Taxi and Bus Fares

tony6403

In April 2012 diesel was costing up to £1.48 a litre.
It is now about £1.04 per litre.
How come these fares have not dropped ?

MarkBargain

They are mostly run by private companies who want to maximise profits for owners and shareholders.

martinsurrey

tony6403 wrote: »

In April 2012 diesel was costing up to £1.48 a litre.
It is now about £1.04 per litre.
How come these fares have not dropped ?

At about 40 mpg thats a change from 16p per mile to 12p per mile

A black cab is about £2.40 per mile.

So that would be a change from £2.40 to £2.36 if they passed on 100% of the reduction, its not worth the effort to reprint all of their fares for such a small change, also as the meters run in about 13ths -20ths of a mile, the change is too small to meter.

(a black cab is 20p for every 123m which is a 13th of a mile)

The cost of diesel is a small part of the the cost of a cab.

Edwood_Woodwood

tony6403 wrote: »

In April 2012 diesel was costing up to £1.48 a litre.
It is now about £1.04 per litre.
How come these fares have not dropped ?

Did the taxi fares increase when the cost of fuel was increasing?

My county has had one increase in taxi fares, in 2009, before that it was 2002.

Therefore, when fuel had increased by about 50% over the past 4 or 5 years, there was no tariff increase to compensate for that.

Exile_geordie

Bus companies generally hedge their fuel buying so will buy in bulk at certain parts of the year so that will not be affected with the low fuel prices now if they bought 6 months ago.


And taxis are based on how far you travel not how much fuel you use.

nomoneytoday

Because the fuel is only one cost.

My friend runs a regular hatchback as a licenced taxi. Tyres, oil, brake pads, radio fees etc all add up to about £100 a week before he drives anywhere.

Malthusian

When the diesel price went up 50% from 2009 did you demand that the buses raise their fares by 50%?

A rise in prices annoys people by a far greater degree than a reduction in prices pleases them. When you raise your prices people complain and look elsewhere, when you lower your prices people soon forget about it and accept the lower price as the norm.

For this reason the vast majority of businesses - not just in transport - absorb fluctuations in their costs as far as possible, taking more profit when the price of their supplies is low and less when they are high. And for something very unstable like petrol, they may pass it on further by hedging. If costs rise over the long term then they pass it on eventually, but they try not to pass on short-term fluctuations in value because it's bad business.

So a bus company takes the impact of fluctuations in petrol prices away from the end user by keeping its fares stable, and then passes it on further by taking out a hedging contract to have its petrol costs fixed regardless of what the price at the pumps does, and the company that supplies the hedging contract will have its own risk management in place. So risk passes through the system until it reaches someone who is happy to bear it (for a price).

They are mostly run by private companies who want to maximise profits for owners and shareholders.

A truism. Maximising profit does not mean cutting your nose off to spite your face. Which is what bus companies would be doing by letting their fares leap up and down from month to month in line with the oil price.