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.