Abstract
Effectiveness of rail transport policy decisions crucially depends on rail transport demand, among other factors. Therefore, this paper estimates the rail (passenger) travel demand in Pakistan using time series data over 1980–2017. The Johansen’s co-integration and error-correction model is employed to obtain the main influencing factors of two models (rail passengers & rail passenger-kilometers) of rail travel demand. In particular, long-run fare elasticities of passenger and passenger-kilometer demand are −0.474 and −0.278, respectively and offer important implications for passenger earnings by Pakistan railway. Moreover, cross-price elasticity of rail travel demand with respect to the costs of road passenger travel is positive, which also provides a possible mechanism of modal split in favor of rail through higher road transport costs. The effect of various market shocks (terrorist attacks, shortage of fuel and rolling-stock, etc.) have reduced the rail travel demand in terms of passengers by 16% and rail passenger-kilometers by 12% during 2010 to 2014.
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