Deregulation of inter‐city coach services in Britain

Public transport in Britain has traditionally operated under conditions of regulation. The 1930 Road Traffic Act imposed controls upon the quantity and quality of transport regulations, with an abolition of the quantity controls associated with inter‐city coach services. The principal objectives of the Act were to eliminate restriction upon entry to the market and to promote competition between coach operators.

This paper is based on research which was undertaken to establish the impact of the 1980 Transport Act upon express (inter‐city) coach services in Britain. The effects of the legislation are examined in relation to the experience of various coach operators, British Rail, and the inter‐city traveller. This provides evidence of the way in which the supply of, and demand for, public transport behaves in a competitive, deregulated environment. It is shown that at least in net terms, the consumer has enjoyed short‐term benefits. Greater uncertainty surrounds the long‐term situation. The main competition has been confined to the principal trunk routes and has taken place between the state‐owned undertaking of National Express and British Rail. The outcome of deregulation for the private sector has been disappointing.

The paper identified similarities which exist between inter‐city and local public transport services. In this context, the lessons derived from express deregulation are employed to suggest likely developments in the deregulation of stage carriage (local) services in Britain.     

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.     

Rail travel and the Leisure market in great Britain

The purpose of this paper is to examine the factors influencing and inducing leisure travel; to convey the sensitivity of rail travel receipts to the performance of the economy and more particularly family and personal disposable incomes; to examine the potential for further market research; and finally, to determine ways and means of attracting marginal revenue in the sustainable recreation/tourism sphere to a major public sector asset.

The paper focuses on leisure marketing by Britain's national railway corporation, British Rail (BR), and the relevant activities of its three passenger business sectors: Network SouthEast (NSE), which operates regional and local services in London and the South East (though not the London ‘tube’ system); Regional Railways, which operates regional and local services elsewhere in Great Britain; and InterCity, which operates the long distance express services.

The paper reviews BR's fares promotions of recent years and in particular draws on some examples taken from Regional Railways. This sector is now the only business of British Rail which in principle is subject to a significant public grant, to meet the obligation of a minimum level of service on social grounds. Of the other two passenger businesses, Network SouthEast receives a grant but the current intention is that it should operate on a breakeven basis from the 1992/93 financial year; InterCity runs on a purely commercial basis.     

Harmonizing heavy goods vehicle taxes in Europe: a British view

One of the biggest unresolved problems regarding the completion of the free internal transport market within the European community is the problem of harmonization of taxation on the road haulage industry. As the highest tax country, Britain might be expected to have to reduce its level of taxes as part of any harmonization.

This paper considers the current methodology of the British Department of Transport regarding the allocation of the track and external costs of road transport, in the light of developments in methodology and experience elsewhere in Western Europe and North America. We find a number of reasons for believing that, far from overstating the marginal social cost of use of roads by the road haulage industry, the current British approach actually understates it. Thus any move towards harmonizing tax levels may reduce taxes in Britain at a time when they should be increasing.     

Man and his transport behaviour Part 4a. User response to price changes: application of the ‘threshold’ concept

Summary

(1) The response of an individual consumer to change in such characteristics as price will be to change behaviour at a critical point, a ‘threshold’ at which a change of behaviour is perceived to be beneficial.

(2) Most choices can be viewed as binary, for example, between pairs of transport modes. A cumulative normal distribution of responses will give an S‐shaped curve, the mid‐point being at the average threshold value.

(3) An aggregate demand curve should show the response of a given group of people to a range of price changes at one point in time. Most curves derived from revealed behaviour do not permit this. To some extent, a demand curve must be derived from interviews and other tests, giving hypothetical behaviour. Such methods are used in non‐transport consumer tests, and work by Brög et al. gives a similar picture for transport users, supporting the concept of the S‐shaped curve.

(4) Allowance for frequency of trip‐making modifies this picture, suggesting that a smoother curve may be appropriate for some conditions, such as non‐work trips. These approaches may be combined by use of catastrophe theory, with two control factors. The hysteresis effect is found around the threshold where repeated changes in the basic stimulus produce successively smaller responses.

(5) There is some evidence of symmetrical response by public transport users to real increases and reductions in cash‐paid graduated fares, but this is not the case where different forms of pricing are involved.

(6) An example of threshold effects in private transport may be found in the monitoring of tolls on the Itchen Bridge by Atkins. Demand became particularly sensitive to price in a certain range.

(7) In the public transport field, there is similar evidence from the experience of introducing flat or zonal fares where graduated fares previously applied. Where travelcards are sold, the effect is much greater, and cases such as the West Midlands show little if any effect on sales despite real price increases. Here, trips are about 7% higher than would have been expected for the same revenue target, had graduated fares been retained. However, it may well be possible to exceed the threshold, especially where fares simplification and increases are combined, as the Trondheim experience suggests.     

Book reviews

The European Community Transport Policy: Towards a Common Transport Policy. By Jurgen Erdmenger (Gower Publishing Co. 1984) [Pp. 155.] £14.50.

