Establishing Fare Elasticity Regimes for Urban Passenger Transport: Time- Based Fares for Concession and Non-Concession Markets Segmented by Trip Length

Abstract

The missing ingredient in many operational studies of public transport patronage prediction is a matrix of direct and cross fare elasticities which relate to specific fare classes within a choice set of fare class opportunities. This paper uses a heteroskedastic extreme value choice model to relax the constant variance assumption of the multinomial logit model so that empirically realistic cross elasticities can be obtained. A combined stated preference and revealed preference data set collected in Newcastle (New South Wales) in 1995 is used to obtain a matrix of direct and cross elasticities which reflects the market environment in which individuals, entitled to concession and nonconcession travel by public transport for short and long trips, make choices while benefiting by a richer understanding of how travellers respond to fare profiles not always observed in real markets, but including fare profiles which are of interest as potential alternatives to the current market offerings. The primary aim is to determine the sensitivity of Newcastle residents to the introduction of time-based bus fares. The four types of time-based bus fares proposed and studied are the 1 hour ticket, 4 hour ticket, day ticket and weekly ticket. The elasticities obtained from the study indicate the level of switching between ticket types and between the car and bus modes for any given change in fare levels or types.