Pricing Strategies for Public Transport Neil Douglas Douglas Economics
Start Oct 2011 Scope Feb 2012 Review June 2012 Mkt Res Plan Sept 2012 Pilot Results Nov 2012 Main Surveys Dec 2012 May 2013 Final Report Jan 2014 NZ BCA Conf July 2014 ATRF Conf 2015 NZTA Published June 2016 NZEA Conf 2017 EEM 2018????? https://www.nzta.govt.nz/assets/resources/565/rr-565-pricing-strategies-forpublic-transport-part-2-literature-review-final-tar-11-11.pdf 2
1. Literature Review of 13 Quality Studies -NZ, Australia, UK, USA, Norway - 1992-2010 Value of Package of Improvements to Vehicle & Stop/Station Statistic In-vehicle Time mins / Trip Vehicle Percent of Fare Stop/Station In-vehicle Time mins / Trip Percent of Fare Mean 7.3 34% 9.8 41% Median 4.3 27% 5.7 25% Inter-Quartile Range 3.4-7.4 14% - 54% 4.2 10.7 10% - 58% Observations 17 16 12 9 3
2. Onboard Bus & Train Survey: Two short self completion questionnaires Stated Preference Survey Willingness to Pay For Vehicle & Stop Quality Travel Time and Service Frequency Rating Survey Unpack Overall Vehicle/Stop Rating into attribute ratings Value of Service Quality Attributes Vehicle/Stop Description Explain Ratings in terms of vehicle/stop attributes & passenger characteristics 4
Sample Sizes 5
Stated Preference Questionnaire 6
Willingness to Pay varied by route Exactly 50:50 Wellington Airport Flyer So Median Value of Time $7.50/hr Christchurch Bus Wellington Bus Wellington Rail Auckland Bus Auckland Rail 7
Model 8
Parameter Estimates ALL SI Dif -0.036 IVT Dif -0.060 Fare Dif -0.366 Stop Quality Dif -0.958 Vehicle Quality Dif -1.142 Concession Fare Constant -0.879 Constant -0.303 t Values ALL SI Dif 36.0 IVT Dif 30.0 Fare Dif 33.3 Stop Quality Dif 29.0 Veh Quality Dif 22.4 Concession Fare Constant 14.4 Constant 7.8 Observations 39,865 Interviews 5,057 Relative Valuations ALL Service Interval / IVT (mins) 0.60 Value of Onboard Time $/hr 9.84 Max Stop Quality / IVT mins 16 Max Vehicle Quality / IVT mins 19 Vehicle Quality Percent of Av IVT 70% Stop Quality Percent of Av Fare 66% Vehicle Quality Percent of Av Fare 78% Average Fare ($/trip) 3.98 Average Trip (IVT mins) 27 Estimated Basic Model SI/IVT = 0.6 Value of Time = $9.84/hr Compares with median of $7.50 Compares with $5.60/hr in Econ Eval in 2013 Max Stop Quality (VP-VG) = 16 mins Max Vehicle Quality = 19 mins But 40% to 80% = practical range Stop Value = 5 mins Vehicle Value = 6 mins Literature Review Median Values Stop = 5.7 mins Vehicle = 4.3 mins 9
Reflects waiting time & timetable inconvenience (displacement) Marginal function requires care in use (i.e. totals) 1. Curvilinear Service Interval Function Random arrivals wait half the headway Look at timetable Plan arrival & wait less SI value reflects displacemen 2. Value of Time increases with income From $5/hr zero income To $18.50/hr at 135k p.a. Wait 7.5 mins when Buses every 15 mins 3. Max Vehicle Quality (0%-100%) increases with trip length = 4 + 0.5(IVT) so 20 min trip = 14mins (0%-100%) 4. Max Stop Quality (0%-100%) Boarding = 6+1xWAIT, Transfer = 4 +1xWAIT, Station Alight = 4 mins, Bus Stop Alight = 0 10
Rating Questionnaire Vehicle Ratings SP Questionnaire High fidelity for explanatory models SP had 5 Levels Also familiarity Hotels Restaurants Films Rating A5 front and back Stated Preference 4 page A5 booklet Both Self completion honest on the day experience based ratings & only way to survey on bus 11
Overall Rating of Different Vehicles Top Train slightly better than Top Bus But are Trains & Buses strictly comparable? Intrinsic preferences Worst Train better than Worst Bus 12
Explanation of Overall Vehicle Rating Parameters Estimates are percentage rating effects Brand new train Linear Variable Beta STE t Bus -0.169 0.018 9.4 Vehicle Age (years) -0.0188 0.0006 30.8 Bus*Age (years) 0.014 0.001 18.7 Bus * Seats (number) 0.0012 0.0004 3.1 Bus * Premium Bus Route 0.067 0.009 7.4 Auckland 0.024 0.004 6.0 Trolley Bus 0.027 0.011 2.5 PM Peak -0.024 0.004 6.0 Entertainment/Holiday 0.038 0.007 5.8 Visit Friends Relatives 0.018 0.006 2.9 Female 0.016 0.003 5.3 Retired 0.055 0.007 7.4 Aged under 18-0.035 0.006 6.3 Aged 18-24 -0.019 0.004 4.8 Constant 0.837 0.068 12.3 a logit model was also fitted see report Vehicle Type Respondent Profile 13
