Annual Report and Accounts 2008
UK Bus and Coach
Revenue for our recently integrated bus and coach business was £578.9 million (2007: £534.2 million) and normalised profit from operations was £67.0 million (2007: £71.4 million). Bus operations continued to do well in the West Midlands, where customer numbers were up 1.5%, and in London. A revised concessionary fares system was introduced, while higher fuel costs led to a small reduction in profitability. The coach business encountered challenging conditions in the fourth quarter, with a tough economic environment leading to a reduction in discretionary travel. Nevertheless, annual express coach revenue growth was 5%, with cross country revenues up by 7%. Airport rates were adversely impacted by a reduction in air travel.
The decision to combine the bus and coach businesses of National Express has yielded benefits across a number of areas. For example, similarities in the two businesses enabled us to merge all back office functions including financial support and information technology. The result was enhanced efficiencies and cost savings that will stand the business in good stead for future challenges. In addition, further cost-saving opportunities to preserve profitability in the difficult economic environment were identified in December 2008.
The combined bus and coach division has also benefited from a single identity as the National Express brand is rolled out across the business, leveraging our reputation for quality, reliability and value. Nevertheless, the new grouping continues to recognise and accommodate those aspects of the two businesses that remain different.
A key highlight of the year was the significant progress achieved in delivering partnerships with local and regional authorities. Roll-out of the Quality Partnerships in the West Midlands continued, following successful revisions and improvements to the Dudley network. Following this success, a new network was introduced in the Solihull area in January 2009. The business also established the groundwork for the first Scottish Bus Punctuality Improvement Partnership with Travel Dundee, the Scottish Executive, Dundee City Council, Angus Council and Stagecoach.
In October we took over the contract for managing car parks and associated shuttle bus activity at Stansted Airport, in partnership with car park operator Cintra UK. We have begun introduction of a new fleet to the service, including seven new Mercedes Citaro 18-metre articulated buses. As a result, we are setting new standards of efficiency and reliability in this growing airport car park market.
In the nation's capital, National Express Travel London continued to win new routes. Two routes, based at our Battersea and Walworth depots, will start operating in April and September 2009.
For the coach business, a major focus in 2008 was the upgrade of the UK's core coach station at Digbeth in Birmingham. In a £15 million project, we are transforming a former bus garage into a passenger facility designed and built to 21st century standards of comfort and efficiency. Meanwhile, we successfully initiated a temporary coach station nearby that ensures no disruption to the services.
We are pleased with the progress of our commuter business, Kings Ferry, which we acquired in 2007. Apart from its well established commuter business, we have been successful in growing its private hire business. Contracts included a six-year deal with the Metropolitan Police to provide transport for activities associated with the Notting Hill Carnival and work with Eurostar to help passengers stranded as a result of the fire in the Channel Tunnel in September.
On international routes, our Eurolines business was a strong performer, with total passenger numbers up 2% over 2007. The Munich, Osnabruck, Amsterdam and Paris routes were particularly popular.
