Crude oil price rises are turning the screws on taxi companies and airlines, pushing them to pass higher fuel costs on to passengers in the form of higher fares.
Out of 118 taxi services operating in Nagano Prefecture, 99 have applied for permission from local authorities to raise fares by 10 percent to 20 percent. If approved, they will mark the first fare increases since April 1996.
In Oita Prefecture, 65 of its 91 taxi firms have asked to raise fares by some 10 percent since early July.
The moves show that taxi companies’ efforts to deal with higher fuel costs through cost-cutting are reaching their limits.
The average cost of liquefied petroleum gas — the fuel most commonly used in taxis — shot up 13 percent in July compared with the same month last year to 71 yen per liter, and is 17 percent higher than two years ago.
An official at a taxi company in Matsumoto, Nagano Prefecture, said the rising cost of fuel has been eating into the firm’s profitability, to the point where the company fears for its survival.
In Tokyo, however, where the taxi business is fiercely competitive, companies are finding it difficult to raise fares.
“Fare-cutting competition has subsided only recently, with many firms offering discounts for long-distance passengers. The taxi industry here is not in a situation where we can hike fares,” said an official at a major Tokyo taxi company.
Airlines, including Japan Airlines Corp. and All Nippon Airways Co., raised international and domestic fares in March and April to make up for higher jet fuel costs.
But because fuel prices have continued to rise, JAL earlier this month announced additional increases on international fares, possibly by the end of the year.
Jet fuel costs have jumped 20 percent since the end of March and may push the airline’s annual fuel costs up by 15 billion yen, compared with its initial forecast.
Tetsuya Takenaka, a JAL board member, said the magnitude of the fuel cost surge is far greater than can be absorbed by cost-cutting.
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