Group overview

UK

In the UK, where our administrative headquarters are located and where our shares are listed, we are well known as one of the leaders of the urban and inter-urban bus industry, and a substantial, high quality operator in the UK rail industry.

UK Bus

Having experienced long-term losses of patronage before its privatisation in the mid 1980s, the UK commercial bus market has recently shown encouraging signs of patronage growth. In Arriva’s case, this has come as a result of customer focused marketing and service delivery. We have had to maintain a tight control on costs despite the inexorable increase in fuel costs and widespread traffic congestion. In part this has been achieved by creative thinking about how best to use, and invest in, our employees and our depot infrastructure.

Within the deregulated UK Regions business, which is about two-thirds of the division, our strategy is to listen to our customers, to design and operate services that they most value, and work closely with local Government to achieve our shared agenda of reducing society’s reliance on the motor car.

London Bus, which represents around a third of the division, is more similar to the many mainland European markets we operate in. It is a mature, competitive, tendered market which the transport authority, Transport for London (TfL), expects to grow steadily in real terms, expanding 40 per cent on 2007 levels, by 2025 (TfL 2025 Vision). Our market share has been consistently close to 20 per cent for many years and our strategy is to continue to compete successfully to maintain and, where possible, improve that share in a growing market.

UK Trains

The UK rail industry is characterised by small numbers of large franchises - much larger than typical rail contracts in mainland Europe. Arriva now holds two UK franchises, operating as Arriva Trains Wales, and CrossCountry. In both cases good operational performance is key to delivering a sound financial performance.

Arriva Trains Wales, which holds its franchise until 2018, is aiming for steady development. The potential revenue impact of strong passenger demand is limited by the substantial Government support payments which form around 70 per cent of the revenues for the franchise, which is unable to cover its costs on a fully commercial basis on the services it is contracted to run.

Our success in winning CrossCountry, the UK’s most extensive rail franchise which we began operating in November 2007, will approximately treble the size of the division in a full financial year. Our stakeholder research has helped us to pinpoint important areas where we can improve the passenger experience, make the business more efficient, market more effectively and support growth in passenger numbers by increasing seating capacity. We plan to increase seating capacity by 35 per cent in the critical evening peak on principal routes by June 2009.