Optimal transit subsidy policy

The basic justification for transit subsidy is that such a subsidy is necessary, given substantial economies of scale, in order to permit fares to be set at a level which will result in reasonably efficient use of the service. Efficiency is not, however, merely a matter of the level of the fares but even more of the fare structure and pattern. Major changes in fare patterns are needed to permit reasonable efficiency of utilization to be attained, and full advantage derived from subsidy. Differentiation according to time and direction, as well as the distance of travel, is required. Ideally, competing modes such as the private automobile should be priced at marginal cost, differentially by time and place, and the subsidy should be derived from taxes on land values in the areas where such values are enhanced by the presence of transit service at low fares. In the absence of such conditions, fares should differ from marginal cost in ways that take into account the impacts of transit fare variations on auto traffic and congestion, and on the subsidy requirements and the adverse impacts of the taxes imposed to finance the subsidy.In addition to these economic efficiency considerations there may be added considerations of distributional impact and political acceptability, which may modify the optimal solution somewhat but should not greatly change the main outlines of the patterns to be recommended.     

Application of path analysis methodology to transit system maintenance performance

This paper develops a conceptual framework for bus maintenance based on path analysis and applies it to forty-eight bus transit systems. The application determines the total, direct, and indirect effects of the variables identified as having significant causal links with maintenance cost per mile. These variables are identified using the stepwise regression method. The findings are that the wage rate and fleet size increase maintenance cost directly and indirectly. In terms of the standardized regression coefficients, fleet size has been found to be the most important factor affecting maintenance cost per mile, followed by the proportion of articulated buses, the wage rate and local subsidy in that order. The proportion of articulated buses has been found to reduce maintenance cost per mile directly and to increase it indirectly. The indirect path coefficient of the proportion of articulated buses is 0.1794 whereas the direct path coefficient is –0.351. Similarly local subsidy as a proportion of revenue increases maintenance cost per mile directly and reduces it indirectly. The corresponding path coefficients for the direct and indirect effects of local subsidy are 0.2553 and –0.1073. In addition population density and the peak-base ratio are positively and significantly associated with miles between roadcalls. The implications of these findings are briefly examined in this paper. Because the path analysis methodology allows the direct and indirect effects of a causal variable to be determined, it is recommended for policy analysis.     

Subsidizing and pricing private toll roads with noncontractible service quality: A relational contract approach

In private toll roads, some elements of the private operator’s performance are noncontractible. As a result, the government cannot motivate the private operator to improve them through a formal contract but through a self-enforcing contract that both parties are unwilling to deviate unilaterally. In this paper, we use noncontractible service quality to capture these performance elements. By employing a relational contract approach, we aim to investigate the optimal subsidy plan to provide incentives for quality improvement. We show that government subsidy is feasible in quality improvement when the discount factor is sufficiently high and marginal cost of public funds is sufficiently small. Under feasible government subsidy, we have demonstrated the optimal subsidy plans in different scenarios. Moreover, some comparative statics are presented. Based on the derived subsidy plans, we further investigate the optimal toll price. We find that the optimal toll price generates zero surplus for the private operator and positive surplus for consumers. We then make two extensions of our model to re-investigate the government’s optimal decisions on subsidy plan and toll price when her decision sequence is changed and when government compensation is present upon termination of the relationship. Some implications for practice have been derived from our model results.     

Competition and regulation in a new integrated transit system across jurisdictional borders

It is often argued lately that some regional transit systems should be integrated to improve the transit services across jurisdictional borders. One of the important issues concerning this integrated transit system is how to make proper use of the competition and regulation to improve its performance and to increase relevant benefits to the authorities, the operators and the passengers. This paper deals with this problem in a new integrated transit system across jurisdictional borders. An optimization model is used to investigate the competition of transit operators in oligopolistic competition transit market (OCTM). An optimization model with nonlinear complementarity constraints is proposed to guide the competition of transit operators using transit subsidy as the regulation means in system optimum transit system (SOTM). By analyzing and comparing the performances of the integrated transit system in two markets, numerical studies show that the competition mechanism should be made full use of and transit subsidy is an important regulation means that should be valued by the transit authorities in the integrated transit system. Copyright © 2016 John Wiley & Sons, Ltd.     

