Megabus, the low-cost bus service that operates in the UK and North America, has helped Stagecoach to increase revenues as passengers look for cheaper forms of transport.

Stagecoach, the bus and train operator, said in a trading update this morning that like-for-like revenue growth in the UK was up 9.2 per cent in the 24 weeks to mid-October. Sales in the United States benefited from the continued expansion of the Megabus brand and revenue was up 8.4 per cent in the five months to the end of September.

Stagecoach launched its no-frills Megabus brand in the US two years ago and the company believes that it has benefited from higher motoring costs, which have encouraged people to look for alternative means of transport.

Stagecoach said: "As consumers experience increased costs in general and higher motoring costs in particular, the group's good-value bus, train and tram services continue to attract passengers from other modes of transport. In particular, value products such as Megabus in North America and advance-purchase rail tickets in the UK are gaining in popularity."

Stagecoach's UK rail division increased revenue by 8.3 per cent but Virgin Rail, which is 49 per cent owned by Stagecoach, reported almost flat revenues because of infrastructure maintenance by Network Rail. Stagecoach said that it was being compensated for this disruption, so profitability should be unaffected.

Stagecoach announced a $60 million (£35 million) investment in 96 double-decker coaches for Megabus in the US two weeks ago. The company has also warned of job losses at South West Trains as it cuts costs to compensate for the slowing economy.

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