Management & Operations

Why British Operators Are Entering U.S. Market

Posted on November 12, 1999

Part one of a series on the British invasion. An interview with David Leeder, CEO of Travel West Midlands of Birmingham, England, and a top exec of National Express, one of the largest British companies, explains his North American strategy. Travel West Midlands moves a million people per day on its bus and metro networks in Britain’s second largest metropolitan area. Three large British-based multimodal operators have landed on American shores in the past two years. Although each has their own approach to this market, all are bent on growing in the U.S. first by acquisition then by the strength of their ideas. National Express (NX) is the second largest of these players, with bus and rail interests on three continents. David Leeder, group vice president and CEO of NX subsidiary Travel West Midlands of Birmingham, England, talked with METRO Associate Publisher/Editor Cliff Henke about why they are in North America and what they plan to do there. The interview took place at the recently held BusCon ’99 in Las Vegas, Nev., where Leeder spoke on "What to Expect from the British Invasion." What is it about the North American market that attracts so many British companies? There are several things. First are the historic and linguistic ties, one reason why we entered the Australian and New Zealand markets. Both are also liberal democracies with long histories of capitalism, with well-understood commercial laws. The second is that public transport privatization is growing in the U.S., and all the U.K. companies have been battle-hardened by the privatization process there. Perhaps the most important reason, however, is our responsibility to our shareholders to increase share value. Our stockholders are looking for growth and at the moment we and they see the greatest opportunities abroad. Yet clearly other countries have privatization traditions. Why haven’t French companies, for example, been as aggressive outside their borders? I can’t speak for them, but I would say that their stockholder pressures are not the same as ours. Transdev, for example, although the operating company in Croydon, [U.K.], is largely owned by a bank. The French commercial law is also different, with its Napoleonic charters, which mean that capitalism works ver differently, with cross shareholding by banks and in some cases government. This so-called "mixed economy" also means that the private sector takes on less risk than it does in the U.K. and U.S. What are the areas of the U.S. market that are greatest commercial interest to your company? We aim to be in all markets in the U.S. We entered pupil transportation first because the opportunities to acquire companies in this market came more quickly and because the North American pupil transportation industry is one of the biggest public transport markets in the world. However, we have also bid on several transit contracts, although we have not yet been successful. It’s very different to other markets, though, isn’t it? There are areas common to all our operations, namely finance, insurance, logistics, safety issues and scheduling. The only things that are totally different are the types of buses and the fact there are no tickets. What is most important to remember, however, is that we want to be in all markets and will approach each opportunity carefully. That’s how we have approached each situation elsewhere in the world. Does this mean that you are looking at rail contracts in the U.S. as well? Though rail privatization is only getting started in the U.S., we are very keenly watching how it comes about. I think it will evolve over time, and probably each city or region of the country will do it differently. Like the bus markets, we will take advantage of each situation in the rail market we are presented with carefully, and we are prepared to operate in a range of economic models. For example, Australia is closest to the British model, where the private company assumes all of the business risk. In Belgium, however, our company there has no control over fares; they are all set by government, which makes it less attractive to the private sector. Regardless of market or country, though, our business is moving people. Our philosophy is simple: provide a safe and reliable service; make the high levels of investment needed to support passenger growth; be customer-focused, providing high value for their fares; and have a decentralized management structure. Our corporate headquarters is very small, as are most British companies. Deregulation taught us that decisions must be made closest to the passengers, and that lesson has helped us in all our markets since.

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