Policy analysis of third party electronic coupons for public transit fares

Mobile technologies are generating new business models for urban transport systems, as is evident from recent startups cropping up from the private sector. Public transport systems can make more use of mobile technologies than just for measuring system performance, improving boarding times, or for analyzing travel patterns. A new transaction model is proposed for public transport systems where travelers are allowed to pre-book their fares and trade that demand information to private firms. In this public-private partnership model, fare revenue management is outsourced to third party private firms such as big box retail or large planned events (such as sports stadiums and theme parks), who can issue electronic coupons to travelers to subsidize their fares. This e-coupon pricing model is analyzed using marginal cost theory for the transit service and shown to be quite effective for monopolistic coupon rights, particularly for demand responsive transit systems that feature high cost fares, non-commute travel purposes, and a closed access system with existing pre-booking requirements. However, oligopolistic scenarios analyzed using game theory and network economics suggest that public transport agencies need to take extreme care in planning and implementing such a policy. Otherwise, they risk pushing an equivalent tax on private firms or disrupting the urban economy and real estate values while increasing ridership.     

The sensitivity of optimal transport strategies to specification of objectives

This paper describes a method for devising transport strategies that makes iterative use of transport models to find the optimal levels of pre-defined transport measures. It gives the results from using this method in nine European cities. At the heart of the procedure lies the definition of objective functions which encapsulate policy-makers' objectives with respect to economic efficiency and sustainability. These objective functions include a number of significant parameters and the paper examines the sensitivity of the results to changes in the values of these parameters. The parameters concerned are: the level of shadow price used with regard to public sector financial surplus and deficit; the trade-off between the perspectives of the present generation and a future generation (of importance to issues of sustainability); the trade-off between internal benefits/costs and external (environmental) benefits/costs; and the level of user benefits that can be “value captured” in the sense of raising additional finance for transport policies. Full sets of results are given for these sensitivity tests, and a number of practical transport policy conclusions are made.     

Car ownership and public transport use: Revisiting the interaction

At the beginning of the 1980s, it seemed that a consensus was emerging among researchers that public transport service levels, fares or quality had a small but possibly important effect on car ownership, and that this should be taken into account for those purposes where car ownership forecasts are used for developing policy on public transport or roads. Somehow, the findings faded away, and had little effect on policy thinking or on analytical techniques. The results of six surveys carried out in South Yorkshire over the period 1972 to 1991, during which there were extreme changes in public transport policy, tend to support a prima facie case for reopening the question. At the household level, car ownership rates are shown to be more volatile than is often assumed, especially in multiple car households. This volatility provides a context within which the quality of public transport provision appears to influence both the level of car ownership and the relationship between changes in the level of car ownership and changes in public transport use.     

Could you also have made this trip by another mode? An investigation of perceived travel possibilities of car and train travellers on the main travel corridors to the city of Amsterdam,The Netherlands

We investigated perceived travel possibilities (or subjective choice-sets, consideration-sets) of car and train travellers on the main corridors to the city of Amsterdam, The Netherlands, and associations with traveller and trip characteristics. We conducted secondary analysis on a survey sample consisting of 7950 train and 19,232 car travellers. Forty-five percent of train travellers had a car in their objective choice-set, 27% of them would however never use it for this trip. Trip destination city centre, trip purpose, paying for the trip, public transport commitment, traffic congestion and parking problems were associated with consideration of car as alternative. Forty-two percent of car travellers had public transport in their subjective choice-set. The ratio between perceived public transport and objective car travel time stood out as determinant of consideration-sets, next to destination city centre, trip purpose, travel time and private versus company car ownership. On average, car travellers’ perceptions of public transport travel time exceeded objective values by 46%. We estimated that if perceptions would be more accurate, two out of three car travellers that currently do not see public transport as an alternative would include it in their choice-set, and use it from time to time. This effect has strong theoretical and policy implications.     

Managing with declining resources

Urban public transport has had broad political appeal and escalating financial support since the late 1960s. The preference has been for public ownership and operation of services with only limited private sector involvement in the provision of services in a highly regulated environment. The financial standing of public transport coupled with the likelihood of a sustained period of fiscal restraint, perhaps even a decline in available resources, has created an imperative for change. This paper argues that broad‐based acknowledgment of the financial realities, clear definition of quantifiable objectives and increased authority and control for public transport management is required if public transport agencies are to meet the challenge. A new balance between service, ridership and revenue is required. Managing with declining resources will require a financial planning approach, separation of policy and planning from operations, removal of restrictions on user choice and operator competition and increased involvement of the private sector. Substantial changes in internal organization, procedures and structures and a cost‐effectiveness orientation will be necessary.     

