How to set up a taxibus service

What is a taxibus service?

A taxibus operates similarly to a conventional public bus service but is delivered using a licensed Hackney Carriage (taxi) or private hire vehicle. It runs on a fixed route and timetable, collecting passengers from designated stopping points.

A taxibus service must:

  • be operated by a licensed taxi or private hire driver
  • be registered with the Traffic Commissioner as a local bus service
  • be open to the general public, with passengers paying a fare similar to standard bus fares
  • accept concessionary bus passes
  • operate as advertised, even if no passengers are booked

This model is particularly suited to rural or low-demand areas where a full-size bus service is not financially viable.

When to use a taxibus

A taxibus service is ideal when:

  • a traditional bus service is no longer sustainable
  • there is a need for regular, scheduled journeys on specific days or times
  • passenger demand is consistent enough to justify a fixed timetable
  • users prefer not to book in advance

A taxibus service offers a predictable timetabled service.

Set up and management

To set up and manage a taxibus service, the contracting organisation needs to:

  • develop a service specification outlining the route, timetable, and operational standards
  • arrange a contract with a licensed operator
  • monitor and review service performance
  • manage user feedback and respond to issues
  • process invoices and payments.

The operating firm must apply for a Restricted Public Service Vehicle (PSV) Licence and be licensed by the local authority for the area in which the service operates.

Typical costs

Costs can vary depending on the operator and service model. There are two common contracting approaches.

Fixed contract price minus fares

The contracting organisation pays the operator a set fee, minus any fares collected. Therefore the organisation bears the financial risk if passenger numbers are low.

Fixed price with fare retention

The operator receives a fixed payment and keeps all fares collected. The operator assumes the financial risk if passenger numbers are low.

In both models, the party retaining the fares is eligible for concessionary fare reimbursement.

Legal requirements

Taxibus services are governed by Section 12 of the Transport Act 1985. Key legal points are:

  1. Any organisation can commission a taxibus service and contract a licensed operator.
  2. Operators must hold a Restricted PSV Licence, allowing them to run a local bus service using a taxi or private hire vehicle.
  3. The timetable and route must be registered with the Traffic Commissioner.
  4. Any changes to the timetable must also be registered.
Next steps

To establish a taxibus service:

  1. Identify demand - assess how many people need transport, where they need to go, and how often.
  2. Calculate costs and funding - prepare a budget and explore funding sources, including local authority grants or community transport funds.
  3. Develop a timetable and contract - agree on a service schedule and draw up a formal contract with the operator.
  4. Select and appoint an operator- identify potential providers and invite tenders or quotes.