Fare Policy Research Articles

Explaining Variation in Transit Ridership in U.S. Metropolitan Areas Between 1990 and 2000: Multivariate Analysis

Between 1990 and 2000, transit patronage increased by around 7% in the United States, but there has been wide variation around this mean. Most research attributes variation in ridership change to a combination of socioeconomic and land use factors, which are beyond a transit agency's control, and service and fare policy decisions, which are within an agency's control. A study built on this earlier work by examining rider-ship change at the metropolitan scale for all metropolitan statistical areas (MSAs) in the United States that had more than 500,000 people at the time of the 2000 census. The study incorporates several measures of service quality in order to evaluate the relative efficacy of policy decisions about service coverage, frequency, and orientation (central business district radial versus multidestination system orientation). The multivariate analysis shows that transit is growing most rapidly in the nontraditional markets of the West but that much of the regional variation is a function of the ...

Explaining Variation in Transit Ridership in U.S. Metropolitan Areas between 1990 and 2000

Between 1990 and 2000, transit patronage increased by around 7% in the United States, but there has been wide variation around this mean. Most research attributes variation in ridership change to a combination of socioeconomic and land use factors, which are beyond a transit agency's control, and service and fare policy decisions, which are within an agency's control. A study built on this earlier work by examining ridership change at the metropolitan scale for all metropolitan statistical areas (MSAs) in the United States that had more than 500,000 people at the time of the 2000 census. The study incorporates several measures of service quality in order to evaluate the relative efficacy of policy decisions about service coverage, frequency, and orientation (central business district radial versus multidestination system orientation). The multivariate analysis shows that transit is growing most rapidly in the nontraditional markets of the West but that much of the regional variation is a function of the particular service coverage, frequency, and orientation decisions made by transit agencies in this region. Service coverage and frequency are the most powerful explanatory variables for variation in ridership change among MSAs with 1 million to 5 million people, whereas a multidestination service orientation is the most important explanation for variation in ridership change among MSAs with 500,000 to 1 million people.

Part 4: Marketing and Fare Policy: Making Automatic Passenger Counts Mainstream: Accuracy, Balancing Algorithms, and Data Structures

Although automatic passenger counters (APCs) have been used for many years, significant obstacles have hindered their becoming a mainstream source of data for monitoring ridership and peak load, estimating passenger miles, and other measures of passenger use important for transit management. The key to APC usefulness is the automatic, routine conversion of the APC data stream into a database of accurate counts. On the basis of case studies of transit agencies, five issues important to achieving this goal are analyzed: data structures, data accuracy, accuracy need and sampling requirements, controlling drift, and balancing algorithms. Balancing algorithms deal with routes with loop ends, negative loads, and rounding. Sampling and accuracy requirements related to passenger miles estimates for National Transit Database (NTD) reporting are also analyzed. The analysis shows that, for most agencies, NTD precision requirements can be met with a small level of fleet penetration, provided that measurement, screening, parsing, and balancing methods keep bias in load measurement below 8%.

The Combined Zone And Fare Planning Problem

This paper looks at the problem of planning an integrated transit system from the viewpoint of optimal fares and zone design. More succinctly, the matter is how to plan an integrated fare system that allows each passenger to travel within different zones with a single zone-based ticket. A 2-level model is given, which is both quite near to real operation practices and makes the planner able to consider various transit firms operating within the same context. The main problem is divided into 2 distinct subproblems: one for the fare problem, and the other for the zone problem, solved sequentially. The fare problem leads to the minimization of an aggregated cost function that is mainly related both to the budget needs of each transit agency, and changing in fare levels for the patronage. The zone problem is solved by a heuristic method which was set up to randomly search for the optimal zone configuration reflecting a given fare policy. Computational test results of the proposed model applied on a real database gathered in the metropolitan area of Florence are also reported.

