The company said today it “closely monitored” its costs on an ongoing basis and were working hard to deliver value for money. But Steve Walker, operations director for the east of Scotland, stressed they had suffered dramatically-increased running costs recently.

He said, “Stagecoach East Scotland are facing increased fuel costs in excess of £1.5m in 2008/9 compared to 2007/8, an increase of over 8%.

“We are working hard to control our costs in order to continue to offer a good network of services throughout the area with value for money ticket options for regular travellers such a the megarider range.”

Meanwhile, a spokeswoman for Travel Dundee – the region’s other main bus operator – said the firm was attempting to keep fares at the current level in the hope of encouraging more people to use the service.

But she added, “Obviously nobody knows how long these fuel increases will last. While fuel costs are definitely impacting on the business, our long-term strategy is to resist any further increases.”

The news came as it emerged taxi fares in the city could be set to rise.

Dundee Taxi Association will meet with the city council’s licensing committee next week and are likely to propose a hike.

There are fears even with a rise, likely to be around 10p on every starting fare, further increases may be needed.