Council cuts could leave Stagecoach's Forth hovercraft service up in the air

Published on Sunday 6 March 2011 18:17

BUS and rail group Stagecoach has turned cautious on plans to operate hovercraft between Fife and Edinburgh after local authorities cancelled a competitive tendering process on the grounds it was too expensive.

Fife Council's environment, enterprise and transportation committee decided recently against opening a competitive tender for a Forth passenger vessel crossing, leaving Stagecoach the only firm likely to establish a service.

Stagecoach lodged planning applications to upgrade its depot facilities in both Kirkcaldy, Fife and Portobello, Edinburgh in late 2009, predicting its hovercraft service could be running by the end of this year, subject to suitable public subsidies.

Fife Council said it had allocated 1 million for infrastructure development costs, estimated to be 6m, although so far the City of Edinburgh Council has failed to provide matched funding.

But the prospect of local authority budget cuts has prompted Stagecoach to "reassess" its Forth crossing plans for economic viability.

A Stagecoach spokesman said: "As we have made clear, many specific details of any potential service would require to be reassessed as part of an updated business plan if our planning applications submitted to Fife Council and City of Edinburgh Council for landing and passenger facilities are successful.

"This reappraisal would test the economic viability of a link before any service was launched. It would consider prevailing operational costs, timetables and service frequencies, the investment required for craft, re-evaluation of consumer demand, fares structure, as well as the current and projected economic conditions and available public support for the project."

Yesterday Perth-based Stagecoach said that the severe weather which crippled parts of the UK transport network in December had failed to derail its performance.

In a trading update, Stagecoach said profitability in the 40 weeks to 6 February remained good despite freezing conditions affecting revenues.

At its UK bus division like-for-like revenues rose 1.9 per cent in the period, compared with 2.3 per cent growth reported in December.

UK rail, which runs South West Trains and East Midlands Trains, saw revenues growth of 6.9 per cent in the 40 weeks, compared with 6.4 per cent previously.

Stagecoach is a major provider of transport services in North America, where like-for-like revenues lifted 8.2 per cent in the nine months to January 31, against 7.5 per cent in the six months to October 31.

The company said: "Overall profitability has remained good, notwithstanding the challenges presented by adverse weather conditions in recent months.".

Paul Hickman, of stockbrokers Peel Hunt, said Stagecoach had 260 million in "firepower" to back potential acquisitions.

He said: "We remain buyers on acquisition potential, upgraded growth potential, and prospects for closer participation in a restructured rail environment."