Incorporating Product Choice into Transit Fare Policy Scenario Models

Document Type

Journal Article

Publication Date

2019

Subject Area

place - north america, ridership - behaviour, policy - fares, economics - pricing, economics - fare revenue, technology - ticketing systems

Keywords

product choices, ridership, revenue, fare policy

Abstract

Customer fare product choices can affect both ridership and revenue, so they are strategically important for transit agencies. Nearly all major agencies offer choices between pay-per-use and pass products, and with each potential fare change, agencies face decisions about whether to modify pass “multiples”—the number of rides needed to “break even” on a pass purchase. However, the simple elasticity spreadsheet models often used to analyze the potential ridership and revenue impacts of fare changes make little or no adjustment for shifts in fare product choices. This paper reviews different options for incorporating product choice into fare policy scenario models, and it presents a ridership and revenue prediction procedure that combines a multinomial logit fare product choice model with the logic of an elasticity spreadsheet model. This combination facilitates evaluation of complex fare changes that are likely to alter fare product market shares while maintaining much of the flexibility and simplicity of a traditional spreadsheet model. Additionally, the proposed model uses only preexisting, revealed-preference automated fare collection data rather than requiring customer surveys. The proposed model is demonstrated using examples at the Chicago Transit Authority (CTA). The CTA experienced a large shift from passes to pay-per-use following a fare change in 2013, illustrating the potential value of accounting for fare product choices in fare scenario evaluation.

Rights

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

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