DTC Anticipates Demand Recovery Ahead of Winter Peak Despite Rising Fuel Costs and National Taxi Debt.
DUBAI: Dubai Taxi Company (DTC) is banking on a rebound in travel demand, stronger operational controls and cost savings from its acquisition of National Taxi to support profitability as Dubai approaches its traditionally busy December travel season.
However, rising fuel expenses, acquisition-related debt and pressure on underlying profit margins continue to pose challenges for the transport operator.
The company’s third-quarter financial results point to a recovery in business activity, with revenue recording substantial year-on-year growth. However, higher operating costs have weighed on profitability.
Dubai Taxi Company reported third-quarter revenue of Dh735.5 million, representing a 25.7% increase compared with the same period last year. The growth followed the consolidation of National Taxi, which DTC acquired in July.
Despite the revenue increase, net profit declined 25.3% to Dh57.1 million. EBITDA margin also contracted to 22.6%, compared with 25.9% in the corresponding quarter last year.
The contrasting results highlight the company’s challenge of expanding its fleet and strengthening its market position while managing the additional expenses associated with a larger operation.
“We don’t see any kind of concern. Although the conflict is still not over, the good news is that a clear recovery and operating momentum are really visible to us,” Mansoor Rahma Alfalasi, Group Chief Executive Officer of Dubai Taxi Company, told Gulf News.
Alfalasi said the company’s immediate priorities include converting the improvement in passenger demand into stronger cash generation, completing the integration of National Taxi and managing the higher operating costs resulting from its expanded business.
Demand recovery gains momentum
Dubai Taxi Company’s taxi and limousine operations recorded a steady improvement in trip volumes during the third quarter, with the year-on-year decline narrowing from 7.8% in July to 6.2% in August and just 1.9% in September.
This marks a considerable recovery from April, when trip volumes had dropped by more than 30%, according to Alfalasi.
“The gap between the number of trips that was falling in April, at more than 30 per cent, has narrowed down now to almost 2 per cent. So, this is really proof that things are getting better,” he said.
Airport-related business has also shown signs of improvement. DTC recorded 1.07 million airport trips in the third quarter, representing a 40% increase compared with the second quarter, reflecting the gradual recovery in passenger traffic through Dubai’s airports.
The upcoming December holiday season could provide further support, particularly as international airlines restore flight services and tourism activity picks up. However, management remains cautious about the timeline for a complete recovery.
“We cannot expect a full recovery very soon,” Alfalasi said, adding that the company’s immediate focus was on ensuring sufficient drivers and vehicles were available to meet returning demand.
He noted that DTC had experienced a relatively smaller impact compared with certain other sectors, particularly tourism. Nevertheless, its taxi and limousine operations continued to face softer demand from airport transfers and tourism-related activities during the quarter.
Alfalasi emphasised that the company’s priority was to maintain full operational readiness, with adequate drivers, vehicles and effective vehicle deployment.
The company is also focusing on ensuring that enough taxis are available during peak hours to capture improving passenger demand.
While the timing of a complete market recovery remains uncertain, management is concentrating on strengthening operational capacity to respond quickly as demand improves.
Rising fuel costs put pressure on margins
Higher fuel prices have emerged as another challenge for DTC, adding to its operating expenses and putting further pressure on profitability.
Alfalasi acknowledged that the increase in fuel prices had affected the company’s cost structure.
Under the current arrangement, the Roads and Transport Authority (RTA) reviews fuel-related fare adjustments every two months rather than monthly. This can create a gap between changes in fuel prices and the fares operators are allowed to charge.
According to Alfalasi, the RTA is considering shifting to monthly fuel-related tariff adjustments, a move that could help transport operators respond more quickly to fluctuations in fuel costs.
He explained that fuel prices can sometimes increase by as much as 40%, making more frequent fare revisions useful in managing the difference between operating expenses and permitted passenger fares.
At the same time, DTC is exploring internal measures to reduce its exposure to fuel-price volatility rather than depending entirely on fare adjustments.
These initiatives include expanding its electric vehicle fleet, improving driver and vehicle deployment, and increasing the use of digital ride-hailing platforms.
The company is also working to increase revenue-generating kilometres, which refer to distances travelled while carrying paying passengers, while reducing non-revenue or ‘dead’ kilometres when taxis operate without passengers.
Alfalasi said the company was prioritising more productive vehicle utilisation instead of allowing taxis to circulate around the city without generating income.
Fuel-price hedging is another option being evaluated, although the CEO did not disclose any specific arrangements or implementation timeline.
Electric fleet expansion and charging infrastructure
DTC has continued to increase its investment in electric mobility as part of its longer-term strategy to manage fuel expenses and improve operational efficiency.
At the end of September, DTC and National Taxi operated a combined fleet of 846 fully electric vehicles across their taxi and limousine businesses.
During the third quarter, the company also commissioned a 24-point ultra-fast electric vehicle charging hub, marking the first phase of a broader infrastructure programme targeting more than 200 charging points.
Alfalasi said DTC had adopted a partnership-based approach to developing its charging infrastructure to limit capital expenditure requirements.
Under the arrangement, Dubai Electricity and Water Authority (DEWA) will develop the charging stations, while DTC will provide the ultra-fast chargers and secure charging rates for its fleet.
He explained that independently financing and developing the infrastructure would require significant additional investment and capital expenditure.
By partnering with DEWA, DTC aims to expand its electric vehicle charging network while managing investment requirements and supporting the gradual transition towards a more sustainable fleet.
The partnership is expected to provide DTC drivers with access to a dedicated electric vehicle charging network across Dubai, while reducing the company’s need to finance the entire infrastructure investment independently.
