Charlottetown Transit has not made a profit since in started in 2005. (CBC)

Charlottetown is going to start paying more to the company that runs its transit system as part of a plan to ensure the company operating the buses can turn a profit.

Trius Transit has been running the buses for six years but has never made a profit.

Trius owner Mike Cassidy believes the new deal, which is currently costing the city about $700,000 a year, will help change that. In part because it protects him from inflation, with subsidy increases tied to the cost of living, and specific protection from the rising cost of diesel fuel.

"I am responsible for all fuel cost up to $1.10 per litre. Any fuel increases over $1.10, the municipalities will reimburse," said Cassidy.

The deal is not entirely one sided. Charlottetown will get improved service. When the new transit schedule launches next month, buses will run up and down University Avenue every 15 minutes throughout the day.

Cassidy is still hoping for one more piece to make a profitable picture at Charlottetown Transit: a student pass paid for out of fees from Holland College students. UPEI students have already voted in favour of a universal pass, a deal worth about $180,000 a year to Charlottetown Transit.

A consultant's report on the transit system said a college student pass was a crucial part of turning a profit.

But student union manager Mandy O'Connell isn't sure students will vote for it. O'Connell said the college students are different from those at UPEI.

"We have a lot of mature students who have to get home and pick up the kids or have other responsibilities other than just going to school and back," she said.

"Those types don't fit what's convenient for the bus schedule."

Cassidy said he is not going to approach Holland College students immediately. He'll wait for the new schedule to be running smoothly before he presents his case to Holland College.