Estimating Price and Service Elasticity of Urban Transportation Demand with Stated Preference Technique: Case in Korea

Price and service elasticities of passenger car travel are estimated using stated preference and sample enumeration methodology. Moreover, the effects of hypothetical travel demand management policies are analyzed by changes on modal share using the elasticity estimates. The elasticity of passenger car travel with fuel price is estimated to be within the range of −0.078 to −0.171. The parameter estimate of the fare variable is estimated to be statistically insignificant in every subgroup of car users. This finding suggests that fare policies are relatively ineffective for increasing transit modal shares in Korea. Meanwhile, car users' responsiveness to changes in parking costs is estimated to be much higher than for fuel cost. This suggests that parking regulations or pricing policies may be effective in reducing travel by passenger car. The elasticity with in-vehicle time, which is a key attribute of public transport amenities, is estimated to be particularly high, implying that policy measures such as introducing express buses or express urban trains could be effective in reducing passenger car travel. The demand elasticity of service levels of mass transit represented by the degree-of-crowdedness proxy turns out to be very high. Reducing crowdedness in public transit can be very effective in attracting more passengers, or at least in retaining current patronage.

University Transportation Survey: Transportation in University Communities

Universities and transit agencies across the United States have been finding innovative ways of providing and financing mobility services on and around university campuses. Many transit agencies are providing substantially more service and moving substantially more riders than their counterparts in nonuniversity environments. Determining what types of relationships exist between transit performance and university policies or practices is the research premise. To that end, the purpose is to document the types of transportation policies, demographics, and land use characteristics that exist on university campuses, and to examine the relationship between transit performance, land use on university campuses, types of university communities, university transportation and parking policies, and student demographics. These characteristics of university transportation systems were examined through demographic data and a mailed questionnaire. The questionnaire was sent to 48 universities and transit agencies across the United States, with 23 responding with enough valid data and information to be included in the study. It has been demonstrated in a significant number of university communities across the country that transit performance is enhanced dramatically by certain fare policies. However, that enhancement differs from one community to the next. It is believed that the answer to maximizing transit performance can be found in a combination of factors and that the optimum mix can be identified empirically.

Mass rapid transit systems for cities in the developing world

An urban rail system is an ecologically and economically efficient way of moving large volumes of passengers in big cities. There are, however, many financial uncertainties associated with such capital-intensive projects that must be addressed with careful planning, project management and effective operational management policies. Government support for the capital funding of the project is likely to be essential for the project's successful financial viability, with private participation contributing in both the execution and operation of the scheme. Integration with other transport modes is also essential, but must be achieved in a sensitive manner that recognizes the right of choice for the traveller. This requires careful planning of fares policy, through-ticketing arrangements and feeder-bus services that may initially have to be developed by the rail company. Given the economic arguments and recent experiences, it is difficult to justify the use of rail-based mass transit for most cities in the developing world. While there can be no doubts over its comfort and the prestige it can confer on a city, there are serious doubts over its cost and even its performance. Conversely, the bus-way system offers unrivalled performance and value for money. The fact that recent experience has seen a strong and growing demand for metros and LRT suggests that the influence of intangible factors is as strong, if not more so, than the technical evidence. An ideal decision-making process would allow consideration of the intangible benefits of mass transit options, while screening out projects that would cause severe financial hardship. (A)

On the optimal fare policies in urban transportation

This paper focuses on welfare optimal transport policies in a public transport market where positive externalities from the route supplier to the travellers as well as negative externalities within group of consumers exist. Additionally, there might be capacity constraints of two types. Firstly, the actual numbers of travellers in a period cannot be above the actual seat capacity supplied by the operator. Secondly, the number of seats supplied by the operator cannot exceed the maximum seat capacity given by the fleet of vehicles the operator controls in the period. Among other things, the paper shows that in the case where there is excess seat and route capacity, the fares should be equal to sum of the short run marginal operational costs and the costs an additional passenger is causing on the other travellers. In the long run, however, fares should be equal to sum of the long run marginal operational costs and the costs an additional passenger is causing on other travellers minus the gain in reduced time costs for all of the passengers that the final unit of supply brings.

Criterion for a fares policy and fares index for bus transport in Sri Lanka

The public transport sector in Sri Lanka faces many problems. Most of these problems seem to be related to the absence of a fares policy. Implicit fare policies, which have been followed in the past, have given rise to many problems of a serious nature, which have continued to undermine the quality of bus transport and threaten its continuity as a viable mode of transport. It is evident that even the numerous management changes from time to time have not made much of a difference.

