Boosting Patronage: Fare Cuts vs Frequency Increases

[#Metro]

There is growing evidence that despite their headline / political appeal, cutting fares is a poor way to generate patronage compared against boosting service frequency. This is not surprising because travel is a derived demand - few people make trips simply for the sake of it.

There is now research in this area:

Effect of Price Reduction and  Increased Service Frequency on  Public Transport Travel
Journal of Public Transportation, Vol. 20, No. 1, 2017  https://digitalcommons.usf.edu/jpt/vol20/iss1/8/

A random effects meta-analysis of the results from 15 projects involving price reduction and 9 projects involving increased service frequency showed that both price reduction and increased service frequency generated public transport travels.

On average, the increased service frequency projects generated more travels by public transport than the price reduction projects. In the increased service frequency projects the proportion of travels generated by the increased frequency was strongly influenced by the size of the frequency increase. In the price reduction projects, we did not find a significant effect of the size of the price reduction on the proportion of travels generated by the price reduction. Finding that people's use of public transport was related to the extent of the service offered suggests they have a need for transport that can be fulfilled with public transport.

Although people appreciate lower fares in general, finding that use of public transport was not significantly related to the size of a price change suggests the effect of price change is uncertain.

Again, confirms the network/Mohring effect that is known for PT... the more people that can use it, the more useful it becomes for everyone. Economists find the fact that the price reduction did not stimulate demand 'puzzling' but it is not so - they are just failing to think of spatial and time effects - you cannot catch a service that does not exist - either in a particular place or at a particular time (or both), even if the ticket for the non-existent service is discounted!!

Finding that there is a strong relationship between the size of the frequency increase and the number of journeys generated is logical. If more departures mean more journeys, then even more departures should mean even more journeys, up to a point were lack of departures is no longer a barrier for choosing public transport.

These results from Norway suggest people had a need for transport that could be satisfied with public transport. Although we do not believe the demand for transport is unlimited, the results support the "demand follows supply" hypothesis. If public transport service was increased, people used public transport more. If public transport service was increased more, people used it even more. Chen, Varley, and Chan (2011) came to a similar conclusion when investigating data on public transport between New York City and New Jersey from the period 1996 to 2009.