Explaining Overall Vehicle Rating in terms of Attribute Ratings # Vehicle Attribute Averag e Attribute Importance Rating Direct Halo 1 Smoothness & Quietness 64% 14.5% 20% 2 Driver/Staff 73% 14.5% 7% 3 Outside Appearance 72% 13.5% 15% 4 Seat Availability & Comfort 74% 12.5% 10% 5 Environmental Impact 62% 10% 8% 6 Inside Cleanliness & Graffiti 75% 8% 5% 7 Ease of On & Off 77% 7% 7% 8 Heating & Air Conditioning 69% 7% 7% 9 Info & Announcements 64% 6% 7% 10 Space for Bags 66% 4% 6% 11 Lighting 75% 2% 4% 12 Ability to use your computer or electronic device / connect to 41% 1% 4% the internet (WIFI) Overall Rating / Total Percent 72% 100% 100% For longer distance rail services e.g. Wairarapa line, onboard toilet facilities at 2% direct and 2% halo should be included with reductions of 0.5% in the direct effect & halo effects of attributes 1-4. Average rating of toilet facilities was 76%. Model enables changes in individual attributes & packages to be valued Regression PrR ALL PrR Sydney Study addition: 1) Regress attributes on each other 2) Multiply coefficient by direct effect on overall rating 3) Note halo effect declines to zero with more attributes x x 14
Bus Stop & Train Station Ratings 15
Comparison of Overall Bus Stop & Train Station Ratings Albany Newmarket Naenae Taita Kenepuru Churton Park Ava 16
1. Explaining Overall Bus Stop Ratings Bus Stop Variable Beta t SHELTER +14% 12.5 SEATING +4.5% 3.5 TIMETABLE +3.3% 2.8 REAL TIME INFO +5.4% 6.5 RETIRED PAX +5.5% 5.1 RAINING -3.4% 3.3 CITY CENTRE -4.7% 5.6 SUBURBAN STOP -7.6% 9.9 WAIT TIME (mins) -0.3%/min 10.6 CONSTANT = BASE 54% 37.0 Models fitted on 7,232 observations (mean values input for shelter, seating, timetable and real-time info). Base group is a bus station, fine weather, non retired passenger, zero wait time. 2. Explaining Overall Station Ratings Rail Station Variable Beta t Off Peak Trip 3% 3.1 Entertain/Holiday Trip 4% 3.8 Retired Person 6% 3.9 House Person 5% 2.3 Car & Parker -3% 3.1 HUB station 12% 15.5 LOCAL station -3% 3.6 Upgraded within 10 years 7% 7.9 Upgraded within 5 years 3% 3.3 Constant^ 56% 73.8 Models fitted on 4,778 observations 3. Comparison of 2002 & 2012 Wellington Station Ratings 17
Stop/Station Attribute Importance Bus Stop Av Importance Attribute Rating Direct Halo Shelter 62% 23% 12% Seating 60% 23% 30% Information 68% 18% 7% Lighting 63% 10% 18% Clean / Graffiti 71% 26% 14% Total 66% 100% 81% Rail Station Attribute Av Importance Rating Direct Halo Platform Shelter 52% 14% 11% Platform Seating 45% 11% 8% Platform Surface 56% 9% 9% Ease to/from Platform 70% 9% 8% Timetable & Announce 59% 9% 9% Lighting 57% 7% 11% Cleanliness & Graffiti 56% 19% 15% Toilet Availability & Cleanliness 34% 1% 1% Staff Avail/Helpfulness 55% 2% 2% Ability to buy food, drinks, paper 39% 4% 4% Ease of Ticket Purchase 53% 8% 14% Car Parking & Drop Off 57% 7% 12% Total 66% 100% 104% Ease of bus transfer was included in the survey but was only significant for bus transfer passengers (8%). Bus stop facilities can be assessed separately. 18
5 Step Methodology for Economic Evaluation of Improved Quality Step 1: Determine the maximum value of quality (i.e. from very poor to very good E.g. Max VQ = 4 + 0.5 x IVT Use time not dollars (NZTA equity VOT) Step 2: Calculate the proportion of the maximum value for the improvement Step 2a: For attributes (packages) Determine the change in overall rating using the direct and halo effects Step 3: Apply the change in rating (transformed using 0.7 power parameter) to the maximum value of quality Step 4 :Forecast new users and total benefit -4.1 Use Cost of Quality (mirror image) -4.2 Calculate Generalised Time Measure -4.3 Calculate IVT Elasticity -4.4 Calculate GT Elasticity -4.5 Calculate Percentage Change in GT -4.6 Apply GT Elasticity to Change in Demand -4.7 Calculate New Users Before (2013) After (2015) Step 5: Calculate total benefit to existing and new users (rule of a half) and apply EEM value of time Glenmore Street Wellington 19
Comments/Questions The electric (trolley) buses are great but need a bit of a spruce up Should be able to take pets on buses Valuing PT Quality using Ratings & WTP Surveys NZEA Conference 2017 20