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‘The fare was fixed weeks ago. The diesel wasn’t’: Bristol PHV operator warns £2 fuel prices are hitting taxi drivers and forcing commission cuts
The founder of Bristol-based private hire operator Tick Taxi has warned that diesel prices reaching £2 per litre are creating serious financial pressures for drivers and operators, particularly those providing fixed-price airport transfers booked weeks in advance.
Jawad Burhan, founder of Tick Taxi, says the rapid increase in fuel costs has left some drivers completing journeys at prices agreed before the latest rises, reducing their earnings and forcing operators to reconsider how revenue is divided.
The company has responded by reducing its usual 20% commission on selected bookings, sacrificing part of its own income to help protect driver earnings and maintain service availability.
Burhan argues that the problem extends beyond higher prices at the pumps. The structure of the private hire market, where journeys are frequently sold at fixed prices and drivers generally pay for their own fuel, means sudden cost increases can be difficult to recover.
Burhan, speaking to TaxiPoint, said: “The fare was fixed weeks ago. The diesel wasn’t.
“When the RAC reported on 2 October that diesel had passed £2 a litre for the first time, most of the coverage was about families filling up. For a private hire operator, the harder problem is timing.
“Much of our work at Tick Taxi in Bristol is airport runs, and most of it is booked days or weeks ahead at a price agreed when the customer books. That is what passengers want: a fixed price for a 4am run to the airport, with no surprises. But it means a fare agreed in September is being driven in October at £2 a litre. The fare can’t move. The fuel already has.
“And in private hire it is usually the driver who buys the fuel. So every rise at the pump lands on the person behind the wheel first, long before any price can change.”
The timing of the latest diesel increase is particularly difficult for businesses operating advance-booking models. Airport transfers, corporate journeys and other longer-distance bookings are often priced before the journey takes place, giving customers certainty but leaving operators and drivers exposed when operating costs change.
For drivers working through private hire platforms or local operators, the effect can be immediate. Although an operator may receive an agreed percentage of the booking, the driver is frequently responsible for fuel, vehicle finance, insurance, servicing and other day-to-day costs.
An increase in diesel therefore reduces the amount remaining from each fare, even where the advertised journey price and operator commission remain unchanged.
Drivers face substantial annual fuel increases
Burhan points to figures attributed to the RAC showing the scale of the increase in running costs over recent months. He said: “The numbers are simple. The RAC puts a typical 45mpg diesel car at about 20p a mile at today’s price. At the end of February, before the conflict in the Middle East pushed prices up, the same mile cost about 14p. That is a rise of about 40% in seven months. For a driver covering 30,000 miles a year, it works out at roughly £1,700 more a year on fuel alone.”
The figures illustrate how relatively small changes in the cost of individual journeys can accumulate across a working year.
A driver covering 30,000 miles annually could face an additional fuel bill approaching £1,700 using Burhan’s estimates, before accounting for any further changes in vehicle maintenance, insurance or other expenses.
For a full-time driver working long shifts, that represents a significant reduction in potential take-home earnings unless fares increase, commissions decrease or fuel consumption can be reduced.
The financial consequences are particularly noticeable on longer airport journeys, where hundreds of miles may be covered on a single booking.
Burhan explained: “The squeeze is sharpest on long runs, where the fuel grows with every mile but the price was set weeks ago. A return run from Bristol to Heathrow is about 210 miles. On the RAC’s figures that is now around £42 of diesel, about £12 more than in February, and on a fare agreed weeks ago it comes straight out of the driver’s pocket.”
The example demonstrates the commercial difficulty facing private hire businesses that rely on advance bookings.
A £12 increase in fuel expenditure on a single airport transfer can significantly affect driver earnings, particularly when the journey also involves waiting time, airport charges and a return trip without a paying passenger.
Tick Taxi cuts commission to protect driver earnings
Rather than immediately increasing previously agreed fares, Tick Taxi has chosen to absorb part of the financial pressure by reducing its commission on certain bookings.
