The impact of fare complexity on rail demand

Abstract

The current rail fare structure in the UK is widely considered to be complex. It offers flexibility by including many different types of tickets but it can also cause confusion, which may lead some to a negative view towards rail travel and thereby potentially inhibit demand, in comparison to a simpler fare regime. This study used an innovative stated preference survey to quantify the demand effects of fare complexity, focusing on Advance tickets (those that are restricted to a particular train service). The choice experiment was designed to mirror very closely the actual booking experience when buying tickets online, in all its complexity. Participants could choose among up to 531 different ticket type combinations for the outward and return legs of a trip and from up to 25 possible train services for each leg. The key design attribute was complexity, defined as the range of different Advance tickets on offer. The survey was applied to a sample of 1027 users and 179 non-users of the rail network on the London-Leeds route. The modelling of the choices with a nested mixed logit model suggested that, all else equal, reducing complexity by removing Advance tickets would lead to a substantial reduction of demand (11 to 45%, depending on route segment). Equalizing the price of Advance tickets for all train services was predicted to cause a smaller reduction (3–6%). By contrast, increasing complexity by adding new Flexible Advance tickets (valid on the services immediately before or after the chosen service) would increase demand by 4–15%. These findings run counter to the hypothesis that simplifying the fare structure would lead to increases in demand for rail travel.