National Express Group continues strong growth at bus business after introduction of contactless bankcard ticketing and daily price capping

 

West Midlands mayor Andy Street and NXWM boss Tom Stables marking the launch of contactless ticketing

 

National Express Group is forecasting that 70% of journeys on its West Midlands bus services will be made on a combination of mobile, bankcard and smartcard tickets by the end of 2018.

The prediction of a further acceleration in the use of digital tickets follows continued strong growth in the first half of the year after the introduction of contactless bankcard ticketing in 2017 and daily price capping. By the end of June, 50% of journeys were being made on digital tickets, compared to 37% in June 2017 and 29% in June 2016.

Presenting the group’s half-year financial results, NEG chief executive Dean Finch said the switch to digital ticketing was partly responsible for continued patronage growth in the West Midlands with commercial passenger numbers rising 1.3% in the six months to June. A survey in March showed that more than half of m-ticket users were travelling more frequently due to the convenience and personalisation of digital ticketing, confirming the results of similar market research last year.

The company also reinforced its commitment to low fares to drive patronage growth following ticket price reductions in six low fare zones last year. A spokesman said no further low fare zones are planned at present but fare freezes are being introduced and will be extended on other areas of the network.

In addition, pricing experience from the West Midlands has halted “years of declining passengers” at NEG’s other bus business Xplore Dundee.

The increase in West Midlands patronage along with a 2% reduction in commercial mileage, which NEG said was mainly a result of more efficient faster bus journey times, led to revenue per mile rising 3% in the first half of 2018.The group plans to use the freed-up buses, and spare coaches available following withdrawals from low-profit routes, to develop new business areas such as commuter shuttles, building on a new £4m a year contract with Jaguar Land Rover. Further new business developments include plans to launch an on-demand bus service shortly.

In the coach division patronage on the core network rose 6% due to discounted pricing, recovery from last year’s London terrorist attacks and passengers switching to coach from rail. NEG said rail disruption had led to 100,000 additional coach journeys. Half were in the West of England where Great Western Railway services have been affected by engineering works and poor punctuality.

You can always rely on the rail boys to help us and they’ve done it again

“You can always rely on the rail boys to help us and they’ve done it again,” Finch said.

Across the coach and bus divisions, revenue rose only slightly from £271.3m to £273.6m in the first six months of 2018, with the small growth rate due to exit from low profit and loss-making Eurolines and Hoppa businesses. Half-year operating profit rose 21.5%, from £26.0m to £31.6m, although £3.4m of the rise was due to property sales including the sale and leaseback of the Xplore Dundee depot. However, Finch said underlying operating profit had still grown 8.5%.

Across the group as a whole, which also includes large Spanish and Moroccan coach and bus businesses and America’s second largest school bus business, revenue rose 6.4% to £1.2bn. Normalised operating profit rose 9.8% to a record £118.7m.

 

This article appears inside the latest issue of Passenger Transport.

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