Urban transport in Germany: providing feasible alternatives to the car

With the second highest level of car ownership in the world, and the third highest population density in Europe, Germany has adopted a range of policies to balance the many private benefits of car use with its serious social and environmental problems. In order to ‘tame’ the car, most German cities have implemented a twofold strategy of expanding and improving pedestrian, bicycling and public transport alternatives simultaneously with restricting car use and making it more expensive. That has increased political acceptability since the car‐restrictive measures are not perceived as mere punishment of car drivers. The results of this coordinated urban transport strategy have been impressive. Germany, as a whole, has managed to increase public transport use and to stabilize the car share of modal split. Some cities, of course, have been more successful than others, and this paper examines three of the most successful cities: Münster, Freiburg and Munich. In each of the cities, the percentage of travel by bicycling, walking and public transport has been raised over the past 20 years, while the car's share of modal split has fallen. This article documents the range of policies used to restrict car use, both in Germany as a whole, and in the three case‐study cities in particular. The key to success is found to be mutually reinforcing transport and land‐use policies. It is the combination of a whole set of coordinated policies that explains the dramatic success in changing travel behavior.     

Future use of stage bus services

The reasons underlying the decline of stage bus services in the U.K. over the past 30 years seem to be well understood, and the probable future trends have been projected using a quantitative forecasting model. The model considers U.K. bus services at a very aggregate level, but it breaks the demand into specific user groups: work trips, children's travel, travel by the elderly, and all other travel, and separately for households with and without a private car. Forecasts depend very sensitively on the level of economic growth assumed, since this governs the two major factors which determine public transport use — car ownership and the cost of operating the services. If the economy could recover its historic growth rates, a further substantial decline in bus use seems inevitable under most realistic assumptions. However, with the present economic outlook, a lower growth rate seems likely to persist for some time, and in this case public transport use will become much more stable in the 1990's; a tendency which would be helped if there were large increases in fuel prices. Many of the Metropolitan Counties have adopted policies of strongly restraining future rises in fares, in some cases to the extent of freezing fares in monetary terms. The effects of such policies on both patronage and subsidies are considered here, and although much of the current political attention is focussed on controlling fares, the question of balance between fares and service levels is also discussed. Lastly, it must be admitted that these predictions are based on knowledge which is largely restricted to the short-term effects of transport policies. The nature of our uncertainty about longer-term effects, and the possible size of them, is considered in terms of sensitivity-testing of the prediction model.     

Reducing car dependence in the heart of Europe: lessons from Germany,Austria, and Switzerland

Munich, Berlin, Hamburg, Vienna, and Zurich – the largest cities in Germany, Austria, and Switzerland – have significantly reduced the car share of trips over the past 25 years in spite of high motorisation rates. The key to their success has been a coordinated package of mutually reinforcing transport and land-use policies that have made car use slower, less convenient, and more costly, while increasing the safety, convenience, and feasibility of walking, cycling, and public transport. The mix of policies implemented in each city has been somewhat different. The German cities have done far more to promote cycling, while Zurich and Vienna offer more public transport service per capita at lower fares. All five of the cities have implemented roughly the same policies to promote walking, foster compact mixed-use development, and discourage car use. Of the car-restrictive policies, parking management has been by far the most important. The five case study cities demonstrate that it is possible to reduce car dependence even in affluent societies with high levels of car ownership and high expectations for quality of travel.     

The demand for public transport. part II. supply and demand factors of public transport

Abstract

This two‐part article, concerned with the way public transport ridership is affected by the various relevant factors, is based on the Executive Summary of The Demand for Public Transport (Webster and Bly 1980), the report of the TRRL‐sponsored International Collaborative Study on Factors Affecting Public Transport Patronage. Part I of the article, which was concerned with the social and economic conditions in which public transport operates, showed the importance of the background factors such as income, car ownership and land use on public transport usage: it also indicated how the longer‐term impacts of the more direct demand factors (fares, service levels) often show themselves in changes in car ownership levels, activity patterns (i.e. where people live, work, shop, socialize, etc) and land‐use development.

