The development of urban bus regulatory policy in Korea reviewed

The urban bus industry in Korea used to be controlled to provide stable transport services and enable operators to secure proper profits, but there were adverse effects within the industry such as inadequate business management and a downward spiral of low quality services resulting from lower fares. The government began easing restrictions on entry, operation, fares, and some conditions and procedures for licensing in the late 1980s, until in 1993, the government published a package of deregulatory measures that were considerably more drastic than those previously seen, such as freely adjusting the number of vehicles within 10%, easing the restrictions and requirements for operators’ employing staff and drivers, and improving the fare system. However, these measures seem to have been introduced too late and too luke‐warmly to encourage new entrants to the industry. Therefore, to gain the desirable effects of deregulation and to secure the development of the urban bus sector, there needs to be provision of a market atmosphere and greater scope for free competition; a positive attitude among operators for efficient business management and new services; and alert observation and monitoring by passengers.     

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.     

Regulating transport’s environmental impacts in a deregulating world

In recent years, a growing awareness of the environmental impacts of transport has played a major part in the shift towards policies to manage the demand for travel. As a result, a substantial increase in the role of public transport has been identified as necessary in any strategy towards more environmentally sustainable transport patterns. At the same time there has been a quite separate process of deregulation and the withdrawal of the state from the transport market. These two trends appear to represent potentially contradictory processes. This article draws upon two major studies that explore the relationship between increasing needs for environmental regulation and the privatisation of bus and rail services. It is shown that, as currently organised in Britain, the development of bus and rail services are inadequately linked to strategic environmental policymaking and, rather than being part of the solution to transport’s environmental impacts, there is a real danger that these ‘green’ methods of transport could slide into simply being part of the problem itself. It is concluded that privatisation and deregulation does not mean the end of the need for policy mechanisms, but they do mean that policy has to be implemented in a very different way.     

Demand for buses in Japanese medium sized cities

The number of bus passenger has been decreasing in Japan since 1969. The increase in car ownership and development in urban rapid rail network has deprived bus service of passengers. The bus industry has suffered from depression for the last twenty years. However, many bus routes are still operated commercially. The amount of external subsidies is not large. The industry is under strict regulation. The common way for bus operators has been to increase fares rapidly in order to keep their break even condition. The first half of the paper describes present circumstances of the bus industry in more details. Then the second half of the paper treats the estimation of the effect of each factor on bus demand by using pooled data in Japanese medium sized cities. The results suggest that the increase in car ownership has had a crucial effect on local public transport demand and is likely to continue to do so.     

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.     

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.     

A survey of the Swiss public transport system and policy

This paper surveys Swiss public transport structure and policy. The regulatory regime is explained with the division between the two operators working under federal monopoly — the State railways (SBB) and the postbuses (PTT) — and the rest of the system. The rather complicated Swiss subsidy arrangements are described. The federal government's emphasis on introducing cheap public transport fares on environmental grounds through the federal transport measures (BTM) and the use of cheap fares in urban areas are discussed. The paper notes the Swiss people's rejection by a referendum of a federal commission's proposal for an integrated transport policy, though some of the solutions were introduced in their own right: the division of SBB into two parts, and the creation of the concept Rail 2000, later developed into Rail + Bus 2000. Finally, the paper reviews problems of the Swiss policy, including the future of cheap fares, making some comparisons with developments in Scandinavia.     

Bus accidents,bus deregulation and London

Local bus services were deregulated in October 1986 in all areas of Britain except London. Government policy is to extend deregulation to London, though not in the current parliament. This paper analyses statistics on bus accidents from the national road accident database from 1981 to 1991 to compare results for London and the rest of Great Britain, and to consider whether deregulation has affected safety. The conclusions depend on the assumption that accident recording practice was not itself affected by deregulation.Bus accident rates are higher in London than on built-up roads elsewhere, partly apparently because of road traffic conditions in London, and partly because open-platform buses have higher accident rates involving occupants, including boarding and alighting accidents, than buses with doors.The main safety effects of deregulation operate through its effects on bus activity, though there is also some evidence that the rate per bus-kilometre of accidents involving other road users fell slightly. This may be due in part to the trend towards smaller buses associated with deregulation. Deregulation has led to a fall in bus patronage, and thus to a fall in occupant casualties; and to a rise in bus-kilometres, and thus to a rise in casualties among other road users in accidents involving buses. The number of fatal and serious casualties among other road users involved in bus accidents is larger than the number among bus occupants, so deregulation in London could lead on balance to a small rise in fatalities involving buses. On the other hand, the number of slight casualties among other road users involved in bus accidents is smaller than the number among bus occupants, so deregulation in London could lead to a fall in the number of slight casualties involving buses.Although there were fears that changes in the management of bus operations or financial pressures might lead to increased accident rates following deregulation, there no evidence in the findings to support such fears.This paper was first presented at the 3rd International Conference on Competition and Ownership in Surface Public Transport at Mississauga, Canada on 25–29 September 1993. The author is grateful to the Department of Transport for the speed and efficiency with which they provided special tabulations from the road accident database for this study.     

Transport system management in San Francisco: an assessment

The paper reports the results of a transportation corridor study. The emphasis in the study is in transportation system management (TSM) policies although some capital intensive alternatives are also considered.

