would necessarily need a very aggressive marketing strategy to acquire the market of other competitors. Competition is very limited because each one has its own market niche and customer set (Competition Commission, 2013).

Uk Bus Service Industry Analysis

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