Increasing public transport revenue or intensifying cannibalization: The effects of introducing a new tariff option in addition to pay-per-use and flat rate options

Authors

Christian Weibel
Lisa Dang
Widar von Arx

Document Type

Journal Article

Publication Date

2024

Subject Area

place - europe, place - urban, economics - revenue, economics - pricing, ridership - demand

Keywords

ublic transport, revenue, pay-per-use, flat rate

Abstract

The tariff landscape within Switzerland's public transport network is characterized by limited options: the flat rate (Generalabonnement), designed to accommodate frequent customers, and the pay-per-use model (Halbtax), tailored for those who use the network infrequently. However, there is a gap in provision for medium-frequency customers, who lack an intermediary tariff option. Our study employs a combination of conjoint analysis and market simulations to assess the potential appeal of a hypothetical novel three-part tariff structure, referred to as the bonus tariff. The paper first examines customers tariff selection, probing whether choices are influenced by biases favoring either the pay-per-use or flat-rate options. Further, we calculate the significance of various tariff attributes and identify sociodemographic variables predictive of tariff preference. Attributes such as the pre-pay credit and bonus levels exhibit the highest part-worth utilities. The analysis shows that the bonus tariff would capture a significant market share. A market simulation underscores the sensitivity of the business case to factors including bonus levels and the proportion of customers transitioning from flat-rate subscriptions. The overarching outcome suggests a positive impact on revenue with the introduction of the bonus tariff. The conclusion delves into the reasons for these findings and outlines implications for tariff management strategies.

Rights

Permission to publish the abstract has been given by Elsevier, copyright remains with them.

Comments

Research in Transportation Business & Management Home Page:

http://www.sciencedirect.com/science/journal/22105395

Recommended Citation

Weibel, C., Dang, L., & von Arx, W. (2024). Increasing public transport revenue or intensifying cannibalization: The effects of introducing a new tariff option in addition to pay-per-use and flat rate options. Research in Transportation Business & Management, 54, 101129.