FirstGroup backs third Heathrow runway

One of Britain's largest public transport operators backed the case for a third runway at Heathrow airport today as it confirmed that bus and rail journeys are proving more recession-proof than airline trips.

FirstGroup, owner of the First Great Western and First Capital Connect rail services, said Heathrow should be expanded alongside the construction of extra rail capacity such as a high-speed line linking London to north England and Scotland. Sir Moir Lockhead, FirstGroup chief executive, said new rail lines would not solve Heathrow's congestion problems.

"We think you need both domestic high-speed rail and better access at Heathrow. We think Heathrow requires that extra capacity," he said. Lockhead, one of the longest serving public transport executives in the UK, said backing Heathrow did not undermine the case for growing the British rail network: "I don't think anyone is saying that we should not have better rail services."

The FirstGroup executive's comments challenged the transport policy of the Conservative party, which has ruled out the construction of third runway in favour of building a new high-speed line. FirstGroup also expects to benefit directly from a bigger Heathrow, as the joint operator of the Heathrow Connect rail service.

Lockhead's comments, which came after FirstGroup joined a newspaper advertising campaign backing a third runway, drew criticism from the Campaign for Better Transport environmental group. "If you make rail convenient for more journeys it can be a substitute for significant amounts of traffic at Heathrow. We hope FirstGroup will take another look at the argument," said Stephen Joseph, CBT's executive director.

The government is expected to publish the conclusion of a public consultation into expanding Heathrow before the end of the year.FirstGroup voiced its support for Heathrow today as it reported further growth at its bus and rail operations in the UK. FirstGroup said passenger numbers at its rail operations rose by 5.9% in the six months to September 30, including the period from July to September when the UK economy slipped into negative growth.

The group cautioned that its First Capital Connect service, one of London's busiest commuter routes, saw a small decline in passenger growth in September, dropping two percentage points year-on-year to 8%. The bus division, which accounts for a third of FirstGroup profits, also performed strongly as passenger numbers rose by 2%. By contrast, the European airline market contracted by 0.5% in September.

Lockhead said First Capital Connect was the only cause for concern and otherwise "the rest of our business is resilient to the recession". FirstGroup is the largest privately owned schoolbus operator in the US and also owns the Greyhound long-distance coach business following the $3.5bn (£2.2bn) acquisition of Laidlaw, a US transport business. Its increased US operations accounted for just under 50% of first-half operating profits, which rose by 75% to £181.2m once amortisation charges and other one-off costs were stripped out. Revenues rose by 56.5% to £2.77bn.