Debt reduction remains a priority
The acquisition of National Taxi has significantly increased DTC’s operational scale but also added to its financial obligations. The company’s net debt reached Dh2 billion at the end of September, equivalent to 3.8 times its last-twelve-month EBITDA. Cash and liquid investments stood at Dh425.6 million.
National Taxi contributed Dh168 million to the group’s third-quarter revenue. However, the increase in business scale did not prevent a decline in overall net profit.
Alfalasi said the acquisition had enabled DTC to achieve its expansion ambitions more quickly, although he acknowledged that the transaction had brought additional financing costs.
“There is a cost for any kind of acquisition, especially considering the margins that we have in Dubai Taxi,” he said.
The company is now planning to begin reducing its debt next year, with a greater emphasis on improving cash generation and strengthening profitability from its expanded operations.
Alfalasi said debt reduction would remain a key priority as DTC works to manage its acquisition-related borrowing.
“The only thing that we can do right now is to work more on deleveraging the debt or the loan that we have,” he said.
Integration expected to generate significant savings
DTC has made progress in integrating National Taxi into its operations, completing approximately 30% of the process by the end of September, ahead of its original schedule.
The integration generated Dh3.9 million in cost synergies during the third quarter. Alfalasi expects the process to be completed by the end of next year, delivering annual savings of more than Dh30 million.
The combined operational fleet had expanded to 15,388 vehicles by September. Of the 600 additional Dubai taxi plates acquired, 450 were already operational.
The next challenge for management is to ensure that the expanded fleet and operational capacity translate into higher revenue, improved efficiency and stronger profitability.
Bolt partnership opens new growth opportunities in Abu Dhabi
Alongside its traditional taxi operations, DTC is expanding its digital distribution network through partnerships with ride-hailing platforms.
Its collaboration with Bolt generated 2.3 million trips during the third quarter, representing a 52% increase compared with the same period last year.
Alfalasi described the partnership as a long-term growth opportunity and expects further progress during the coming year.
He indicated that DTC could soon extend its taxi-related collaboration with Bolt into Abu Dhabi, creating another avenue for expansion.
DTC already operates limousine services in Abu Dhabi and is assessing opportunities to enter the emirate’s taxi market, while also exploring potential expansion into other parts of the UAE.
The company recently added 1,607 Arabia Taxi vehicles to the Bolt platform, further increasing the number of vehicles available through the digital network.
DTC is also testing additional services through its mobile application, including car rentals, which are currently available to a limited customer group, and a delivery offering known as The Box.
The broader strategy is to transform the application into a multi-service digital platform rather than relying exclusively on taxi bookings.
Management believes Dubai’s expanding population, growing business activity and continued urban development will provide long-term support for mobility and transport demand.
Diversification strengthens business resilience
DTC’s expansion into other mobility-related businesses has helped reduce its dependence on conventional taxi operations and provided additional revenue streams during periods of weaker passenger demand.
Its delivery bike business generated Dh32.1 million in third-quarter revenue, an increase of 75.2% year on year. Growth was supported by fleet expansion and rising demand across the UAE’s on-demand delivery sector.
The business works with major delivery and digital platforms, including Careem, Talabat, Noon and Keeta.
Meanwhile, the bus segment recorded revenue of Dh29.6 million, broadly unchanged from the previous year, supported by recurring contracts. DTC also renewed its Dubai school bus agreement with the Ministry of Education for another five years, according to Alfalasi.
These businesses have helped maintain cash generation during periods when taxi demand has weakened.
Alfalasi said the company had evolved beyond its traditional role as a taxi operator to become a broader integrated mobility platform, operating across five business segments: taxis, limousines, buses, delivery motorcycles and digital platform services.
He explained that while the taxi business experienced a slowdown during the regional conflict, the bus and delivery segments continued generating cash flow, helping offset some of the pressure on the wider business.
The delivery segment, in particular, is expected to remain an important growth driver next year as DTC expands its partnerships with digital platforms and increases its fleet capacity.
Alfalasi said the company’s investments in delivery motorcycles were beginning to produce results, supported by the rapid expansion of e-commerce activity across Dubai.
He added that the city’s growing online retail and delivery market was creating additional opportunities for DTC through its aggregator partnerships.
Autonomous taxis
DTC is continuing to explore autonomous taxis with technology partner Apollo Go, in coordination with the RTA.
The service remains in the pilot and testing phase, with operations currently restricted to a limited zone. The company has not yet provided a target number of autonomous vehicles for 2027 or a timeline for a wider rollout.
“We are still piloting the project with our technology partner, according to the RTA plan. We are still in the exploration phase right now, and we are doing all kinds of testing,” Alfalasi said. He said DTC was prepared to scale up the service once the testing and regulatory requirements were completed.
Initial customer feedback has been encouraging. “According to the initial data, it is good as a start,” he said.
He added that the immediate priority was ensuring the service was safe and useful for customers before expanding operations to additional areas. “Still, it is too early to judge, but of course the numbers will start picking up very soon,” he said.
Future outlook
Looking ahead, DTC is counting on improving aviation activity, population growth and urban development to support mobility demand across Dubai and the wider UAE.
But the company’s immediate priorities remain completing the National Taxi integration, capturing further synergies, improving fleet utilisation and managing debt.
Alfalasi said the recovery in international flights was providing some encouragement, particularly as more airlines resumed services to Dubai. “The main focus is to complete the synergies and integration between Dubai Taxi and National Taxi, and also benefit from the demand that is now starting to grow again in Dubai, as well as international flights that are resuming,” he said.
The company is also keeping the door open to further acquisitions and regional expansion next year, although Alfalasi said any potential deal would have to demonstrate clear value for the business. “Starting from next year, there will be good opportunities that we need to explore, especially any kind of expansion or new acquisitions. But again, this will be subject to the value these opportunities can add for us,” he said.
