Fuel-price strategy is paying off for Arriva

Arriva is celebrating its decision to fix prices for fuel used by its CrossCountry inter-city trains for much of the next decade at last year's levels. But the company, which also runs London buses, has admitted its fuel bill on the buses is set to rise by a third.

Arriva, in line with all its rival UK passenger transport companies, today reported soaring revenues as Britons get out of their cars and on to buses and trains.

Its first-half revenues rose 50% to about £1.35 billion. Much of that has come from CrossCountry, the franchise it won last year from Virgin Trains and which it began operating last November.

Arriva said passenger revenues on CrossCountry were up 10% year-onyear. At UK rail franchise Arriva Trains Wales, they grew 10.7%.

With soaring oil prices weighing heavily on transportation groups - especially the airlines - Arriva reported 75% of its 100 million litres of fuel a year for its CrossCountry trains is fixed at just 26.5p a litre until 2016. Arriva fixed the price - train fuel is tax-free - last July when it won the franchise, just ahead of the spikes that have seen record crude prices.

Arriva said it is currently paying 29p a litre for its buses - bus fuel gets tax rebates of about 80% - but admitted the fixes it has put in for next year will result in its bills rising to 39p a litre.