Passenger numbers at the Go Ahead-owned franchises fell by 1.8% during July-December 2012, following a 0.7% drop in the previous six months

Patronage declines at Go Ahead’s Southern franchise have accelerated, with loss of business on all its major routes exacerbated by poor operational performance and new travel patterns caused by extensions to the London Overground network.

Passenger numbers fell 1.8% from July-December 2012, following a 0.7% drop in the previous six months. The July-December fall would have been worse but for the impact of the London Olympics.

Go Ahead chief executive David Brown said that the franchise’s Gatwick Express service had been hit by continuing falls in air passengers and that the leisure market on the Brighton Main Line had been severely impacted by the economy. In addition, more passengers than expected had been abstracted from Southern’s services by London Overground enhancements, which have created cheaper and quicker alternative routes in the Metro area.

“The effect of London Overground has been very positive for [Transport for London] but hasn’t been great for us because what we predicted in our bid [for Southern] has not turned out that way,” Brown told City analysts. “Nobody really knew what was going to happen with London Overground and what it has done is create all these new connections we wouldn’t have anticipated [in the bid] back in 2009, and that has changed passenger flows.”

Brown added that poor operational performance caused by “a litany of one-off issues” had contributed to loss of passengers. Punctuality fell from 89% to 87% during the six months, and was particularly poor from October-December at 82-83%. “Continual big issues on the network can drive passengers away. That’s a fact,” Brown said.
In February, he personally attended a meeting with senior Network Rail staff to discuss how to minimise infrastructure failures. “[With Network Rail] we have got to find ways of anticipating infrastructure failures before they happen, starting to look at the problems in a different manner. And we have to get our right time performance up,” Brown said.

The loss of patronage at Southern together with a smaller impact from high levels of cancellations caused by driver shortages at London Midland contributed to a further decline in the finances of Go Ahead’s rail division. Its July-December operating profit fell to £14.1m from £16.5m in 2011, despite passenger revenue growth of 10%. The profit margin declined to just 1.5% on turnover of £915m.

Despite its falling patronage, Brown said Southern remained in profit and would continue to do so due to the availability of Department for Transport revenue support from September.


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