GIS-based transit trip allocation methods converting stop-level boarding and alighting trips into TAZ trips

ABSTRACT

This study introduces a framework to improve the utilization of new data sources such as automated vehicle location (AVL) and automated passenger counting (APC) systems in transit ridership forecasting models. The direct application of AVL/APC data to travel forecasting requires an important intermediary step that links stops and activities – boarding and alighting – to the actual locations (at the traffic analysis zone (TAZ) level) that generated/attracted these trips. GIS-based transit trip allocation methods are developed with a focus on considering the case when the access shed spans multiple TAZs. The proposed methods improve practical applicability with easily obtained data. The performance of the proposed allocation methods is further evaluated using transit on-board survey data. The results show that the methods can effectively handle various conditions, particularly for major activity generators. The average errors between observed data and the proposed method are about 8% for alighting trips and 18% for boarding trips.     

Incentive subsidy scheme design with elastic transport demand

Huge public transport subsidies caused by deficits have become a heavy financial burden on some local governments due to the decline of bus passenger numbers. It is essential to apply the performance‐based contract to bus services considering maximization of social welfare. This paper constructs an incentive subsidy contract considering the decision‐making powers of the service level and calculating the proper frequency elasticity aiming at two problems of performance‐based contracts. Meanwhile, we consider a role of bus operators ignored by most researchers. Under the scheme, the decision‐making power of the service level is discussed based on five assumptions, and meanwhile, bus operators are motivated to reduce cost and improve service level in the scheme. The case of the bus service of Arao city indicates that the optimal frequency equals to zero when bus operators decide frequency. If bus operators determine efforts, the optimal effort also equals to zero with the goal of maximizing the profit. Also, bus operators can play their roles in lessening cost and improving service level to help bus operators and the local government achieve a win‐win situation, which maximizes the social benefit in this subsidy scheme when all factors are decided by the government. Copyright © 2013 John Wiley & Sons, Ltd.     

Estimation of the perceived value of transit time for containerized cargoes

This paper proposes a novel method for estimating the perceived value of transit time of containers by shipping lines. The key idea is that a shipping line’s published schedule is the optimal decision that minimizes the sum of fuel cost and time-associated costs of the containers adopted by the shipping line. Using the proposed method, we find that the adopted values of transit time for nine trans-Pacific services operated by Orient Overseas Container Line and five trans-Pacific services operated by Maersk Line are between US$5/TEU/day and US$30/TEU/day. We further demonstrate how the adopted value can be used for designing the optimal transit times between ports, analyzing the viability of slow-steaming, checking whether ships should speed up to catch up to connecting ships on other services, and helping to predict the market share of less polluting fuels in view of rules on air emission.     

Short-term impact analysis of fuel price policy change on travel demand in Malaysian cities

Abstract

Malaysia is one of the few countries in the world that provides a fuel subsidy to consumers. Due to the recent economic crisis, the Malaysian Government decided to revise its fuel subsidization policy from a fixed price subsidy to a floating price subsidy dependent on global oil demand. Recognizing that the change in fuel subsidization policy can have an impact on travel behavior, this article investigates the short-term impact of the policy change on private and public transportation in the Klang Valley region of Malaysia. Spectral analyses are performed to investigate if the policy change has an impact on private vehicle travel demand, measured in terms of road traffic, and short-term travel demand elasticity with respect to fuel price is estimated. To measure the impact on the public transportation system, the demand cross-elasticity values of rail transit and buses are also estimated. It was found that traffic flow reduces with an increase in fuel price, although elasticity and cross-elasticity values obtained are low. The article finds that there is a potential mode shift from private vehicles to rail transit with increasing fuel price. It is demonstrated that reducing fuel price subsidy can be an effective travel demand management strategy to alleviate congestion.     

