Cut National Express Subsidy Cost £15m

National Express has found it tough to pull in elderly coach passengers since the government axed its subsidy on senior citizen tickets. The government subsidy ended up costing the company £15 million a year, and its withdrawal last November prompted the business to launch its own concession scheme. Initial sales for the card have been less than expected, and concessionary revenues fell 40% during the first quarter of the year to £2.8 million.

However, National Express says weekly concession card sales have doubled recently after a decision to include airport routes in the scheme. As of now, the company has sold some 100,000 cards. Additionally, revenues across its core express coach network rose 5% on a like-for-like basis during the quarter. This includes a 3% growth in passenger volume.

In a press release, National Express said that they continue to drive investment and efficiency in the customer offering. It has recently announced the largest network review in 25 years, four new routes and the introduction of a new pricing scheme on key routes – which will offer very competitive on-the-day and 14-day advance fares. The company is getting support from growth outside the coach business, particularly in Eurolines.

As for National Express’s bus business in the UK, the company says commercial revenue remains robust, with a 4% year-on-year growth. Passenger volume continued to be unchanged on a like-for-like basis, while sales for its student travel card kept growing strongly. It especially saw encouraging passenger growth on routes benefiting from recent fleet investment. The company is adding 160 new buses to its fleet during the first half of the year, and funding for another 31 hybrid vehicles has been secured from the government recently.

Additionally, the UK bus business has benefited from the detailed network review and a substantial improvement in punctuality. This has meant operating profit for the first quarter of the year increased, along with an overall divisional revenue rise of 2%. The company also says it has agreed with the West Midlands Integrated Transport Authority (WMITA) on the basis for the concessionary reimbursement scheme for the upcoming financial year.

National Express’s UK rail business, namely c2c, also saw strong growth with a 10% increase in revenue. The company further improved its punctuality during the quarter and is the top performing train operator in Britain with an annual average punctuality rating of 96.8%. Additionally, the company successfully handed over the East Anglia franchise to Abellio Greater Anglia Limited in February after delivering £56 million in revenue for the current year.

In Spain, the transport group’s Alsa, a bus and coach operator, achieved 5% intercity revenue growth year-on-year driven by an increase in passenger volume on routes in Northern Spain and around Madrid. In its Spanish urban bus operations, revenue grew 4%.

National Express also operates a school bus business in North America, which saw a 6% rise in year-on-year revenue. In total, the company has secured more than 400 net new buses for the 2012/13 school year through new contracts. On top of this, it has recently completed the acquisition of Petermann Partners, the fifth biggest provider of student transport services in the US.

National Express chief executive Dean Finch says they aim to offer reliable and well-run services for customers at great value prices. This strategy is allowing them to deliver good revenue growth throughout its businesses, expand into new markets and win additional contracts – all supported by continuous improvements to services, strong cost control and fleet investment.