Stagecoach Group, which runs South West Trains, London's biggest commuter franchise, is preparing to shed staff in response to the economic difficulties that are expected to take a huge toll on jobs in the capital.

Brian Souter, who founded the Perth-based bus and train company 28 years ago, said that no decisions had been taken but that any responsible company would seek to control costs in the face of a downturn. Stagecoach employs about 30,000 people.

Administrative and marketing functions are likely to be the first in the firing line, but many of these positions could be removed through natural attrition. A spokesman said yesterday that the company would not jeopardise customer services by cutting frontline staff.

“Central London employment is already falling, but we haven't seen any impact on peak-time travel,” Mr Souter said. “However, it's fair to say that there are fewer leisure travellers.”

Bus and rail operators have appeared to be immune to the economic problems so far, despite record-high oil prices this year and demands for near or above-inflation wage settlements from employees. Passenger numbers for bus and rail groups have climbed throughout 2008, helped by the introduction of nationwide concessions on buses for over-60s.

Transport groups argue that the public is switching from cars to buses and trains - termed modal shift - which they attribute to the rising cost of motoring, greater concern over the environmental impact of driving and frustration with congestion. “The question for us and for other transport operators is whether modal shift can occur faster than the impact of a downturn in the economy,” Mr Souter said.

He also revealed that Virgin Trains, in which Stagecoach is a 49 per cent partner, would not advertise or promote a new timetable, scheduled to start on the West Coast Main Line in December, because it feared that travellers would be caught up in extensive disruption.

The timetable will call for three trains an hour running from London to Manchester and will cut journey times significantly. Mr Souter said that he doubted Network Rail's ability to run a consistently high-performing railway in the first month or so of the new timetable. Network Rail was fined £14 million this year after engineering works overran on the main line from London to Birmingham and Manchester.

Today Stagecoach will announce a $60 million (£35 million) investment in 96 double-decker coaches for its megabus.com operation, which started this year on America's East Coast.

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