Part II reviews the current state of knowledge on the effects of changes in fare levels and quality of service and of the introduction of various traffic and transport measures (traffic restraint, bus priority, etc): it outlines current methodology on costing public transport services and draws the supply and demand sides together in a consideration of particular strategies which are at the disposal of the operator, the planner and the policy maker.     

Integrating congestion pricing,transit subsidies and mode choice

We model and analyze optimal (welfare maximizing) prices and design of transport services in a bimodal context. Car congestion and transit design are simultaneously introduced and consumers choose based on the full price they perceive. The optimization variables are the congestion toll, the transit fare (and hence the level of subsidies) and transit frequency. We obtain six main results: (i) the optimal car-transit split is generally different from the total cost minimizing one; (ii) optimal congestion and transit price are interdependent and have an optimal frequency attached; (iii) the optimal money price difference together with the optimal frequency yield the optimal modal split; (iv) if this modal split is used in traditional stand-alone formulations – where each mode is priced independently–resulting congestion tolls and transit subsidies and fares are consistent with the optimal money price difference; (v) self-financing of the transport sector is feasible; and (vi) investment in car infrastructure induces an increase in generalized cost for all public transport users.     

Optimal land use and transport planning for the Greater Oslo area

The aim of this paper is to describe and apply a comprehensive framework to derive optimal and acceptable land use and transport strategies. The framework includes a constrained optimisation algorithm that approximates and maximises an objective function with respect to available land use and transport instruments and constraints. We apply the framework to Greater Oslo based on output from a land use and transport model for this area (RETRO). Available instruments are toll ring charges, public transport frequency and a discrete land use instrument. Constraints represent acceptable levels on the available instruments, and acceptable levels on equity between geographical zones, accident cost reductions and the financial balance of the actual strategy. Strategies are found in situations with increased and reduced fuel taxes, and the direct and indirect land use and transport effects of the optimal strategies are assessed.     

Accommodating preference heterogeneity in commuting mode choice: an empirical investigation in Shaoxing,China

A latent class model is developed to accommodate preference heterogeneity across commuters with respect to their mode choice between electric bike, private car, and public bus within the context of China. A three-segment solution – ‘electric bike individuals’, ‘private car addicts’, and ‘public bus enthusiasts’ – is identified, each characterized by heterogeneous preferences regarding specific mode attributes and unique socio-demographic profile. The choice model confirms the determinative effects of perceived alternative attributes on commuting mode choice, while the traditionally used objective attributes – travel time and cost – are found to have relatively small influences. The membership model provides solid explanations for these segment-specific preferences. This study provides a better understanding of the nature of mode choice behavior, which can be useful for strategies tailored to a specific segment in order to promote the use of sustainable transport modes.     

Accounting for travel time variability in the optimal pricing of cars and buses

A number of studies have shown that in addition to travel time and cost as the common influences on mode, route and departure time choices, travel time variability plays an increasingly important role, especially in the presence of traffic congestion on roads and crowding on public transport. The dominant focus of modelling and implementation of optimal pricing that incorporates trip time variability has been in the context of road pricing for cars. The main objective of this paper is to introduce a non-trivial extension to the existing literature on optimal pricing in a multimodal setting, building in the role of travel time variability as a source of disutility for car and bus users. We estimate the effect of variability in travel time and bus headway on optimal prices (i.e., tolls for cars and fares for buses) and optimal bus capacity (i.e., frequencies and size) accounting for crowding on buses, under a social welfare maximisation framework. Travel time variability is included by adopting the well-known mean–variance model, using an empirical relationship between the mean and standard deviation of travel times. We illustrate our model with an application to a highly congested corridor with cars, buses and walking as travel alternatives in Sydney, Australia. There are three main findings that have immediate policy implications: (i) including travel time variability results in higher optimal car tolls and substantial increases in toll revenue, while optimal bus fares remain almost unchanged; (ii) when bus headways are variable, the inclusion of travel time variability as a source of disutility for users yields higher optimal bus frequencies; and (iii) including both travel time variability and crowding discomfort leads to higher optimal bus sizes.     

Urban passenger transport in the United States and Europe: a comparative analysis of public policies

This is the second part of a two‐part series that examines recent developments in urban passenger transport in the United States and Europe, focusing on the roles and impacts of the public sector as these have varied by country and over time. The first part of the series described public policies for roadway systems and private car use, whereas this second part concentrates on public transport. After a review of demand and supply trends, the article evaluates government policies in terms of public vs private ownership and operation, public regulation, financing responsibility by government level, types and amounts of subsidy, and impacts of ownership, regulation, and financing arrangements on costs and productivity. This second part concludes with an overall comparison between Europe and the United States, and considers how Europeans and Americans might learn from each other's successes and mistakes in order to improve transport policies.     

