Well, that happened faster than expected! This was my outlook for the long-distance bus market in Germany year, from about two weeks ago, in late December:
Outlook for 2015
Mergers, or further shutdowns of minor market players seem likely for the coming year.
And this week, we already had the first big merger. Actually, it was even the biggest possible merger, between the two market leaders, Flixbus from Munich and Mein Fernbus from Berlin. That’s probably why even BILD.de reported on it, quite extensively. Initially, there was not much to say about this, beyond what was reported there, but now there are a few things.
Future Strategy of Flixbus Mein Fernbus
In addition to the initial articles about the merger, An interview with Jochen Engert, founder of Flixbus, by Gründerszene, gives some more ideas on what the benefits of the merger and future strategy will be in addition to the initial articles about the mergers:
- Higher frequency of connections on popular routes.
- More direct and express connections.
- Faster international expansion, to other European markets.
While this is (obviously) not mentioned, it is also safe to assume that there will be fewer promotional offers for routes that only Flixbus Mein Fernbus serves, in the future. This should result in improved margins.
So far, there’s no indication that the Bundeskartellamt might stop this merger² – and I think they should not, as even a combined Flixbus Mein Fernbus is very small, compared to Deutsche Bahn, and probably even Air Berlin’s or Lufthansa’s short distance business – and therefore, the other players in the market will need to react.
Deutsche Bahn needs to step up their Game
The company most threatened by this merger is Deutsche Bahn. Now they need to react. Their options are basically the same as before, they just need do more and be faster now (to not lose even more market share and profitability):
- (Finally) Get some free WiFi on more trains, not just for some 1st class passengers in ICE.
- Promotional offers or lower prices on routes which the bus companies are “winning”.
- Expand the experiment with IRE trains to more routes (than just Berlin – Hamburg).
- Invest more into their own bus company, IC Bus.
Postbus & Co. need to look for Partners
Kölner Stadt Anzeiger reports that Postbus already has found a new partner, the French Idbus (owned by SNCF). Shifting the focus to international connections might be a smart strategy for the smaller players in the market. Postbus probably still has serious ambitions for the domestic market though, too, and for that, they should look for another German partner (to replace ADAC), too. Same goes for the other (even) smaller players in the market, like DeinBus.
One piece of good news for the smaller players in the market is that there still seems to be new companies willing to invest into the market, lately for example Megabus (backed by Scottish bus operator Stagecoach) as a new enterant to the market. Maybe some of these new entrants will go for “buy” instead of “make”, or might be willing to cooperate at a later stage.
² If something would happen to disturb the merger, I would expect it to be due to Deutsche Bahn pulling political strings. Maybe they could use their new “special weapon” Ronald Pofalla for that. He could just say “Hiermit erkläre ich die Fusion für beendet” – or something like that.