Go-Ahead notes a “tipping point” towards public transport

More people are set to turn to public transport, believes the Go-Ahead Group, the majority shareholder in Govia Thameslink Railway.

Setting out the company’s longterm strategy as “the next billion journeys”, Go-Ahead Group Chief Executive Christian Schreyer said: “The only big question mark is recovery from COVID-19. What speed will it have? Will it be back to pre-crisis levels this year, or will it take two years? I cannot tell you. But we have seen strong recovery.

“The fuel situation helps us. High fuel prices are deflecting car users. They will see public transport as an alternative.

“We have a dramatic increase in the rate of inflation, after 18 years of no or slow inflation. We believe that trend will support the public transport market, if the regulations are right.

“We believe the impact of higher fuel costs on us will be offset by more people using public transport - higher passenger numbers will outweigh higher operating costs.

“Modal shift will result from environment-related political regulation, with higher investment in zero-emission vehicles and stronger price competitiveness of public transport versus cars.”

Go-Ahead was stripped of its Southeastern franchise in 2021, following accounting irregularities over several years, for which the Department for Transport imposed a fine of £23.5 million (RAIL 954).

The group lost half its market value, and the company had to suspend trading in its shares after it was unable to file its accounts on time.

The organisation has since rebounded, with stock rising by 60% in March, when it was awarded a new contract to continue running the Thameslink, Southern, Great Northern and Gatwick Express brands until at least April 1 2025, with up to a further three years at the Transport Secretary’s discretion. GTR runs nearly one in four trains in the UK.

Go-Ahead believes that “transport is at a tipping point”, and in the medium term has a goal of increasing annual revenue by 30% to £4 billion. Its strategy refers to “drilling down on common cost drivers” including maintenance, energy and overheads.

Schreyer, who joined the group only five months ago, explained: “Public transport is the key to decarbonised mobility. Electric cars cannot deliver the same benefit as mass public transport. And urbanisation will increase the market, along with an ageing population.

“Does the Mayor want to have 50 cars or one bus on the road? We need to communicate that more openly.”

Go-Ahead says it will play “a constructive role” in supporting the creation of Great British Railways and in shaping the future of passenger service contracts.

As well as the largest rail passenger business, Go-Ahead runs one in four buses in London under contract to TfL, and has widespread bus operations on the south coast, Oxford and Manchester. It sees regional bus services in the north of England as a particular growth opportunity. It employs 27,000 people.