The Wales free bus pass is not generally available on train services. You can't use it on the North Wales Coast or the Cambrian mainline for example, nor on the Cambrian Coast for a large part of the year. It wasn't available on the Conwy Valley line until after the X1 bus service had commenced. The council only made it available on the Conwy Valley deliberately to get passengers off the bus back onto the train. If that doesn't count as deliberately rigging the market, then I don't know what would be.
Before the council deliberately undermined it, the X1 showed that there was a market for an hourly service, including through services to Porthmadog. What we currently have is a three hourly train service, with some very poor onward connections to Porthmadog. So poor is the service that is often quicker to go via Bangor! I used to go from Porthmadog to Llandudno quite often for shopping, but it is almost impossible to do so by public transport now - it is far and away quicker and easier to go to Bangor.
While money continues to be poured into the black hole that is the Conwy Valley line, there is no way that the Assembly or local councils are going to support a parallel bus service. And there is no way the Conwy Valley line is ever going to get the investment needed for an hourly service. So we are stuck with the current miserable service, when something so much better is needed, and could be had for a fraction of the cost. As far as I am concerned, the Conwy Valley line isn't providing a service, it is preventing the service that is needed.
And I say that providing a pass on the bus which isn't usable on the train is rigging the market in favour of the bus. The council merely equalised the situation.
Let's face it, if the train was as comparatively unattractive as you say it is, someone with a bus pass which can be used on both will clearly chose the bus. That they didn't shows that the bus wasn't as attractive as you like to say it was.
That's not to say that the train service shouldn't be improved to meet peoples expectations. I agree with this here as I do with the Whitby line for example.