Modelling greenhouse gas emissions from cars in Great Britain

This paper outlines the issues involved in the problem of global warming. The road transport sector's contributions to this problem are then detailed and various policy options to reduce greenhouse gas emissions from private cars are discussed. The paper then describes a model which forecasts greenhouse gas emissions from cars. The effects of various policy options are then modelled and the results compared. Policies considered include: raising fuel prices in terms of the UK government's commitment to increase road fuel duties; subsidising public transport in terms of reduced public transport fares; and a tax differentiated by engine size.     

National policy towards cars: Hong Kong

The Hong Kong transport policy objective is simply, mobility. With this the automobile must conform. A confined land area, difficult to develop, has absorbed excessive immigration and must now service a dynamic entrepreneurial economy.

Transport infrastructure based on major planning studies is created through government capital and is backed by careful legislation, effective administration and private sector participation. The problem is that overall expansion is even faster: widespread urban renewal—roads cannot equally expand; enormous New Territories New Towns—people still want to move in and out so the need for more transport accelerates. Over ten million trips daily are made by 5.5 million people. The answers cannot be more and more private cars: it must be promoting the most effective use of major transport investments, where possible off roads, and the mass carriers on roads. The need to curb congestion by containing escalating car numbers (especially as so far only 17% of households have access to an automobile) led in May 1982 to imposition of severe taxes on ownership. The ultimate and equitable objective is to control usage. Road pricing may be the answer.

In Hong Kong the private cars is part only of a complex strategy including metro, rail, bus, minibus, ferry, taxi and tram. The car cannot take precedence.     

Transport policy for London in 2001 The case for an integrated approach

The paper reports the results of a series of studies conducted to enable the London Planning Advisory Committee to provide advice on strategic transport policy for London. The analytical approach combined the use of an area-based, multi-modal strategic model (LAM) and professional judgment. The performance of LAM as a basis for providing rapid advice on complex issues in transport policy is assessed.The resulting policy advice advocated a coherent approach, involving new infrastructure, particularly for rail; improved management of the road and public transport networks; the use of subsidy to enhance public transport service levels; and road user charges to reduce the impact of private vehicles on congestion and the environment. Road user charges emerged as the pivotal issue in the policy; the paper discusses their role, and the questions which still need to be resolved before they can be implemented.The main message of the study is that no one element of transport policy can tackle London's problems alone; an integrated policy in which infrastructure provision, management and pricing are used to complement one another is shown to be far more effective.     

Transit subsidies and regulation: Lessons from the Israeli experience

The Israeli transport sector, like those of many other countries is subject to complete government control with regard to fares, entry into the market, terms of operation and subsidies. It is unique, however, in that the fares charged are remarkably low and that the major transit mode, buses, is operated by privately owned companies. This paper explores what makes this low level of fares possible and in doing so examines the principal characteristics of the sector. It shows that this phenomenon cannot be explained by the amount of subsidy given to the operators but must be attributed to other factors, mainly the efficiency in the production of the services which is motivated by the profit maximization objective of the operators. The paper further argues that government policies regarding subsidy and regulation are generally inefficient as they cause misallocation of resources.     

Competition in multi-modal transport networks: A dynamic approach

We analyze the behavior of market participants in a multi-modal commuter network, where roads are not priced, but public transport has a usage fee, which is set while taking the effects on the roads into account. In particular, we analyze the difference between markets with a monopolistic public transport operator, which operates all public transport links, and markets in which separate operators own each public transport link. To do so, we consider a simple dynamic transport network consisting of two serial segments and two parallel congestible modes of transport. We obtain a reduced form of the public transport operator’s optimal fare setting problem and show that, even if the total travel demand is inelastic, serial Bertrand–Nash competition on the public transport links leads to different fares than a serial monopoly; a result not observed in a static model. This results from the fact that trip timing decisions, and therefore the generalized prices of all commuters, are influenced by all fares in the network. We then use numerical simulations to show that, contrary to the results obtained in classic studies on vertical competition, monopolistic fares are not always lower than duopolistic fares; the opposite can also occur. We also explore how different parameters influence the price differential, and how this affects welfare.