Brighton and Hove Bus Company is a subsidiary of the Go Ahead Group. If you listened to the whingeing of its manager Roger French you might shed tears at the risk to the company from rising fuel prices. Now the company has to take the drastic measure of bringing forward planned fare increases and talking of more increases to come.

From Sunday 20 July the price of a single fare will go up by 10p to £1.80 while a one day city saver will jump from £3.20 to £3.50. According to French, the escalating cost of diesel, has put an extra £2 million on the annual fuel bill of Brighton and Hove Buses.

Turning to the Go Ahead Groups shareholders report you would expect to find profit warnings and the like given this significant threat to earnings from rising costs. The 2007 Report is called Creating Value through Quality and boasts of a 25% increase to 70p per share in the dividend paid. Revenue increased by almost £400m and operating profit by £20m. But Frenchie would respond- its the sudden increase in fuel prices that are to blame. Not if you read the Groups most recent trading statement 28 June 2008:

"Our bus division is performing well. We have continued to improve margins, despite higher fuel costs, and expect to deliver a significant increase in operating profit for the full year compared with the £55.8m achieved last year.
Growth in second half revenue in our deregulated businesses is expected to remain strong, in line with the first half growth rate of 8.7%. This increase has been driven by growth in passenger numbers, including some early benefit from the national extension of the concessionary schemes on 1 April 2008, and increases in fares. (French has previously spoken of the devastating impact on the company of the government funded scheme which allows pensioners to travel free)
Fuel prices have continued to increase since the April update, resulting in a further net cost of around £1m for this year. We have now hedged 100% of our requirements for next financial year to June 2009 at an average price of 43p per litre and 50% of the following year at an average of 52p per litre. Although recent fuel price increases have been significant, fuel still represents a relatively small part of the cost base of our bus operations, at around 10%. We remain confident that over time we can recover these extra fuel costs through a combination of improved consumption efficiency and fare increases."

About 10 years ago you could jump on a bus in Brighton for about 80p. Of course that meant that all manner of undesirable oiks could afford to travel and you wouldn't want that if you'd just bought a new fleet of shiny buses with CCTV available for extra safety. The title of the shareholders report says it all- Creating Value through Quality. So rather than just getting bums on seats, making optimal use of space etc its about enticing the select few back onto the buses by showing them that they're not full up with the unemployed, low paid workers and immigrants who all smell of course. French wants his drivers to offer passengers an experience of comfort when they travel with Brighton and Hove buses and if this happy end is facilitated by pricing oiks off the buses then so be it. Once again the market, the council and the better off secure a victory with the tried and trusted method of economic apartheid.

When the company slashed its prices for a short-term period last year so as to put the start-up social enterprise the Big Lemon buses out of business I complained to the Competition Commission. Fat lot of good that did as they don't act on 'anecdotal' evidence such as sustained fare increases and predatory pricing.
Bus boycott anyone?