Subsidy and public transit performance: A factor analytic approach

The need to measure and evaluate transit system performance has led to the development of numerous performance indicators. However, depending upon the indicator, we oftentimes reach different conclusions regarding transit system performance. The research reported in this paper uses factor analytic methods to generate a set of underlying attributes (factors) that capture the performance of public transit systems in Indiana. Similar to what is reported in the literature, this study finds three attributes that best describe transit system performance: efficiency, effectiveness, and overall performance. Based upon systemsÕ factor scores, the study finds that systems scoring highly on one attribute generally perform well on the remaining attributes. Further, there is an inverse relationship between system performance and subsidies, a finding that supports performance based subsidy allocations.     

Integrated transit services for minimum cost operation considering heterogeneous demand

Abstract

In large metropolitan areas, public transit is a major mode choice of commuters for their daily travel, which has an important role in relieving congestion on transportation corridors. The purpose of this study is to develop a model which optimizes service patterns (SPs) and frequencies that yield minimum cost transit operation. Considering a general transit route with given stops and origin-destination demand, the proposed model consists of an objective total cost function and a set of constraints to ensure frequency conservation and sufficient capacity subject to operable fleet size. A numerical example is provided to demonstrate the effectiveness of the developed model, in which the demand and facility data of a rail transit route were given. Results show that the proposed model can be applied to optimize integrated SPs and headways that significantly reduce the total cost, while the resulting performance indicators are generated.     

The value of service reliability

This paper studies the impact of service frequency and reliability on the choice of departure time and the travel cost of transit users. When the user has (α, β, γ) scheduling preferences, we show that the optimal head start decreases with service reliability, as expected. It does not necessarily decrease with service frequency, however. We derive the value of service headway (VoSH) and the value of service reliability (VoSR), which measure the marginal effect on the expected travel cost of a change in the mean and in the standard deviation of headways, respectively. The VoSH and the VoSR complete the value of time and the value of reliability for the economic appraisal of public transit projects by capturing the specific link between headways, waiting times, and congestion. An empirical illustration is provided, which considers two mass transit lines located in the Paris area.     

Modeling a rail transit alignment considering different objectives

An optimization model for station locations for an on-ground rail transit line is developed using different objective functions of demand and cost as both influence the planning of a rail transit alignment. A microscopic analysis is performed to develop a rail transit alignment in a given corridor considering a many-to-one travel demand pattern. A variable demand case is considered as it replicates a realistic scenario for planning a rail transit line. A Genetic Algorithm (GA) based on a Geographical Information System (GIS) database is developed to optimize the station locations for a rail transit alignment. The first objective is to minimize the total system cost per person, which is a function of user cost, operator cost, and location cost. The second objective is to maximize the ridership or the service coverage of the rail transit alignment. The user cost per person is minimized separately as the third objective because the user cost is one of the most important decision-making factors for planning a transit system from the users’ perspective. A transit planner can make an informed decision between various alternatives based on the results obtained using different objective functions. The model is applied in a case study in the Washington, DC area. The optimal locations and sequence of stations obtained using the three objective functions are presented and a comparative study between the results obtained is shown in the paper. In future works we will develop a combinatorial optimization problem using the aforementioned objectives for the rail transit alignment planning and design problem.     

