Bus Éireann will shortly reveal it paid private bus operators a record €70 million in 2004 for providing the State-owned company with extra capacity, particularly on the school transport scheme.

The annual results of the company will show turnover rising by almost 15 per cent to €250 million, with passenger numbers up by 40 per cent in the last five years.

While the company will report a record surplus for 2004, the improvement in its fortunes has ironically given a boost to the private bus and coach industry.

Payments by Bus Éireann to private sub-contractors have risen by 7.6 per cent in the last two years alone. A few years ago the company was paying about €34 million to private sub-contractors.

The private bus industry is receiving an increasing portion of Bus Éireann's business.

It is estimated that 1,700 suppliers, many of them small private bus operators, are contracted as part of the school transport scheme. This Department of Education contract is held by Bus Éireann, although private companies like Aircoach have spoken in recent weeks about the need to put it out to tender.

It is estimated that private sub-contractors are now doing over 42 per cent of the kilometres undertaken by Bus Éireann each year.

Most of the sub-contractors are small, rural-based operators. About 150,000 children use the school bus service each day.

While most of the private contractors are used for this service, Bus Éireann sometimes contracts in private operators for once-off commercial activities.

The annual report of the company is expected to report strong progress as a result of new investment agreed as part of the national development plan.

The company will point to better frequencies and a wider network as proof that such investment is paying off.

However, the company will once again highlight the damaging impact of traffic congestion on its services.

In its 2003 annual report it estimated that traffic congestion added €19.2 million to its cost base.