Transport fares on East African routes could rise as operators agitate for higher margins in the face of high operational costs and growing competition on regional routes.

While the bus operators have not given an indication on when a new fare structure may come into force, they are suggesting a 20 to 50 per cent increase on the Kigali-Kampala-Nairobi route.

“The appropriate fare on the Kigali-Kampala route should be Rwf12,000, and not the Rwf8,000 being charged currently,” said Col. Dodo Twahirwa, the executive chairman of Trinity Express, one of the bus companies with a big fleet of buses on the route.

Col Twahira said Rwf12,000 per passenger, will cover the operational costs and leave them with a fairly good margin to service their debts.

“A combination of multiple fees, big fuel budgets, maintenance costs and servicing debt have piled pressure on operators’ earnings,” said Col. Twahirwa.

The multiple fees paid to both the local and central governments in Uganda and Tanzania are some of the costs eating into the bus operators profits.

Bus operators have protested these costs to the East African Community Secretariat prompting heads of state under the Northern Corridor Infrastructure Initiative to direct municipal councils in Uganda to stop collecting the fees. But the local authorities have continued charging foreign registered buses transiting their administrative areas in defiance of the directive.

READ: Rough EA business terrain eats into bus operators’ profits

In Uganda, local authorities are still collecting Ushs10,000 (Rwf2,344) for each bus that stops to pick passengers in Kabale, Ntungamo, Mbarara and Masaka, according to Twahirwa.

It is understood that the local governments are turning to these fees to replenish shortfalls in tax revenues with low economic activities in their jurisdictions.

Operators insist that Rwandan local governments do not charge foreign registered buses these fees which Uganda should emulate.

Kenya, too, does not collect these fees, according to Mohamed Jaffer Meghji, the logistics manager at Modern Coast. The Kenyan-registered company operates in Rwanda, Uganda and Kenya.

Another challenge cited by bus companies plying the Kigali-Kampala-Nairobi route is that there are few passengers on the route and the cargo transported is still low.

The manager Mash Coaches in Kigali, Shariz Shiru says it is impossible to have a bus full of passengers on the Kigali-Kampala-Nairobi route. The buses leave Nyabugogo Park almost empty with 10-15 passengers booking directly to Nairobi from Kigali.

He describes the Kigali-Kampala-Nairobi operations as “too rough for bus companies to remain profitable as competition has cropped in leading to undercutting using transport fares.

The fare from Kigali-Kampala-Nairobi on the express buses depend on the type of bus and the class the passengers books. The fares range from Rwf27,000 to 30,000 on Mash Coaches.

“It is difficult for the three bus companies on the Kigali-Kampala-Nairobi route—Simba, Mash and Modern Coast to leave Kigali with all seats booked. Most times the buses are full of Kampala bound passengers,” said Mr Shiru.

The low number of passenger to Nairobi coupled with high operational costs explains why Regional Coach, Starways, Kampala Coach and Akamba failed.

In 2012, KCB put the assets of Akamba Public Road Services on sale to recover a Ksh168 million ($1.97 million) loan. This marked a dramatic end to the regional transport icon, which had taken the loan from KCB in 1992.

Kampala Coach, which had deployed buses to Kampala, Kigali, Bujumbura, Dar es Salaam, Nairobi and Juba closed in 2013 due to tax issues with the Uganda tax body.

Many factors have, however, conspired to throw transport firms out of business. The era of information technology has hit the courier business hard — traditionally a lucrative income stream for the buses — significantly eating into their earnings.