Effects of contracting on cost efficiency in US fixed-route bus transit service

Contracted service comprises a significant proportion of total operating expenses in the provision of fixed-route bus transit service in the US. Despite its importance, the literature on the economic effects of transit service contracting has been limited to only a few studies since the mid-1990s, and is inconclusive due to problems with the nature and methodology of the past studies.This paper examines how the cost efficiency of providing fixed-route bus transit service varies by the degree of contracting. I make several improvements to previous studies and conduct a regression analysis that: (1) addresses the endogeneity problem between the contracting decision and cost efficiency, (2) differentiates between agencies that contract out only a portion of service from those that contract out all service, (3) takes into account the moderating effects of several factors on the effect of contracting on cost efficiency, and (4) uses a relatively larger set of cross-sectional time-series data constructed from the National Transit Database from 1992 to 2000.The analysis results show that the combined effects of contracting lower operating costs by $4.09 and $2.89 per vehicle hour for partial and full-contracting agencies, respectively, in the average case. These average cost savings translate into 7.8% and 5.5%, using the average operating cost per vehicle hour of $53.06. However, this improvement is not universal, because the effects of contracting on cost efficiency vary by factors such as peak-to-base ratio, agency size, the wage gap between bus operators in the public and private sectors, and agency type.     

Refining light rapid transit typology: a UK perspective

Abstract

Recent developments in the light rapid transit sector have introduced transit modes that are attempting to imitate the performance of others, e.g. buses with tram-like characteristics. The boundaries between existing definitions of what is a bus, tram or train are becoming blurred. For transport studies and practice this requires a review of how we define modes. This is not just a matter of semantics, but has safety and competition regulation implications for system operators. This paper proposes a structure to produce rail- and bus-based transit mode definitions and typology that are appropriate for modern use. A decision tree is used to classify and define the transit modes as guided-bus, trolley-bus, light rail and tram-train and is provided with example systems. The paper provides a robust definitional framework that allows transit system promoters, operators and other interested parties to have a consistent basis of reference when specifying and comparing rapid transit systems.     

Automatic fare collection in transit: a synthesis of current practice

Many industries are keeping pace with changing technology in an effort to improve operating efficiency and attract consumers with innovations. The transit industry is no exception, one example being the installation and operation of automatic fare‐collection (AFC) systems. There are many issues to consider in implementing an AFC system, including the type of equipment required and the expected quality of system performance.

This article presents a synthesis of several sources of information pertaining to AFC operations. It includes a discussion of system requirements, and the advantages and disadvantages of system operation. Performance measures of reliability and maintainability are also defined, and AFC systems are evaluated using these measures. Several conclusions are reached concerning current AFC practice.     

Appropriate mass transit for developing cities

This paper is concerned with the majority of developing nations who lack large resources for public sector projects. It questions the basis of much mass transit planning and attempts to put forward a more efficient way of reaching decisions. It calls extensively on experience of Metro Manila, capital of the Philippines, where an innovative system of metropolitan planning and administration is throwing a new light on ‘appropriate’ investment in such developing cities.

Mass transit systems as currently conceived in such developing cities—fully segregated rail‐based systems—are unlikely to be affordable (at least for many years) and in consequence scarce resources should not be devoted to developing and evaluating them. Rather, the principal objective should be to provide low‐cost, affordable mass transit—affordable to governments and to passengers. This almost certainly points to road‐based systems, or predominantly at‐grade light rail transit (LRT) systems, which are usually regarded as ‘obviously unworkable’ in developing city environments.

This judgement is questioned and it is suggested the potential of LRT to provide appropriate low‐cost mass transit is not being realized. An approach to determining its potential applicability is proposed. If feasible it should be evaluated against road‐based systems before decisions to implement new mass transit systems are taken.

While circumstances vary between countries the central message of this paper—that public sector resources have a very high opportunity cost which make all but the lowest‐cost mass transit systems very difficult to justify—will hold in all but the higher‐income developing economies.     

