Public transport solves London's traffic problems

London Briefing: London City Airport has come a long way since it was first proposed by the London Docklands Development Corporation. Officially opened by Queen Elizabeth in late 1987, it has been extensively extended and redeveloped since.

Dermot Desmond acquired London's smallest commercial airport in 1995 for a reported £23.5 million. One of those infamous "rich list" tables put the recent value of that stake at around £332 million (€492 million). The accuracy of that calculation could be challenged but it has no doubt been a good investment for Mr Desmond.

Passenger numbers, which were around 500,000 per annum when he bought the airport, are said to be around 1.6 million today. Management is reported to be planning for five million in the years ahead.

Many people I know are more than happy to pay the higher fares normally associated with City, if only to avoid the horrors of Heathrow. It helps that you can usually check in and get to your flight with a minimum of fuss in tolerably clean and functional surroundings, something that cannot be said about London's largest airport.

Earlier this month, the airport received a major boost with the opening of an extension of the Dockland's Light Railway (DLR). The big disadvantage of City Airport has been the need to use either taxi or bus services, raising the spectre of traffic delays. The DLR will now whisk us into Bank station in 22 minutes. According to Transport for London (TfL), 50 per cent of the airport's users take cabs and pay an average £15 per trip, which looks low to me. We can now do the same journey for £2.80 on the DLR.

The opening ceremony attracted Ken Livingstone and transport minister Karen Buck, who were joined by Colin Jackson, Lord Sebastian Coe and Olympic gold medallist Denise Lewis.

The presence of the athletics delegation indicates the role the airport will play in the transport infrastructure for the 2012 Olympics. The hope is that the on-time DLR extension will prove a useful omen for the other infrastructure projects that the games require.

Transport, of course, is at the heart of Ken Livingstone's policy programme. The mayor has come in for stick recently, not least for his decision to scrap the Routemaster buses in favour of much-hated - by commentators at least - "bendy" buses. I wonder if the critics ever travel by bus.

Livingstone has also been accused of reneging on earlier commitments with the decision to raise the congestion charge by 60 per cent. The extension of the charging zone has attracted less criticism, with more acceptance these days of its merits. A further western extension of the charging zone is planned for 2007.

TfL is nothing but ambitious. A five-year, £10 billion investment programme is underway. One small initiative, recently announced, gives funding (up to £1,000) for businesses that want to install showers and lockers for staff who cycle. TfL will also provide free cycle stands and trade-price bicycles for firms that operate a bike pool.

Over the past five years, according to TfL, the number of cycle journeys in London has doubled. TfL also claims it is providing the highest volume of bus services since 1957 and is carrying the highest number of passengers since 1965.

The dwindling band of critics argues that the biggest source of congestion on London's roads is an army of near-empty buses, but nobody is paying much attention.

TfL has reason to be pleased with itself. In many cities in the UK and abroad, public transport use is declining. In London, bus and underground usage is growing rapidly. The DLR recorded a six-fold increase in passenger numbers over the past decade - which will grow further with the most recent City Airport extension.

Some things never seem to change. Negotiations are underway with unions to try to head off threatened tube strikes over the Christmas period.

Taxis are as impossible to get late at night in the West End as they always are in December, but there has been a quiet revolution in London's public transport system in recent years. If it continues, and it looks likely that it will, more and more of us are going to abandon the car for the tube, bus or bicycle.

Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.