Marketing and Fare Nexus Applied in San Diego

The multimodal operator environment and fare structure of San Diego’s transit system have, for the past several years, been structured to encourage transfers and to provide easy access between the bus and rail systems. During the past year, marketing efforts in the region were expanded to penetrate new markets and aggressively pursue new customers for the region’s bus and trolley services. The real issue was how to effectively integrate the existing fare structure with the new markets and retain existing customers. The San Diego Metropolitan Transit System had a great opportunity to expand its market with the opening of a new trolley extension to Mission Valley. At the same time, bus services were also being expanded. A new effort resulted in a commitment from the policy board to move ahead with a more aggressive marketing and fare strategy to capture new riders. The objective of the new fare policy was to relate it to new markets while retaining existing markets. The fare policy was designed with a pricing strategy to closely respond to different market segments, both new and existing. The new fares were implemented on November 23, 1997. The goal was to increase ridership and fare revenues and minimize impacts on existing riders. Initial results, based on the first 9 months of the new strategy, indicate that ridership increased 13.5 percent and revenue increased 10.6 percent.

Enhancing Transit’s Competitiveness: A Survey Methodology

Attracting customers to the bus and subway is an often-discussed goal for transit agencies. Current research methodologies such as travel demand, stated preference, and discrete choice models and opinion research are sometimes poorly suited to determining which types of service improvements, facility designs, or fare policy initiatives will be most effective in attracting potential customers. Drawing on elements of established methods, an approach is developed for use by New York City Transit focusing on travelers’ actual experience of the subway, bus, automobile, taxi, and car service and their reasons for mode choice. Survey questions were developed from focus group findings that New Yorkers actively choose between competing modes on the basis of six major factors, from how long the trip will take to availability of parking. Travelers choose the mode that presents the least difficulty for a particular type of trip. Survey results show that the areas of subway service improvement with the greatest potential ridership payoff are reducing how long it takes to make a trip, increasing the availability or ease of use of transit, and making traveling on the subway a more comfortable and relaxing experience. Two external factors—parking availability and taxi fares—are also found to significantly affect subway ridership.

ELASTICITIES FOR TAXICAB FARES AND SERVICE AVAILABILITY

This study utilizes a unique dataset from New York City to examine the effects of taxi fare increases on trip demand and the availability of taxi service. The elasticity of trip demand with respect to fares is estimated to be −0.22; the elasticity of service availability with respect to the taxi fare is 0.28; and the elasticity of service availability with respect to total supply of service is near 1.0. These results have important implications for taxi regulatory decisions. First, fare increases do substantially increase industry revenues but at a lesser rate than the percentage increase in the fare. The implication for policy-makers is that fare elasticities must be carefully considered to obtain desired improvements in drivers' earnings. Second, service availability -- an important aspect of service quality that is generally overlooked during fare policy debates -- should be a central consideration in fare setting, given the considerable impact of fares on availability. Finally, where the supply of cabs needs to be expanded, the number of cabs can be significantly increased without harming the revenue stream of existing operators. This finding alleviates a major industry objection to issuing additional taxicab licenses.

Issues in Fare Policy: Case of the New York Taxi Industry

Setting taxi fares is one of the most delicate and difficult tasks faced by taxi regulators. Fare setting is delicate because political forces are strong on both sides of the issue. The difficulties lie in reliably determining taxi costs and revenues and how a fare increase will affect service quality. Major issues commonly raised in connection with fare policy are considered, including the goals of fare changes, the relevance of medallion prices, and implications for service availability. It is concluded that fare increases can achieve their goal of increasing revenues to the taxi industry but that additional regulatory action is required to ensure improvements to driver and vehicle quality. Arguments that fare increases are unnecessary in the face of high medallion prices are shown to be impractical and possibly counterproductive. Finally, it is argued that fare increases expand the availability of taxi service and that availability considerations should be an integral part of fare policy.

Maryland Mass Transit Administration Fare Simplification: Effects on Ridership and Revenue

In the transit industry there is a general assumption that fare increases produce more revenues but decrease ridership. A recent fare policy change implemented by the Maryland Mass Transit Administration (MTA) challenges this tenet. The focus of this paper is how the MTA, by involving riders and operating staff in identifying strengths and weaknesses of the fare structure, was able to develop a fare system vision that stressed simplification and convenience and to design bold changes to the current fare structure that resulted in increased ridership and revenue.

