Sir Brian inspires new Stagecoach leadership

By Doug Jack

CEO Martin Griffiths envisions Megabus sleeper coaches in U.S.

Sir Brian Souter stepped up to chairman of Stagecoach, Perth, Scotland, handing over the position of chief executive officer to Martin Griffiths effective May 1.

Souter co-founded Stagecoach with his sister Ann Gloag, starting with two coaches running express services between Scotland and London. The government of the day broke up the state-owned National Bus Company and the Scottish Bus Group. Stagecoach expanded rapidly, later taking on rail franchises when British Rail was privatized.

Stagecoach has grown to an annual turnover of around $4 billion and is a major player in the North American coach industry, with its the fast expanding network. In the United Kingdom, Stagecoach has the largest fleet of buses and operates many train services, including the busiest London commuter network.

Griffiths kindly agreed to an interview with me for BUSRide a few days before he took up his new appointment.

The man has worked for Stagecoach for 15 years. He holds a first class honors degree in law from the University of Glasgow and is a fully qualified chartered accountant. He became a member of the Stagecoach board in 2000 and has always worked very closely with Sir Brian, with responsibility for implementing and controlling its successful strategies.

Before his current appointment, he was the group’s finance director, supporting Sir Brian in all aspects of the management of the group’s operations and new business development. He was responsible for overall financial policy, taxation, treasury, employee benefits, pension management and rail franchise bidding.

We talked about Souter’s move from CEO to chairman. He is now 59 and wanted to step back from day-to-day management. It is unusual in British corporate governance for a person to make the move from CEO to chairman. Griffiths said the board discussed the situation thoroughly.

“We did not want to lose Brian’s experience and enthusiasm,” he says. “We had seen people who had played a major role in establishing other companies. When they walked away, sometimes the companies did not do so well. Gerry Watts, previously the senior independent director, has been appointed deputy chairman and he will be assisting Brian. We will make sure there are no conflicts of interest, because more than 50 percent of Brian’s interests are now outside Stagecoach. Above all, we will still welcome the motivation and challenge from Brian. I am also very pleased that the change has the full support of our shareholders.”

Souter Investments hold Souter’s interests outside Stagecoach in a wide-ranging portfolio that includes Polski Bus, a Megabus type of operation in Poland, along with ferries and coach services in Turkey.

Innovative influence to continue

Souter has a legendary reputation in the industry as an innovator and has a great grasp of the business’s details. I asked Griffiths if he would have a similar style or be different.

“You can only be yourself,” Griffiths says. “We have great people in the company and they know how we want to run the business. Part of my challenge is to bring through the next generation. We have always encouraged our people to be innovative and I will continue with that policy.”

I remember Griffiths telling me a few years ago, in a light hearted way, that he and his fellow directors always went to work on a Monday morning with a little bit of trepidation. They wondered what new scheme Souter had thought about over the weekend. was a classic example with the fare structure modeled after low cost airlines. Stagecoach started by using older vehicles to minimize costs, but as soon as the concept proved popular with the public, the company invested heavily in new and well-equipped coaches. Many of those now running in the United Kingdom are 65-seat tri-axle coaches built to just over 49 feet. There are even services to Amsterdam, Brussels and Paris.

I asked Griffiths whether he envisions further opportunities to grow the business.

“I believe our strategy has been the most consistent of all the major transport companies,” he says. “We have grown our businesses organically, but we also have added companies where we believe they make a good fit, and occasionally we have sold some of them.”

One example was the sale of bus companies in London to an Australian bank in the summer of 2006 for around $400 million and the subsequent re-acquisition in the fall of 2010 for $80 million. Seeing that the company had been under-performing,  Stagecoach saw the opportunity to buy it back and turn it around.

Sleeper coaches in the U.S.
A few days before our interview, Stagecoach launched the first of 10 double deck Van Hool coaches built to the European maximum length of just over 49 feet. Costing around $750,000 each they feature 53 luxurious leather seats that can convert into 42 beds for overnight express services. The company says they will provide more than 1,700 beds per week on journeys ranging from 400-600 miles between London and Scotland.

The group is looking at introducing and sleeper coaches to North America, but first has to ensure that vehicles could be built to comply with Buy America regulations.

“North America is very important to the future of Stagecoach,” says Griffiths. “Our challenge with is to get Americans out of their cars and demonstrate to them that there is high quality alternative transport at really affordable prices. If we can persuade even a fraction of the car users to switch to coaches, we will be very happy.”

He says in North America, there are plenty of journeys in the 400-600 mile range where sleeper coaches could be highly effective. While not as fast as airlines, there is none of the hassle of getting to and from airports, checking in an hour before departure, going through security and facing other restrictions. Furthermore, the coach can save the cost of an overnight hotel stay and the fares are very competitive.

Bearing in mind that Griffiths is 47, I asked him where he saw the future for public transport – bus, coach and rail – in the next 10 to 15 years.

“I am really positive about the future,” he says. “We are living in times of austerity but public transport is remarkably resilient. I hope that the economic situation will pick up here and across the Atlantic. All market research says that public transport is very important and will play a major part in reducing congestion, pollution and emissions.”