PHIL WHITE, the chief executive of National Express Group, very nearly made the wrong choice early in his career.

“If someone had said to me, ‘Do you want to be a partner at PricewaterhouseCoopers or a finance director of a bus company?’, I would have made the wrong decision,” he admits.

Thankfully for National Express, White never really thought he would cut it as a partner in Deloitte, the audit firm with which he trained, and he got on the buses, once seen as the Cinderella of public transport networks.

Now, with many years of service under his belt, he is steering National Express Group through what promises to be one of its most successful periods.

The company’s share price has increased by more than a third in the past year and it has a market capitalisation of £1.2 billion. The group runs seven of the UK’s nine best- performing train operating companies. Its National Express long-distance coach services, so popular with students and pensioners, are enjoying a revival, while its local bus services, which operate all over the country, are performing steadily and its yellow school bus company in the US has plenty of opportunity for growth.

However, transport being the key service it is, there are always challenges to which the company must react. The latest is the security threat raised by the suicide bombings in London earlier this month.

Bus and train operators and their employees and customers are at the front line of potential terrorist attacks on public transport. When 20,000 people were evacuated from Birmingham’s city centre bars on the Saturday night after the 7 July London bombings, it was a Travel West Midlands bus owned by National Express Group that was at the centre of the scare and that was subject to three controlled explosions.

White is full of praise for the way his West Midlands employees handled the circumstances of that Saturday evening. Their efforts, and those of all the transport workers involved in the London atrocities, trigger a comment on one of his favourite subjects. “The private sector has public spirit,” he says. “Just because we are in the private sector doesn’t mean we don’t have public service.”

The subject is close to his heart because train operators have been upbraided recently for making record rail profits. Bus and rail groups are particularly susceptible to claims of profiteering because many of their businesses depend wholly on subsidies from the Government. Executives, including White, have also made handsome windfalls from the deregulation and privatisation of the transport sectors.

The sniping has begun again as passengers have finally started to return to the railway leading to soaring rail revenues. Like other operators, National Express’s UK rail franchises, which include Midlands Mainline, Gatwick Express and One, which covers London and the East of England, have seen revenues rise by 9.6 per cent.

The close watch that the Government keeps on the railway will become more explicit from today when the functions of the Strategic Rail Authority are transferred to the Department for Transport. In future, it will be the Department for Transport (DfT) that awards rail franchises. There are hopes that this will refine a process that has seemed, to City eyes at least, something of a lottery.

National Express Group is currently shortlisted for two new franchises — Greater Western and Thameslink — and White hopes to win at least one of these, particularly since the DfT has now emphasised that past performance does count.

The first round of franchising saw some train operators make huge promises about transforming the way passengers travel. White believes the most important thing these days is to offer a tender that is deliverable and that can meet the budget set because the DfT appears to be moving back to lowest-cost operators, rather than “best- value” ones.

There is no point in an operator offering so much that it breaks the budget, says White. “The days of super-profit franchises are over,” he says, “but companies still need to make a decent return.” If operators get their sums right, they should be able to do just that, with perhaps less risk.

In contrast to the growth seen on the railways, bus services outside London are stagnating. Competition for bus operators in the regions comes from the car rather than rival bus companies. With 73 per cent of National Express’s bus revenues coming from Birmingham and just 20 per cent from London, where it has only recently become a player, the company has felt this discrepancy keenly.

Travel West Midlands has been handicapped in Birmingham because the local authority, in contrast to London, has been reducing bus priorities on the roads. Equally, the example of Edinburgh, where residents recently voted down a congestion charge, shows how difficult it can be to introduce genuine innovation in transport.

“Democracies are good, but bloody inefficient,” White says. “It takes someone like Ken [Livingstone] to drive change. He is the one that has made buses acceptable in London.”

White’s philosophy for National Express Group is that it is a collection of lots of devolved, local businesses. The company has 22 brands within its portfolio, some of which will be instantly familiar to its customers in a particular area while they will never have heard of others.

“We have local companies, run by local people for local people,” White says. “I don’t try to run buses in Birmingham from here [London], so why should I try to run a bus company in Dallas from here?” White also emphasises the long-term nature of his business. “We could have done a lot to change Birmingham in the short term, but that would have damaged our long-term standing there,” he says. “Hiking up fares is a zero sum game in a deregulated market.

“If I were ripping customers off in Birmingham I would have [Brian] Souter [of Stagecoach] all over the place. He said to me ‘You’re not being greedy. I can’t get in there’.”

“It’s not in my interest to rip off customers or governments because eventually I will lose the contracts in the regulated sector and lose customers in the deregulated business.”

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