The effects of peak hour and congested area taxi surcharges on customers’ travel decisions: Empirical evidence and policy implications

Abstract

Under a stationary taxi fare structure, the varying passenger demand for taxis over time and space creates a serious shortage of taxi supply during peak hours and outside the city center. Apart from providing additional supply by increasing taxi fleet size and suppressing overall passenger demand by increasing taxi fare, it is more preferable to address the problem by means of surcharge. A surcharge can be imposed on the taxi customers who take taxis during peak hours and/or travel towards congested areas. A portion of the taxi customers may change their mode choices, arrival times, and taxi drop-off locations to avoid the additional cost. By alleviating the shortage of taxi supply, waiting time can be greatly reduced and thus the service quality can also be improved. In this study, 773 taxi customers were interviewed for their travel decisions under different hypothetical scenarios. A total of 4638 observations were used to calibrate multinomial logit and nested logit models for the analysis. The results of the logit models demonstrate that all six concerning attributes, walk and wait time, taxi travel time, public transport travel time, travel fare, early arrival time, and the number of interchanges involved, are significant to affect the taxi customers’ travel decisions. The results of market segmentation analysis further show the variations in the travel decisions of taxi customers in different segments, including gender, occupation, monthly income, and family car ownership. Sensitivity analyses were carried out, and suggestions on the implementation of a taxi surcharge scheme are provided. The calibrated models, findings, and discussions are believed to be useful for establishing a new taxi fare structure to strike a balance of spatio-temporal taxi demand and supply in the market.