The UK scheduled express coach market – its economic structure and consequent entry, exit and operation by small and medium firms

Following deregulation of the UK inter-city coach market through the 1980 Transport Act the network is now dominated by two firms giving cause to question the success of the policy and the processes enabling competitive freedom. A policy cornerstone was contestability, and though market entry by small and medium sized coach firms in the UK has not been sustained in large quantities, deregulation has arguably been successful in maintaining low prices and stimulating innovation and quality improvements. The research examines potential reasons for the lack of multiple firm activity in the UK given the freedoms afforded by the market structure and tracks changes in the market. Consolidating early academic work and filling knowledge gaps with non-academic and trade press data, the research also outlines economic market structures that characterise the market across the research period and which have influenced the success of deregulation. The research compares subsequently liberalised European markets with the UK, examining factors that have stimulated and suppressed market entry. The conclusions focus on factors that are critical to market success, such as: the requirement for a comprehensive network to maximise efficiency and reach; strong demand in both service directions; brand awareness (local level and/or nationwide); e-commerce platforms, and financial resources to mitigate losses while building market share. The research finds that entry by small and medium sized firms can only be sustained if at least one of these factors are present. In parallel the research demonstrates movement through several economic structures by each market, in-part meeting objectives set by Governments, and results in a cyclical model to show the likely lifecycle of a liberalised inter-city coach market. The research finds that settled state structures have provided such freedom that large firms may now more easily compete (retaliate) or change business models (switching the main role of competition away from the open market to new monopsonistic sub-markets) with monopoly control remaining in the open market - a policy failure perhaps but maintaining the mode as a viable competitor in the public transport mix. The main research finding is how e-commerce has shaped liberalisation, shortening early competitive phases, altering travel behaviour, and raising customer expectations – all creating new barriers for smaller firms but seeing an increase in use, reach and coverage for large firms and new opportunities for 'virtual' providers.