A note on fares in regulated and deregulated airline markets: A comparison of Spain and the UK

This note reports on a comparison of fares policy in international scheduled airline passenger services between deregulated markets in the UK and regulated markets in Spain, for the period extending from 1986 to 1991. The comparison looks at the range of fare types available; the extent to which fare types are made available across routes; and the discount rate for selected fare types. The methodology used to compare fare levels controls for exogenous factors such as differing distances and traffic densities. The study concludes that whereas the discounts offered for particular fare types need not be greater in deregulated markets, these markets display a wider range of available discounts. The likely resulting effect is that yields (revenue per passenger) are lower in deregulated markets.

Transit pricing research

Several decades of research on transit pricing have provided clear insights into how riders respond to price changes in both the transit and automobile sectors. For the most part, riders are insensitive to changes in either fare levels, structures, or forms of payments, though this varies considerably among user groups and operating environments. Since riders are approximately twice as sensitive to changes in travel time as they are to changes in fares, a compelling argument can be made for operating more premium quality transit services at higher prices. Such programs could be supplemented by vouchers and concessionary programs to reduce the burden of higher fares on low-income users. Also, cross-elasticity research suggests that higher automobile prices would have a significantly greater affect on ridership than lower fares. Most research on transit fare structures shows that the common practice of flat fares is highly inequitable, penalizing short-distance and off-peak users. Free fare programs have proven quite costly for each new transit user attracted and have rarely lured motorists to transit. Free fares limited to downtowns have been more successful than systemwide free fare programs. While prepayment schemes have met with success in the U.S. and Europe, honor fares have suffered from excessive revenue losses in at least one case in the U.S. Some of the more noteworthy fare policy successes in North America have been Bridgeport's combined pass-fare program, Allentown's deep discounts, Ottawa's major fare reduction and differentiation, and Columbus's substantial midday discount. As paratransit and other new transit alternatives to conventional bus continue to emerge, new, more differentiated fare practices can be expected in the future.

A note on fare policy in personal rapid transit

AbstractThe choice of fare policy is more flexible in personal rapid transit than in conventional transit and has some unique aspects. The implementation of fare policies as a function of distance are discussed, and, following a discussion of how the fare would be collected in a PRT system, consideration is given to whether the fare should be per person or per vehicle.

Public transport demand models and elasticity measures: An overview of recent British experience

The paper reports and considers studies of demand analysis presented at a one day conference held in 1984 at the University of Oxford. Practical experience is emphasised, especially in the larger cities, where the main themes of investigation are: aggregate studies of demand; disaggregate elasticity measures; alternative demand model specifications; and the joint issues of marketing, fare policies and network integration. Studies ranged from detailed regression models to identify factors influencing demand to simple manual extrapolations of trends. Model specifications are discussed with respect to their treatment of journey substitutes and the measurement of associated cross elasticities and also the form of the relation between demand and travel attributes. The application of suitable methods and models in a range of planning contexts is limited by the availability of appropriate (stratified) data sets and the usual compromise of practice.

A transit ridership‐revenue model

The paper outlines the theoretical underpinnings of an urban mass transit revenue and ridership model designed to provide medium term forecasts of future trends in situations of data sparsity. The specific example laid out in the paper relates to the Greater Vancouver Regional District but the framework is of general applicability. Much of the informational input at the initial stage is of a general kind and details of the specific transit system and local area are of the sort which should be readily available to most urban authorities. The model developed is designed for use on a desk‐top micro‐computer and offers an inter‐active method of forecasting. The operator has the facility to both consider fare policy sensitivity and review alternative scenarios about future trends in exogenous factors. A selection of forecasts developed for the GVRD is provided to reveal the main features of the approach.

The transit pricing evaluation model: A tool for exploring fare policy options

A model is presented for probing a range of impacts which could be expected when instituting a new transit pricing system. The model weights on-board ridership survey responses based upon disaggregated fare elasticity estimates. In addition to forecasting the potential ridership and fiscal consequences of a new fare structure, the model incorporates revenue and cost data on specific users' trips to estimate changes in farebox recovery as well as effects on efficiency and equity. This paper describes the working components of the model followed by a demonstration of its use. Employing fare, cost, and trip-making data from the Southern California Rapid Transit District, the system's current pricing practices are examined. Long distance users were found to pay disproportionately low fares in relation to the cost of their trips, while very short riders were generally overchanged for their trips. A distance-based pricing scenario is then designed and tested with respect to its ability to remedy some of the problems associated with flat fares.