Analyzing Changes in Revenue of Subway Organizations according to Bus Fare Increase in Seoul Metropolitan Area

Abstract

Seoul metropolitan area has adopted an integrated transfer and distance-based fare system that allows transfer discounts between different modes of travel. Given that the revenue allocation in the context of the integrated transit system is based on the revenues proportional to the basic fare, an increase in the basic fare of a certain mode is closely linked to the revenue allocation. A rise in the basic fare of a certain mode has caused a collective increase in the allocation of revenues derived from a transit mode with a fixed base fare. A reduction of that fare, on the other hand, has driven down the revenue allocation. Under the circumstance, the lack of a systematic approach to analyze the public transport revenue has made the transport planning authorities nothing but passively respond to the current pricing policy. In other words, a need has arisen to address the limitations of the current methodology of analyzing the transport card data. This paper aimed to analyze the effects of a fare increase of a transport mode on the revenue sensitivity of the other modes. To that end, this paper developed a methodology to calculate costs and revenues based on the order in which transfers were made between different transport modes using the transport card data. In terms of the use of inter-urban metropolitan bus services, this study simulated the effects of the basic bus fares that rose by 100KRW to 600KRW on the revenue from subway fares. The results indicated a reduction of the basic fare distribution ratio due to the decrease in the subway revenue when the base fares for buses increased by 100KRW. This was also evident when the paper reviewed that the Seoul Metro which accounted for 88.1% of the total revenue reduction and experienced a decrease of 7.7million KRW (approx. 2.8billion KRW/year). When fares were increased by 200KRW or more, the increase in the basic fares exceeded the basic fare distribution ratio, which, in contrast, caused a decrease of up to 500KRW for some of the other private train operators. The methodology evaluated in this study may be applied to the policy support systems related to the integrated distance-based pricing scheme in metropolitan areas using the transport card data in the years to come.