Rising petrol prices have prompted commuters to leave their cars at home and go to work on public transport, Go-Ahead, the bus and rail operator, said yesterday.

The company also reported that it had benefited from a surge in older passengers using their free passes since the Government's free local bus travel scheme for the over-60s was extended nationwide in April.

Go-Ahead's shares surged 15 per cent to £17.61 on the back of the bullish pre-close trading statement, in which it said it was heading for record results in September. Other listed public transport stocks also gained, with Stagecoach and National Express Group up more than 7 per cent and FirstGroup up 6.3 per cent.

“We believe that high petrol prices might encourage people to switch to rail,” Keith Ludeman, chief executive of Go-Ahead, said. “The railway is very different to how it was in the time of the last downturn, in the 1990s, and the primary competing mode of transport, the car, is becoming very expensive. A lot more people are looking at rail as a reliable alternative.”

Go-Ahead said that there were also signs that its bus division was benefiting, despite a rise in fares. Second-half revenues in Go-Ahead's bus division are expected to be in line with first-half growth of 8.7 per cent.

Mr Ludeman said: “We think second cars will be used less and people like students will give them up. But we have to be intelligent about putting fares up because people are price-sensitive on short trips. If it is too high, they will just walk.”

Go-Ahead lost nearly a fifth of its market value in February when it gave a gloomy forecast on rising fuel prices and hinted that a downturn in the capital's jobs market could cause it problems. However, since then it has seen no sign of commuter numbers falling.

Despite the worsening economic news over the past month it has continued to see double-digit growth in passengers. Go-Ahead expects that growth on its Southern and Southeastern franchise to be similar to the 13.2 per cent achieved in the first half.

The privatised rail and bus sector did not exist in the early 1990s, the last time the UK went through a recession, and analysts have been uncertain how the sector would respond.

Go-Ahead had been considered particularly vulnerable because it is the capital's biggest bus operator and carries more rail commuters than Stagecoach - which runs South West Trains - on Southern and Southeastern as well as on its London Midland franchise between St Pancras and Nottingham. Mr Ludeman added: “A lot of people are now seeing that rail particularly could be a very resilient sector.”

The group, which will control all trains to and from London's Victoria from Sunday, has also seen a strong start to the London Midland franchise, which it took over in November 2007.

“The performance of our rail operations over the past two months has been excellent, with continued strong underlying revenue growth supplemented by a number of favourable cost settlements,” Go-Ahead said. It expects full-year operating profit from the rail division to be ahead of the £66.1 million achieved last year and despite higher fuel costs, profits in the bus division are expected to increase significantly from the £55.8 million that was achieved last year.

The transport company has taken steps to mitigate soaring fuel prices, which are set to add about £1million to costs this year. It is 100 per cent hedged for the next financial year at an average price of 43p per litre and is 50 per cent hedged the following year at an average of 52p. Last year, it was paying on average 27p.

Damian Brewer, an analyst for JPMorgan, said: “If anything, we think rising fuel and costs might see some marginal switching from car use on to public transport.”

Go-Ahead still faces the prospect of losing its Southern franchise next year if it does not win the competition to run the routes into Victoria for five years from 2009. Short-listed bidders will be announced in September and competition is expected to be stiff.

Separately, Go-Ahead has also been shortlisted by the Department for Transport to manage the lengthening of Pendolino trains on the West Coast Main Line between London and Glasgow.

Pensioners on board for a further stage in life

So-called silver riders are taking full advantage of the extension of free bus travel. Go-Ahead reported early benefits from the nationwide extension of free bus-travel passes to the over-60s and Stagecoach is expected to report similar increases next week.

“We are seeing lots of pensioners using buses for days out to places like Bournemouth, Poole and Oxford,” Keith Ludeman, chief executive of Go-Ahead, said. “In Brighton, we have seen an 11 per cent spike in pensioners using the bus.” Bus companies are reimbursed for the extra passengers they carry by local authorities, which pay a percentage of the full adult single fare for each person carried.

The £1 billion scheme does not include long-distance coach services or train fares. In London over-60s are entitled to free Tube travel, alongside free bus travel.

Patricia McLeod, 82, who lives in Southampton, said that she frequently took several buses to go shopping in Romsey and to visit Salisbury. “The bus is full with all of us old biddies. It's made a huge difference to pensioners. Before, if you were on a limited income, you couldn't afford to go to these places,” she said. “I'm going to go down to Portsmouth this summer and to Bournemouth. My friend and I are off to Winchester tomorrow.”

David Wright, 62, a retired civil servant living in North Yorkshire, recently used his pass to travel around Cornwall, while completing a section of the South West Coastal path with his wife. He said: “I saved about £15 in Cornwall. The drivers seem pleased that we were using the buses, even though there was hardly anyone paying.” (Angela Jameson)

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