Transport Reform: Changing the Rules. By Stephen Plowden. P.S.I. No. 642 (London: Institute, 1985.) [Pp. 250.] £6.50. ISBN 0–85374–258–8.

The Atlas of British Railway History. By Michael Freeman and Derek Aldcroft (London: Croom Helm, 1985.) [Pp. 128.] £12.95.

Losing Track. By Kerry Hamilton and Stephen Potter (Routledge & Kegan Paul in association with Channel Four, 1985.) [Pp. viii + 152.] £7.95. Paperback.     

Transport policy for an ageing population

Mobility declines with increasing age, reflecting the onset of physical or mental infirmity, affordability of travel for those on retirement incomes, and the mal-design of the transport infrastructure and operational arrangements. With the prospect of a rapidly ageing population, it is important to address measures to promote mobility if the quality of life of older people is to be sustained. In the UK, pensioners on low incomes, who could be hindered in their travel by the cost of fares on public transport, benefit from the general availability of half price (or better) concessionary fares for local travel. A variety of measures are in place to counter the effects of age-associated disabilities that hinder mobility, including low floor buses, subsidised taxis and community transport schemes. The Disability Discrimination Act is ensuring that public services vehicles are accessible to older people with disabilities. The motor car is of increasing importance in later life, particularly for those with disabilities, and a variety of design and technological approaches are being brought to bear to maintain the mobility of older people. These various efforts undoubtedly enhance the mobility of older people. However, beyond that broad conclusion it is hard to make evidencebased judgements. There is therefore a pressing need to develop methods to evaluate developments in policy and practice.     

Evaluation of the policies in British local transport plans with regard to the promotion of rail freight

Over the last couple of decades there has been a trend in Western Europe and North America towards making the railway industry more able to compete successfully with road for freight haulage through deregulation and/or structural change. This trend has been drive, partly, by a concern to produce more commercially viable railway industries, but also by concerns to reduce the environmental impacts of road haulage through modal shift. The latter in particular has led to the development of public policies supportive of rail freight, particularly at the national or international levels. This paper reports on qualitative research that analysed public policy aimed at promoting rail freight in Britain but, unusually, the focus was on local rather than national policy. The research was an investigation of the approach of local authorities to the encouragement of rail freight as evidenced through their Local Transport Plans. The paper concludes that in Britain there has been a significant amount of local policymaking for rail freight and that although national policy matters are of overriding importance, the role of local policy is significant and can be developed further.     

Policies towards suburban rail services in Britain and the federal republic of Germany — a comparison

This paper compares the major role played by suburban rail (S‐Bahn) systems in West German cities with the much more limited role of rail in the British conurbations. Clearly, the difference owes much to the institutional and financial arrangements in the two countries. In West Germany, large amounts of earmarked funds have been available for rail investment, whilst the Federal government has been willing to shoulder much of the burden of operating subsidies. The Verkehrsverbund has emerged as a highly effective way of coordinating fares and services without direct ownership of any mode of transport. By contrast in Britain funds for rail investment have been much more limited. Progress with integration has been far slower, and is threatened by current government policies regarding both bus deregulation and the abolition of the Metropolitan county councils. Whilst rail is firmly established in German cities, its future in Britain looks bleak.     

Allocation of funds to public transport investment and operating support

This paper reviews the present levels of operating support to, and public investment in, public transport systems in Western Europe. All internal bus, tram and rail services are included, and estimates made for total support in Britain, Sweden, West Germany, the Netherlands and France. To make comparison meaningful, these are shown in relation to GDP and traffic carried. Support levels in Britain are below average, but by no means the lowest as sometimes assumed. Reasons for providing support are considered, including existence of financial burdens arising historically, assistance to particular groups of users, problems in price discrimination and inability of other modes' charges to reflect costs. The extent to which support payments may merely subsidise inefficiency is outlined. A distinction is drawn between productive efficiency, i.e. the resources used to provide a specified level of service and fare, and allocative efficiency, i.e. the extent to which resources are allocated so as to maximise traffic, etc. The extent for reducing support yet retaining the present general level of service and fare is considered.Means of raising finance for support are outlined, including relative roles of central and local government. The scope of local taxes being raised to meet local objectives is considered, notably in the French versement transport: In conclusion, it is suggested that trunk inter-city services should cover all costs from fares, by a discriminatory pricing policy, but central government provide a basic support level for rural areas. In urban areas, practical limits exist to price discrimination, and the best policy may be collective purchase of facilities through a local tax.     

Improvements and rationalizations of bus service in rural areas of Denmark

This paper presents an empirical investigation of the effects of marginal changes in public bus transport in rural areas. It is based on a larger study of bus services in rural areas of Denmark (Hansen, 1986). At the beginning of the 1980s, politicians suddenly demanded reductions in public expenditures. Therefore, the Regional Transportation Corporations reduced services and increased fares. However, this article shows that it is possible to meet the demand for reduced subsidy and the passengers' wishes for better service simultaneously. Where the empirical investigations show fare elasticities of about -0.2, the service elasticities seem to be numerically above 1. In the last part of the paper these findings are applied to an alternative saving policy.     

