Bus service left at fuel stretch as fare hike fears grow

Published on Monday 21 February 2011 17:36

FEARS of increasing bus fares and service cutbacks were raised today after the Capital's publicly-owned bus company warned that rising fuel prices will cost it several million pounds this year.

&#149 Lothian Buses expects its profits for 2011 to take a major hit

Lothian Buses, which is owned by the councils of Edinburgh, Midlothian and East Lothian, said it expects to take a major hit from the pressure at the pumps in 2011.

That is set to eat into the company's profits, which ran to 9.3m in 2009.

City council chiefs have also upped the annual dividend they claim from the company as its biggest shareholder by 1m to 3m, increasing the financial pressure on the firm.

Bosses at the company today insisted that they would do all they could to protect customers, but there were fears that they will have to consider increasing fares, reducing services or axing some routes.

&#149 Should Lothian Buses raise ticket prices to help pay for the soaring cost of fuel? Vote here

Ian Craig, managing director of Lothian Buses, said: "The rising fuel costs will add millions more to our operating costs in 2011 compared with 2010, and the challenge for Lothian Buses is to mitigate these costs by ensuring we are run as efficiently as possible. We will continue to seek to minimise these costs to passengers.

"The flip side for us has been that public transport becomes a more attractive option for car users as it's increasingly more cost-effective and it will undoubtedly have a more positive effect on the environment, with the ensuing drop in Co2 emissions.

"This year, Lothian Buses is investing 15m in fleet and network improvements to continue to offer passengers superlative public transport."

Last week, petrol prices reached an all-time high of 128.81p a litre, while diesel surged to 134.01p a litre.

Councillor Andrew Burns, leader of the Labour group on the city council, said: "Rising fuel costs are a concern. Anyone that fills their car up can see how much costs are rising and it is bound to have an effect on Lothian Buses.

"I'm sure the management team at Lothian Buses will do all they can to protect the customer but if (fuel] prices continue to rise then that financial pressure will build up."

Graham Birse, managing director of Edinburgh Chamber of Commerce, said: "The impact of this is huge. Companies have to either put prices up, which damages sales, or absorb costs, which damages profit.

"A fuel regulator is the solution. They can then say if the costs shift we drop one tax to compensate the other so that the fuel price stays the same. It keeps prices stable and there is no effect on government income."