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One of New Zealand's biggest taxi firms is set to raise its fares in a move expected to trigger price hikes across the country.
Wellington Combined Taxis, the capital's largest company, will raise its fares by 15c a kilometre to $2.75 in the next few days, to catch up with steadily rising fuel prices.
Taxi Federation executive director Tim Reddish said fuel accounted for up to a fifth of operational costs and predicted many companies would follow suit.
"What's generally happened in the past, and what's happening now, is that companies wait and see for a while until they can't hold on any longer, and then increase their fares."
Drivers have reported a drop in business and Reddish said managers faced a tough task retaining customers if they increased fares.
"People's disposable income is being attacked on all fronts, with rising mortgage costs, rising food costs and rising petrol costs, so it becomes a fine balancing act to increase your fares without encountering consumer resistance," he said.
Wellington Combined Taxis' general manager, Kevin Braid, said the decision to raise fares was agonising.
The firm was aware of the financial pressures on its customers and had held off for some time to avoid "killing" its market.
One of Auckland's leading firms, Alert Taxis, raised its fares two months ago but was "continuously monitoring the situation," said co-owner Robert van Heiningen.
Keeping costs down, by servicing its own vehicles and converting fleet cars to run on LPG, was helping to ease the pressure.
"But you'd be naive to think for one second that these fuel increases are not having an impact."
The only taxi company that can guarantee its fares will not rise is newcomer Green Cabs, whose hybrid petrol/electricity fleet charges only $2.30 a kilometre in Auckland and $2.50 in Wellington.
Owner Callum Brown said the fuel costs of its Prius vehicles were one-third those of traditional petrol cars, so the recent petrol price hikes had not affected his company nearly as much as they had other firms.
Brown said there would be no change to fares until a review this November.
