PASSENGER numbers on the Caledonian Sleeper have plunged by nearly a quarter in the last three years amid competition from rival Scotland to London rail operators and cut price air fares.

New figures reveal the new franchise holder Serco has taken over the Sleeper amid a steady decline in passengers, from a peak of nearly 274,000 in 2010/11 to to less than 210,000 by 2013/14, the last full year for which figures are available.

The 23.5 per cent decline passengers comes after a previous resurgence in its popularity.

From 2005 to 2010, passenger numbers rose steadily by 31 per cent, boosted in 2010 by the disruption to air travel caused by the Icelandic ash cloud.

Since then, however, passenger numbers on the Sleeper have gone into freefall, dropping from 273,898 in 2010/11 to 259,388 the following year and 239,073 the year after that. By 2013/14, passenger numbers were down to 209,634.

Mark Smith, a rail enthusiast and author of the respected Man in Seat 61 guide to UK train travel, said the figures were unexpected.

However, he suggested that the trend could lie with passengers migrating to quicker daytime rail services on the East and West Coast Main Lines.

Mr Smith said: "I'm surprised - airline security hasn't gone away, and I thought the sleeper was still growing.

"But we have seen Virgin accelerate and double Glasgow-London trains from every two hours to hourly, and East Coast make improvements to Edinburgh-London too. So it's possible some Lowland sleeper business has gone over to better day trains.

"As far as I know, both routes have been gaining market share from planes over the last few years, with more improvements to come on the new Virgin EC franchise such as brand new trains, three hour 59 minute [journey times] and increase in London-Edinburgh frequency to half hourly."

Price may also be a factor, with a berth on the Sleeper from the Central Belt to London costing around £260 return at weekends compared to around £140 by plane.

It is also costly to run, with the subsidy levels of at least £76 per passenger when occupancy peaked in 2010.

In 2011, a Scottish Government consultation proposed cutting costs by removing either the "Lowland" service to Edinburgh and Glasgow or the "Highland" service to Fort William, Inverness and Aberdeen.

However, there is sign of a turnaround, with passenger figures of 220,191 in the 12 months to the end of February 2014 - partly boosted by increased traffic for the Commonwealth Games and Ryder Cup.

A spokesman for Serco, which took over the franchise on April 1, said it was confident it could reverse the trend.

The operator has vowed to transform the Sleeper into world-class "tourist rail experience" with £150 million of brand new rolling stock by 2018 and revamped accommodation and catering facilities.

Peter Strachan, Serco's Managing Director at Caledonian Sleeper, said: "We've already introduced a new food and drink menu, bedding, uniforms, livery and 12 month booking service, and I'm confident that more and more people will appreciate that the Sleeper provides a really good way to travel between Scotland and London for both business and leisure, allowing you to have whole day's extra work or play on each return visit."

However the firm was embarrassed just days after taking over the service when a computer booking problem meant around 30 people turned up to find berths had been double booked.

A spokeswoman for Transport Scotland said: "Transport Scotland had identified that usage of the Caledonian Sleeper service had been decreasing for a number of years as the previous franchise drew to an end.

"We were confident that the service had the potential to be revived to its former glories and took the decision to split this from the main ScotRail franchise to encourage greater investment and growth in the service than under the previous franchisee."