Burhan confirmed that the operator has made adjustments to its usual 20% commission structure to help ensure drivers continue receiving an acceptable return from journeys.
He said: “That is why, on some jobs booked before prices went up, we have cut our usual 20% commission. We are waiving around 10% of the fare on some bookings, and up to 15% on some fixed-price routes, so the trip still pays the driver properly. It costs us, but drivers are the business. If a job stops paying, good drivers stop taking it, and we would rather give up part of the commission than lose the driver.”
The decision demonstrates how rising fuel prices can affect both sides of the operator-driver relationship.
Why passing higher costs to passengers is not straightforward
Increasing passenger fares would appear to offer a direct way of recovering higher fuel expenditure, but Burhan believes substantial price rises could undermine demand.
Airport transfers are particularly sensitive because passengers can compare the cost of a private hire booking against alternative transport arrangements or lifts from friends and relatives.
Tick Taxi currently charges £48 for the journey between Bristol and Bristol Airport, according to Burhan.
He said: “The alternative would be to put prices up, and that is no easy fix either. Adding 20% to the £48 we charge from Bristol to Bristol Airport would make it £57.60, more than £19 extra on a return trip. For a family booking for half term, that can be the difference between booking a car and asking a relative for a lift.”
A 20% increase would add £9.60 to each £48 journey, or £19.20 across two journeys charged at that rate.
The example highlights the pricing dilemma facing private hire operators. Higher fares may help maintain driver earnings and recover business costs, but they can also reduce the attractiveness of pre-booked transport.
For airport transfer businesses, the commercial calculation is particularly important because many passengers arrange journeys well before travelling and may already have compared several transport options.
Operators therefore face a choice between absorbing higher costs, reducing their commission or increasing prices and potentially losing bookings.
The difficulty becomes greater when fuel prices move quickly, while customer bookings and advertised tariffs are established over longer periods.
Airport charges add further pressure to fixed fares
Burhan also argues that diesel is only one element of the rising cost of airport transfers.
Access and drop-off charges have become another significant expense for operators and drivers, particularly where these charges are included within the advertised fare rather than added separately.
He said: “Fuel isn’t the only cost inside a fixed fare. Bristol Airport’s drop-off charge, which we include in our prices, is now £8.50 for up to ten minutes, up from £5 three years ago. That is more than double the £3.50 of diesel for a run there and back from central Bristol.”
For a business selling fixed-price airport transfers, that charge must be factored into the overall journey price alongside fuel, driver earnings and operator commission.
Unlike fuel expenditure, which can vary according to vehicle efficiency, driving conditions and mileage, airport access fees are typically determined by the airport operator.
Where an operator includes the fee within its advertised price, the business must decide how much of that cost to recover from customers and how much can be accommodated within its existing pricing structure.
The combination of higher diesel prices and airport charges makes airport transfers particularly exposed to cost inflation.
It also raises questions about how businesses should calculate future fares when some expenses can change substantially between the date of booking and the journey itself.
Hybrid and electric vehicles become more attractive
Burhan believes reducing dependence on diesel vehicles will form part of the longer-term response.
Tick Taxi is directing more work towards hybrid and electric vehicles already operating within its fleet and encouraging drivers to consider lower-fuel-consumption alternatives when replacing their vehicles.
He said: “Longer term, the answer is less diesel. We are giving more bookings to the hybrid and electric cars in our fleet, which use less fuel or none, and encouraging drivers to make their next car hybrid or electric. That is not a cheap switch, and public charging has its own costs, but every litre a car doesn’t burn is a litre a spike like this can’t touch.”
The transition presents both opportunities and challenges for private hire businesses. Hybrid vehicles can reduce diesel or petrol consumption, particularly where journeys involve urban driving, while battery-electric vehicles eliminate direct fuel purchases.
However, vehicle acquisition costs, financing arrangements, charging infrastructure and the price of public charging remain important considerations.
For drivers undertaking long-distance airport transfers, vehicle range and charging availability can also affect scheduling and the number of journeys that can be completed during a working day.