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.     

The treatment of traffic in the Dutch environmental outlooks: the role of science in policy making and policy evaluation

The Dutch National Institute of Public Health and Environmental Protection publishes Environmental Outlooks in which 25‐year projections are made. These Outlooks quantifying the environmental problems, form the scientific basis for Dutch environmental policy. Traffic and transport is one of the main sectors causing environmental problems. The emissions and energy use of all relevant categories (road traffic, non‐road traffic) are based on model simulations with models. This paper describes the main models used.

If present policy is implemented only a minority of the environmental targets will be met.

If a sustainable transport system for the Netherlands means a large reducton in CO₂ emissions and energy use after 2010 a stronger emphasis on both technical and non‐technical measures (such as land‐use planning combined with public transport improvements) for the period until 2010 is needed than proposed in the Second Transport Structure Plan, unless a sustainable energy source becomes available.     

An optimization model for integrated transit-parking policy planning

The optimization model proposed in this paper is aimed to assist city councils (or other transport authorities) in the planning of integrated transit-parking policies. The objective is to minimize the joint operating deficit of the transit and parking operators while ensuring given minimum levels of (motorized) mobility in a city. The key decision variables are transit fares and parking fees. The impact of price changes on transit and car modal shares are described by logit functions of the generalized travel costs. The practical utility of the model is illustrated with a case study involving a midsize city in Portugal.

     

One price for all? Price discrimination and market captivity: Evidence from the Italian city-pair markets

This paper tests whether, and to what extent, airlines exploit market captivity by using price discrimination strategies. The Italian passenger market is particularly fit for this purpose, given the high differentials in the degree of the inter-modal competition amongst domestic connections. Results show that, ceteris paribus, airlines adopt a different pricing behaviour depending on the degree of inter-modal market captivity. First, in highly concentrated markets with respect to air competitors, airlines price higher when the inter-modal competition is limited. This proves that inter-modal market captivity strengthens the effect of market power. Second, the inter-temporal price discrimination leads to a J-shaped distribution of fares over time, which is more pronounced when the inter-modal competition is effective. This suggests that airlines need to adopt a pricing technique that allows for a greater market segmentation in order to compete successfully with high-speed rail transport and to extract a larger part of passengers’ surplus. These results are relevant in terms of transport-investment implications and competition policy. The indirect benefits that investments in rail infrastructure would yield through downward pressures on competing airline fares should be embedded in any cost-benefit analysis of high-speed networks investments and in any policy evaluation of measures that aim to reduce the territorial gaps in infrastructure endowment and accessibility.     

An international study on land‐use and transport interaction

This paper underlines the important role played by the interaction between transport and land use in the way cities develop and the need to use a fully integrated land‐use/transport model to assess the longer‐term impacts of urban policies. Since most of the models of this type had never been properly tested, the Transport and Road Research Laboratory in the early 1980s set up a collaborative study to examine critically their performance and to assess the impacts of a range of commonly applied policies.

The paper briefly describes the first phase of the study in which nine models from seven countries were subjected to a rigorous set of tests covering a variety of policies. For practical reasons each model was applied to the city on which it was originally calibrated. To overcome some of the problems of comparison, a second phase of the study was conducted in which some models were applied to several cities each so that the differences due to the particular characteristics of the cities could be identified. In carrying out this phase, some cities were examined by several models and discrepancies in the results analysed. The setting up of the second phase of the study is outlined in this paper, but not the results, which are given in later papers in this and subsequent issues of Transport Reviews.     

Bus policy — Conclusions from a case study

The main policy conclusions from a recent bus study in the new town of Telford in the U.K. are summarised and discussed. The choice of bus routes and their combination into networks is examined. Alternative fares systems are compared and the implications for the fare levels necessary to cover costs are discussed. It is argued that bus services can generally be financed from the fare-box but that, unless services are cut as passenger demand falls, unduly high fares will result and these will unnecessarily drive more passengers away from the buses. Several particular aspects of service marketing are then examined and the paper concludes by discussing the actual organisation of the bus services.     

Deregulating the bus industry in Britain — (A) the proposals

Abstract

Over the past five years there has been an unprecedented stream of transport legislation in Britain, and policy has switched significantly towards the provision of services commensurate with market demand. The most important single document has been the recent publication of the White Paper on ‘Buses’ which could bring about dramatic changes in the road passenger transport industry. This introductory section outlines the arguments for and against change and then summarizes the proposals.     

The experience of express coach deregulation in Great Britain

This paper reviews the effect of express coach deregulation in Britain following the Transport Act 1980. The authors have monitored the range of services offered before and after the Act, using operators' literature, roadside surveys, on-vehicle passenger interviews and interviews with operators as sources of information. These are used to present an overall picture of express deregulation, with particular reference to changes in real fare levels, and also the relative importance of competition within the coach industry compared with that of inter-modal competition (that between coach and rail). The latter has emerged as more significant.The greater part of the paper is devoted to analysis of the long-distance market but the development of commuter coach services into central London is also examined, together with the reasons why independent operators have secured a larger share of this market.     

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.