The worsening economy combined with soaring petrol prices is driving people out of their cars and on to public transport, according to Arriva, the bus and train operator, which today reported a 40 per cent increase in pre-tax profit.

London's biggest bus operator, which also operates in 12 European countries, is seeing the benefits of people shifting from cars and aeroplanes to buses and trains, with a 59 per cent increase in revenue in the first six months to June 30.

Arriva, which took over the UK's CrossCountry rail franchise last year, said revenue had risen by £1.4 billion from £902 million last time. Pre-tax profits at the group climbed to £66.3 million, up from £47.3 million in the first half of 2007.

Operating profits in the UK rail arm jumped to £14.8 million from £1.1 million a year earlier, due to the contribution from CrossCountry, which stretches from Aberdeen to Penzance and saw revenues on the service improve 10 per cent year-on-year.

The company's European operations delivered a 50 per cent increase in revenue of £626 million and a 24 per cent rise in operating profit of £34.9 million, boosted by the acquisition of 80 per cent of Hungary-based bus business Interbus Invest.

Sunderland-based Arriva, which runs more than 16,000 buses and trains in the UK and continental Europe, said it was well placed to avoid an economic downturn because of the long-term nature of its rail and bus operating contracts, which underpin its future earnings. It has also taken prudent steps to hedge against rising fuel costs and has a strong balance sheet.

The company said that higher fuel prices and slower macro-economic growth was a challenge to the industry but also presented an opportunity. "We have attractive value-for-money propositions, both for fare-paying passengers looking to switch from more fuel-intensive car and air journeys, and for public authorities as they increasingly acknowledge the proven financial benefits of private-sector service delivery," Arriva said in a statement.

Arriva will pay an interim dividend of 6.15p a share, up 10 per cent on the payout a year ago. The shares rose 4.2 per cent to 743p on the day.

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