National Express is pulling out of its Dot2Dot airport transfer service less than a year after launching it.

The rail and bus operator gave warning in July that the revenues for the new operation were below expectations. It told the 180 staff last night that it intended to sell the business, which has made a trading loss of about £8 million this year or, failing that, to close it.

Richard Bowker, chief executive of National Express Group, said the main reason behind the airport transfer service's lack of success was the collapse in inbound tourism in the last six months, particularly in tourism from the US.

"We had early warning that tourism was falling off from talking to hotel concierges. We have always been very clear that every part of the business has to pay its way and, if it wasn't, we would close it," Mr Bowker said.

The decision to close Dot2Dot is potentially embarassing for Mr Bowker, who launched several development projects, including initiatives in marketing and coaches, shortly after he took over as chief executive of the transport group.

Mr Bowker said: "Every company should have things in development. We are very sad that Dot2Dot has not worked out the way it was planned — I especially feel for the people who have been achieving extremely good customer satisfaction levels."

Other parts of the group appear to be resilient in the face of the economic difficulties in the UK and Spain. National Express said in an interim management statement that it was on course for "strong" year-on-year earnings growth and that management's expectations remain unchanged.

Analysts consensus forecasts for the group are for a 23 per cent increase in earnings to £252 million.

Mr Bowker said there was evidence that new customers were using National Express's East Coast service between London and Edinburgh, thanks in part to a widespread advertising campaign promoting "miniature prices".

Mr Bowker said he believed public transport could be resilient to any recession as people were clearly still keen to travel, but wanted to do so in the most cost-effective way.

"The travel industry is not immune to an economic slowdown and we are seeing evidence of consumers becoming increasingly focused on securing the best value for money they can. We remain confident that public transport and the products and services delivered by National Express Group are well placed to deliver the value which consumers are looking for," he said.

The company’s East Coast train service saw like-for-like revenues growth of 11 per cent and the figure for National Express East Anglia was up per cent, resulting in a 9 per cent rise across the rail portfolio for the first nine months of the year.

Coach revenues were up 5 per cent and bus operations saw like-for-like revenues growth of 7 per cent in the UK.

The company said its improved trading performance reflected better passenger volumes as well as fare rises.

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