They already have 55% of the bus network in Scotland - how much more do they want?

Neil Rennilson, Lothian Buses chief executive

The council has been watching developments after FirstGroup introduced a new �1 daily travel ticket on certain routes in Edinburgh this week.

FirstGroup competes with existing city centre services run by Lothian.

Lothian Buses said it has been investing �6m in new vehicles and it has no plans to cut its �2.20 unlimited daily travel ticket to match the FirstGroup's price.

Concerns have been expressed that less profitable routes could be neglected as the companies vie for business.

Lothian chief executive Neil Renilson said: "Lothian is already investing millions of pounds on new buses and smart card ticketing options, which will benefit all passengers.

"FirstGroup have doubled the number of buses on routes that were already well served so not only is there nothing new for passengers, it is also wasteful competition, particularly when you consider issues such as exhaust emissions.

Lothian has 75% of capital services

"Their actions mean that buses are becoming a cause of congestion rather than a solution. They already have 55% of the bus network in Scotland - how much more do they want?"

However, Gordon Dewar, general manager of First Edinburgh, hit back saying that it was Lothian which was guilty of hurting passengers.

He said: "The flooding of routes started some time ago. We started introducing new routes into Edinburgh in April.

"We have found that Lothian have been running new buses on those routes.

"Down in Musselburgh where we have been running buses for years - even before deregulation - we are finding that Lothian have a bus every two or three minutes.

"We feel there is a market for two companies, and we're doing our best to provide an alternative to the car.

Price moves

"We can't compete on numbers of buses, because Lothian is much much bigger than us in Edinburgh.

"We have gone for the price sensitive market. The analogy I would use is to compare us with what Ryanair has done in the airlines market."

The city council has said it could intervene under the new Transport Scotland Act 2001 which allows local authorities to regulate services by drawing up "quality contracts" with bus operators.

The contracts prevent them from cherry picking certain routes at the expense of less profitable ones.