Transport Self-help kit: Providing transport services to your community

How to set up a taxibus service


A taxibus service is a regular public bus service, run by a licensed Hackney Carriage or Private Hire operator using a taxi or private hire vehicle.  Just like a regular bus service it runs along a fixed route and to a timetable. Users can just turn up, usually at designated stopping places and pay a fare similar to a regular bus fare and passengers can use their concessionary passes.  

Case study: St Budeaux Taxibus

The St Budeaux Taxibus is currently operated by two individual taxi operators, who obtained restricted PSV licences. The service runs every 30 minutes Monday to Friday, between housing estates in St Budeaux and their nearby local shopping area.

The taxibus picks up passengers at defined bus stops and also has a “hail and ride” section where the taxibus will pick up at any safe place.  Passengers pay individual fares, similar to the equivalent bus fare in other parts of the area, and holders of concessionary bus passes are able to travel free as the service is registered as a bus service.

When might a taxibus be suitable?

A taxibus typically replaces a bus service, where the bus service has become uneconomic to run but there are some people who wish to make a regular journey. The service might run as little as once per week, or offer multiple daily journeys.

A taxibus (rather than a taxishare) is suitable when every timetabled journey is likely to be carrying passengers.   The service must always run as advertised regardless of whether anyone wishes to travel, as it is registered with the Traffic Commissioner.  Therefore the contracting organisation is paying for journeys even if no one uses the service.  

It is also preferred if users do not want to or are unable to plan their journey and book their transport at least the day before they travel.

Resources needed

The contracting organisation will need to:

  • Draw up a service specification and arrange a contract with an appropriate operator
  • Monitor and review the operation of the service, manage a user feedback process, publicise the service and receive and process invoices from the operator.

The Taxi/Private Hire Operator will need to apply for a Restricted PSV licence, which is required to operate this service. The operator must also be licensed as a Taxi/Private Hire Operator for the District or Borough in which at least part of the service operates.

Typical costs

Many taxi operators may be willing to operate the service at their standard meter price. If the operator is being contracted to run the service for a certain price, this can be done in two different ways;

  • The contracting organisation can pay the taxi operator the contract price, less any fares he/she has taken.  In this way, the financial risk is with the organiser, because if passenger numbers are low, the amount that is paid to the operator is nearer the contract price.
  • The taxi operator can agree to run the service for a fixed price and keep any fares taken.  In this way, the financial risk is with the operator, assuming the fixed price  paid by the contracting organisation is less than the service costs to run.  Therefore, if passenger numbers are low, the operator does not make a profit.

For either option whoever keeps the fares will receive some reimbursement for passengers using their concessionary passes.  

The Law

Taxibus operations are permitted under Section 12 of the 1985 Transport Act. Any organisation can commission a service and contract an operator. An operator may apply for a licence (Restricted PSV Licence, current cost £61) which enables them to operate their taxi as a local bus service, charging separate fares along a registered route to a published timetable. The timetable must be registered with the Traffic Commissioner.  The operator should do this as they will hold the relevant Restricted PSV Licence, but you may wish to help them by providing the timetable for example.  Any timetable changes will also need to be registered.

What to do next

  • Identify potential demand (number of people, journey(s) needed)
  • Calculate likely costs, budget and funding source(s)
  • Draw up and agree timetable and service contract
  • Identify potential operator(s) and tender or seek prices from them
  • Agree with the operator exactly how it should be run.
  • Operator to apply for restricted licence.

Where to get further advice

Community Transport Team
Economy, Transport and Environment Department
Hampshire County Council
Telephone: 01962 846785