BUS passengers will see dramatic reductions in fares in East Lothian as council-owned firm Lothian Buses replaces routes being axed by First Group.

A single fare on the new 113 route between Pencaitland and Edinburgh will be £2.40, compared to the £3.60 fare currently offered by First, while the cost of a day ticket will go down from £7.30 to £5.

Ian Craig, managing director of Lothian Buses, said the new service would be operated by East Lothian Buses, an offshoot of the municipally-owned bus company.

It comes as First Group considers further fare increases and selling off bus divisions in order to cope with a predicted drop in operating profits due to lower demand and cuts in Government subsidies.

Lothian Buses, which is 91% owned by the councils in Edinburgh, East Lothian and Midlothian, has already signalled that it will take over the majority of services being axed by First East.

Mr Craig said: "We are delighted to provide the people of East Lothian with their own dedicated bus service that offers expanding public transport opportunities. This rural service will have its unique branding that differentiates itself from its sister urban operator, Lothian Buses.

"East Lothian Buses will benefit from the experience, expertise and investment of Lothian Buses Plc, offering passengers a modern accessible fleet, as well as a better standard of service, and better value fares and ticket structure."

A spokeswoman for the company said that, as well as investment in fleet, East Lothian Buses has invested in improving the infrastructure and will increase the provision of BusTracker real time information along the route of the service 113.

Mr Craig added: "We are currently recruiting drivers for this new route. Where possible we will recruit First Bus drivers who have been made redundant."