Moving towards lower-emission vehicles may reduce exposure to future diesel price increases, but it does not remove the wider issue of operating costs.
Operators must still ensure that vehicle replacement costs and charging expenses can be recovered through the fares charged to passengers.
Calls for taxi fare reviews to respond more quickly to fuel costs
Although private hire operators generally set their own passenger prices, hackney carriage fares are subject to tariffs determined by licensing authorities.
Burhan believes councils should reconsider how they respond to sudden increases in fuel costs, particularly where formal fare reviews take place only periodically.
He said: “Councils reviewing hackney carriage tariffs should treat fuel as a moving cost. A review every year or two works when prices move by a few pence. It doesn’t work when diesel rises 40% between reviews.
“TaxiPoint has reported North Yorkshire weighing a 5% rise after diesel climbed more than 40% since its last fare change, and Stirling consulting on 11.7%. A published fuel threshold, with an extra that applies above it and falls away when prices drop, would be fairer to passengers than a permanent rise and fairer to drivers than waiting for the next review.”
The proposal would introduce a mechanism allowing a temporary fuel-related fare adjustment when diesel prices exceed a predetermined level. Such an arrangement could provide a more responsive alternative to permanent tariff increases, although its introduction would depend on the relevant licensing authority and applicable fare-setting procedures.
It would also require a transparent method of determining when the additional charge should apply and when it should be withdrawn.
The wider issue is the speed at which regulated taxi fares can respond to changing operating conditions.
Where a council undertakes a tariff review annually or less frequently, drivers may experience several months of increased costs before any revised fare structure takes effect.
By contrast, private hire operators have greater flexibility to change prices for new bookings, although existing fixed-price commitments remain a commercial constraint.
Airport access charges should be considered alongside fares
Burhan also wants airport access costs to form part of wider discussions about taxi and private hire pricing. He said: “Airport access charges belong in the same conversation. Airports set them, not councils, and several have gone up this year alone. A fare review that ignores the cost of reaching the terminal door is working from an incomplete sum.”
The distinction between airport charges and council-controlled taxi tariffs creates a further complication. Local licensing authorities can review hackney carriage fares, but they do not ordinarily determine the charges imposed by airports for using their drop-off facilities.
Drivers and operators must nevertheless account for both costs when deciding whether a journey is financially viable.
Where airport charges increase independently of taxi tariffs, drivers may face additional expenditure without an immediate mechanism to recover it.
Operators urged to share rising costs rather than leaving drivers to absorb them
Burhan’s final recommendation focuses on how private hire operators should respond when previously agreed fares no longer reflect the cost of completing a journey.
He argues that operators should consider reducing their share of existing bookings while being transparent with passengers about the price of future journeys.
He said: “Private hire operators, whose prices councils don’t set, should share the hit with drivers on work already booked, and be straight with customers about new bookings. If diesel stays at £2 for long, some of it will have to reach prices, and passengers would rather hear that plainly when they book than find a surcharge on the day.”
The approach would place part of the immediate financial burden on operators rather than requiring drivers to absorb the full increase.
However, the ability of businesses to reduce commissions will depend on their existing margins, operating costs and contractual arrangements with drivers.
Burhan’s comments also raise a wider question about the sustainability of fixed-price private hire work during periods of volatile operating costs.
Passengers increasingly expect certainty when booking journeys, but drivers and operators must still account for expenses that can change substantially before the service is delivered.
The Tick Taxi founder concluded: “Fixed prices are one of the best things about booking a car to the airport. Keeping them fair, to passengers and to the drivers who pay for the fuel, means being honest about what the trip now costs.”
With diesel costs affecting the economics of every mile travelled, the pressure is likely to remain particularly acute for operators specialising in long-distance journeys and fixed-price airport transfers if elevated fuel prices persist.
The decisions being taken by Tick Taxi illustrate how operators may increasingly need to adjust commissions, vehicle allocation and future pricing rather than leaving drivers to carry the full cost of fuel increases.
