A new deal worth 414 million has been reached to secure free bus travel for the elderly and disabled for the next two years.
The Scottish Government announced the investment in the concessionary travel scheme – which it said made a “real difference” to 1.2 million users.
It comes after the Government reached a new deal on how much firms would be reimbursed.
Operators currently receive 58.1% of a single adult fare from the Government for each journey, with the scheme having a budget of 192 million this year.
The new deal with the Confederation of Passenger Transport (CPT) reflects the expected increase in demand, fares and costs, as well as falling fuel prices.
In 2015-16, the budget for the scheme will rise to 202 million, with the reimbursement rate dropping to 57.1%. The following year the budget will rise again to 212 million and there will be another slight drop in the reimbursement rate, to 56.9%.
Transport Minister Derek Mackay said: ” Concessionary travel is a key part of the Scottish Government’s social wage and makes a real difference to many of the 1.2 million national entitlement card holders, including our elderly and disabled.
“Research shows the National Concessionary Travel Scheme is greatly valued by users. Card holders themselves say it helps them financially, gives them a greater sense of independence, reduces feelings of isolation and gives them more confidence in their own ability to travel.”
He added: ” The latest reimbursement terms are based on a formula agreed with the industry in 2013. They will help provide stability for the industry, with recent energy forecasts also taken into account to help manage the costs of the scheme – welcome news for taxpayers.”
CPT Scotland director George Mair said: ” Today’s agreement signifies the end of a thorough and fact-based look at National Concessionary Travel Scheme reimbursement, which should ensure that the budgets for the next two years more closely mirror actual costs.
“This gives bus operators a welcome degree of certainty and signifies a pathway for future such discussions. We thank Transport Scotland for its constructive and positive approach throughout this process.”