The results suggest that currently popular TSM policies in U.S.A., even when augmented with capital intensive changes, have only marginal impacts on modal choices. These currently popular policies, high occupancy vehicle priority lanes, improved bus and express bus service, increased feeder bus service and so forth, appear to confer benefits to well to do suburbanites but do not improve the transportation of urban dwellers.

Another interesting result is that if user costs were increased to cover the full costs of transportation the transit fares for low income people would increase ten percent and the increase for urban dwellers would be about 20 percent. Interestingly, there would be no change in bus fares for either group. However, for high income travellers and suburbanites the increase in transit fares would be in excess of 100 percent. Thus, the current fare structure is inequitable making the low income people and the urban dwellers to pay a much larger share of their transportation cost than the often well to do suburbanites.     

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.     

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.     

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.     

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.     

Modelling the impact of rail fare increases

Rail fares in South-East England have been increasing in real terms for several years, and are expected to continue to do so. In this paper, the impact of such increases is examined in terms of the choices of mode of travel, home and job location, and residential migration. Forecasts are made using a model in which the population is partitioned into four sets according to whether they have changed home and/ or job over the forecast period. The model allocates population to homes and workers to jobs, and commuters to the three modes of travel considered. The impact of an increase of 25% in real fares over a five-year period is examined and a number of conclusions are drawn. The model shows that rail patronage will decline even if transport costs remain constant in real terms, because of decentralisation of jobs and rising car ownership. The overall long-term rail fare elasticity is found to be –0.7, but this is the mean of a wide range of values for different parts of the study area. People ceasing to commute by rail would divide almost equally between car and bus, the latter being used particularly to Central London. Those people who commute to London who are seeking new homes would tend to choose to live nearer London than they would have otherwise. The paper concludes with a discussion of the findings in terms of the assumptions implied in the model.     

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.     

Optimal transport strategies for European cities

A new procedure for generating optimal transport strategies has been applied in nine European cities. A public sector objective function which reflects concerns over efficiency, environmental impact, finance and sustainability is specified and a set of policy measures with acceptable ranges on each, identified. Optimal strategies based on combinations of these policy measures which generate the optimal value of the objective function, are identified, and compared between cities. Resulting policy recommendations are presented. The results demonstrate the importance of an integrated approach to transport strategy formulation. They emphasise the role of changes in public transport service levels and of fares, and of charges for car use. By contrast, new infrastructure projects are less frequently justified. In the majority of cities the revenues from car use charges are sufficient to finance other elements in the strategy. However, private sector involvement either in initial financing or in operation may be desirable. Revised objective functions to reflect private sector involvement are specified, and optimal strategies with private sector operation of public transport are also identified. The requirement to meet private sector rates of return for public transport operation typically results in lower frequencies and higher fares; charges for car use then need to be raised to satisfy public policy objectives, but system performance is reduced. This revised version was published online in June 2006 with corrections to the Cover Date.     

Optimization-based study of the location of park-and-ride facilities

Park-and-ride facilities are parking lots located on the periphery of cities to intercept car trips coming from the suburbs and diverting them to a transit system, thus playing a potentially important role in reducing traffic congestion and air pollution in urban areas. In this paper, we present a study carried out to shed light on where to install park-and-ride facilities in the city of Coimbra, central Portugal. Its main component is an optimization model which aims to determine the best possible locations for a given number of park-and-ride facilities under the objective of minimizing car use in the urban areas. The main result of the study is that the introduction of only three park-and-ride facilities could reduce car use in Coimbra's urban areas by 19%, an impact that would be very difficult to achieve through measures such as decreasing bus fares, increasing parking fees and/or increasing bus services.     

Are urban bus services natural monopolies?

Although Britain's local bus services have been open to free competition for more than three years, most have continued to be operated as monopolies by the original incumbents. Some competition has occurred, but the incumbents have usually driven off entrants. This paper uses findings from case-studies of competition and from deregulation generally to consider whether monopoly operation has inherent advantages over competitive operation. If so, urban bus routes would be natural monopolies. The evidence suggests that they may be, because single-operator services are more convenient for users.     

‘Unconventional modes’ of transport in the United Kingdom—A review of types and the policy context

‘Unconventional modes’ (UCMs) of public transport have been emerging steadily and unobtrusively in the United Kingdom over the last two decades, largely originating in rural areas. Since 1977, there has been a quickening expansion of numbers and diversification of types in the light of governments' increasing concern with the cost of supporting ‘conventional’ public transport and the search for cheaper alternatives. An essential part of this review is to establish a definition of ‘unconventional’ as an aid to classifying the wide and increasing diversity of modes, and clarifying terminology. UCMs overlap with ‘community transport,’ which caters for the mobility needs of elderly and handicapped persons. In the context of bus service deregulation in 1985/6, the UCM sector is expected to expand although its precise future role is unclear.     

Air deregulation revisited: Choice of aircraft,load factors,and marginal-cost fares for domestic air travel

If airline deregulation is working as predicted, then fares should fall to marginal costs. This paper computes such optimal fares, allowing for a wide variation in point-to-point distance, traffic, and available aircraft type. It is shown that marginal-cost fares are exceeded by average carrier costs. This implies an unpleasant dilemma: either the industry is naturally destructive (if the returns are internal to firms) or else the sustainable industry configuration is less than welfare-optimal. In the latter case, the possibility of a Pareto-improvement with a judicious form of re-regulation cannot be ruled out. In light of this, a certain amount of caution about the results of deregulation is suggested.