TRANSPORT group Go-Ahead is looking for ways to reduce fuel consumption after its diesel bill increased by £4.7m in six months.

The Newcastle company is conducting a trial using an additive that is said to reduce consumption by five per cent.

The group is also planning to convert its fleet of 2,500 buses to run on biodiesel - a blend of 95 per cent mineral fuel with five per cent from renewable sources.

Passengers could also face fare rises and possible cuts to services as Go-Ahead combats the effect of high fuel bills.

Chief executive Chris Moyes said bus services in County Durham, where the company has an estimated 35 per cent market share, will reduce when Go-Ahead pulls out from Bishop Auckland, from April.

The town will be served by rival transport group Arriva.

Yesterday, Go-Ahead revealed an 11.2 per cent fall in half-year profits to £43.6m, even though turnover rose 6.5 per cent to £675.9m.

Despite the decline, Go-Ahead expects a better performance in the second half of its financial year. Mr Moyes said that every 1p on a litre of diesel increased the company's fuel bill by about £1m a year.

He said: "High fuel prices are not a blip, they are a long-term problem. We have got to adjust.

"We can't pass the entire cost on to our customers, so we are looking at other areas.

"We are running trials in the North-East using fuel additives and we have successfully completed biofuel trials in the region and we will be converting the fleet to 100 per cent biodiesel."

Go-Ahead employs more than 20,000 people in the UK and, each year, about 700 million passenger journeys are taken on its services, which include some London buses.