An analytic investigation of optimal bus size

The use of smaller buses offers passengers a better service frequency for a given service capacity, but costs more to operate per seat provided. Within this trade-off there is an optimal bus size which maximises social benefit. A mathematical model is described which can be solved analytically to provide an explicit relationship between optimal bus size and factors such as operating cost, level of demand, and demand elasticities. The model includes: passenger demand varying with the generalised cost of travel according to a constant elasticity; the effect of changes in bus occupancy on average waiting times and on operating speed; the financial constraint that farebox revenue must equal operating cost less subsidy; an allowance for external benefits associated with generated demand, and for the effect of the flow of buses on traffic congestion; and an operating cost increasing linearly with bus size. The optimal size varies with the square root of demand, and with the unit cost to the power of 0.1 to 0.2. It also increases slowly with the proportion of cost covered by subsidy. For typical urban operating conditions in the United Kingdom the optimal size for a monopoly service lies between 55 and 65 seats assuming the observed relationship between cost and size; it is possible that changes in working practices could make smaller buses relatively cheaper to operate, so reducing the optimal size, but it seems unlikely to fall below 40 seats.     

The effect of financial constraints on the optimal design of public transport services

Recent experience with the design of bus services in Santiago, Chile, seems to confirm Jansson's (1980) assertion regarding observed planned bus frequency and size being too low and too large, respectively. We offer an explanation based upon the relation between cost coverage, pricing and optimal design variables. We recall that average social cost decreases with patronage, which generates an optimal monetary fare below the average operators' cost, inducing an optimal subsidy. Then we compare optimal frequency and bus size—those that minimize total social costs—with those that minimize operators' costs only. We show that an active constraint on operators' expenses is equivalent to diminish the value of users' time in the optimal design problem. Inserting this property back in the optimal pricing scheme, we conclude that a self-financial constraint, if active, always provokes an inferior solution, a smaller frequency and, under some circumstances, larger than optimal buses.

A whole-system approach to evaluating urban transit investments

New transit capital expenditures are typically evaluated in isolation from the transit/transport systems to which they belong. Problems with reporting performance elements such as ridership and costs are discussed. A focus on evaluating the total transport systems impact of new transit project implementation is called for. On this basis, new US rail transit systems have generally performed poorly. Total transit ridership has generally shown only minimal improvements and, at times, has declined. Financial performance has been disappointing in most cases, particularly when understood in the context of the additional system costs imposed through the reconfiguration of bus networks to serve the new rail systems. Low-cost approaches to improving basic transit services can often be more effective than either rail or bus capital-based projects. An obsession with technology leads to the wrong questions being asked. We should instead start inquiry with the study of needs.     

Mobility evaluation for urban public transportation

Summary

This paper has reported on a study of relative opportunity—not absolute opportunity. Minimum absolute standards for mobility or accessibility are difficult to justify. Some additional study into the development and application of absolute mobility standards may be warranted.

The application of the mobility evaluation model has primarily focused upon a corridor line‐haul system. Conclusions suggest that such a system will not markedly improve existing transit mobility levels in either the peak hour or the off‐peak. The experimental work has verified this conclusion, and more importantly, it has detailed quantitatively the exact levels and spatial distribution of mobility improvements. However, this study does not include a comprehensive analysis of all methods of mobility enhancement, nor does it undertake a comparison of alternative means of mobility improvement. Certainly other methods to improve access to opportunities should be explored before policy considerations are finalized. These methods include other transit solutions, land use alternatives, socio‐economic policies, and other‐mode transportation alternatives. The accessibility technique and mobility indices approach appears to have general applicability in the analysis of optimal strategies for system evaluation.

Of interest is an examination of alternative feeder transit systems to the corridor line. Additional research with the model might point out the maximum mobility effects expected through improved collector service in the suburbs, with corridor line‐haul to the CBD.

The indices are also readily available for a comparison of mobility patterns for different urban areas. Application of the program to transit and socio‐economic data for a set of cities would yield an indication of the relative mobility levels provided. Such data might be considered as an evaluation criterion for future transit funding by federal officials.

In addition, the model is currently being considered by UMTA as a tool to aid in the evaluation of the equitable distribution of transit system benefits as defined in Title VI of the Civil Rights Act of 1964.²⁵ The mobility output would serve as an indicator of the levels‐of‐service provided to certain disadvantaged urban groups. For this application the computer model is being altered to achieve compatability with the Transportation Planning System (UTPS) computer model package developed by UMTA.