UK: National Express fare cuts boost demand

Unveiling of new National Express coach named after the University of East Anglia (UEA).

Unveiling of new National Express coach named after the University of East Anglia (UEA). PHOTO: ANTONY KELLY - Credit: © ARCHANT NORFOLK PHOTOGRAPHIC

National Express today said price cuts helped lift coach passenger numbers by 7% as it attempts to weather the loss of concessionary fares for senior citizens.

The transport group, which also runs the c2c rail service in Essex, said “competitive” pricing and faster, more direct services enabled the coach division to post underlying revenues growth of 1% so far this year.

National Express has been hit by the withdrawal of the Government’s £16 million senior citizen concession scheme, which meant one million fewer subsidised journeys last year.

The group said coach concession revenues are down 10% this year, which analysts at Espirito Santo called “somewhat concerning”.

The operator has responded by slashing prices - including half a million £5 fares - in a challenge to rival Stagecoach’s Megabus service.

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National Express said coach revenues during Easter were an “encouraging” 6% ahead.

It is hopeful a new contract to run coaches between London Victoria and Luton Airport, more services to Gatwick Airport and the sale of tickets through budget airline Ryanair will give the division a further boost.

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Its c2c franchise saw “good” revenues growth during the period. The operator, which was stripped of the East Coast mainline in 2009, said it is in “constructive” discussions with the Government over extending the c2c contract, ahead of re-bidding for the Essex Thameside route.

The group’s bus division, which serves the West Midlands and Dundee, grew underlying revenues 3%. Poor weather squeezed passenger numbers and profits were hurt by a cut in government grants for bus operators.

But National Express said encouraging signs of growth in April, plus rising concession revenues, paint an optimistic outlook for the division.

The group is on track to meet profit targets for the year as it builds its international presence. Analysts at Deutsche Bank expect pre-tax profits of £145 million for the year, down from £164 million in 2012.

It recently won two contracts to serve millions of German rail commuters in Cologne and Bonn after beating current incumbent Deutsche Bahn.

Revenues in its Moroccan urban bus arm were up 25% on a like-for-like basis, while in Spain urban bus sales were 5% higher.

Total sales in its North American school bus division were up 18% after an acquisition last year, but were flat on an underlying basis.

Its shares gained 2% as Espirito Santo analysts said the update was “broadly encouraging”.

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