Wodonga Taxis chairman Scott Cowie said the rise might shock customers, but it was essential for a sustainable business.

Mr Cowie said customers would be given pamphlets over the weekend to explain the need for such a hefty rise.

“We understand the importance of not pricing customers out of the market because, to many, we are an essential service,” he said.

“But, we are not publicly funded transport and need to ensure fares provide a sustainable return to the industry.

“It’s like a sandwich goes up every year in price at your corner shop — unfortunately this is the way it has got to be.”

It is Wodonga Taxis’ first rise in six years.

The move is part of an across-the-board 12.5 per cent rise in regional areas recommended by the Essential Services Commission. The commission handed its report to the state government on March 31.

All of its recommendations have been approved by Transport Minister Terry Mulder.

Mr Cowie said the last rise he could recall was in September 2008.

“It’s 12.5 per cent compared with an annual rise of 2 per cent because we haven’t had a rise in six years,” he said.

Mr Cowie said that before 2008, operators had an annual increase.

“But for whatever reason — and I’m not really sure why — the government stopped fare increases,” he said.

“We’d prefer it not to be like this but we have to catch up somewhere.

“All our costs have gone up, of course, in the past six years, the same as everything else.”

And more fare pain could be on the way within a couple of months.

“This is the last one the government will do,” he said.

“We’re going to set our own fares as of July 1 because of the new rules (covering taxis),” he said.

Earlier this year, Mr Cowie said he feared that the government allowing regional and rural operators to set fares could cause chaos.

He raised the possibility of up to 13 fare structures in Wodonga as a result of the changes.

But Victoria’s Taxi Services Commission chairman Graeme Samuel said it was far more likely that a price equilibrium would be quickly established.

He said operators being able charge higher prices would quickly translate to greater profitability for owners.

And with higher profits, they could then afford to pay higher wages for their better drivers.