A BUS company lauded as one of Britain's best is in the second year of a profit slump.

Roger French, managing director of Brighton and Hove Bus and Coach Company, has seen profits dip below £4 million for the second year running.

The firm's failure to reach its £5 million profit target for the financial year that finished in April means there will be less money for new buses and equipment and for upgrading buildings and facilities. Last year the firm invested £3.5 million of the firm's profits in improvements and the rest went to parent company Go Ahead.

Mr French was unable to guarantee that ticket prices, which have risen 50 per cent in five years, would stay the same.

He said the strategy of adding services to popular routes, cutting services from under-used routes and, as a last resort, increasing ticket prices had worked in the past and would be carried on.

He said: "It's not getting any easier to run a successful bus company in Brighton and Hove.

"The cost of diesel has risen by 30 per cent a year for the last two years and now the cost of gas and electricity is going up."

The firm, which operates most buses in Brighton and Hove and has services stretching as far north as Tunbridge Wells in Kent, is blaming high diesel prices and free bus passes for pensioners introduced in April. Passenger numbers have risen but the number of paying customers stayed about the same, with more people buying Saver season tickets.

Income was down by just over one per cent - about £500,000.

The cost of gas and electricity is expected to rise sharply in the next year so the firm is calling on staff to save energy wherever possible.

Mr French said: "There are different perceptions over ticket prices. The Saver ticket is seen to give exceptional value for money at the moment. It's a question of timing. No business could rule out price increases."

Ticket prices were lower than most other towns and cities, and Brighton and Hove City Council's policy of designing roads to give priority to bus routes had helped bus travel retain its popularity.

In 2000 a single fare cost £1. It now costs £1.50.