Travel Cost Budget and Ability of Urban Bus Users to Pay Considering the Income Classes in Indonesia

The Bus Reform policy known as Trans Koetardja was adopted and implemented in Banda Aceh of Indonesia in early 2018 to promote bus ridership and to specifically mitigate the dependency on private means of transportation. This system is presently being run as a trial and free of service charge through the subsidy provided by the government of Aceh with the amount being spent projected to escalate by the year 2020 due to expansion in the number of bus lines. There is, however, the plan to introduce bus fare to ease the burden of subsidies on the government but most of those engaged in the ridership are generally students and people from low-income households. Therefore, there is the need to determine an appropriate charge or tariff based on the household's ability to pay (ATP), especially with the focus on the need for low-income people to sustain the subsidy for their daily travel. This study was conducted to determine the ability to pay (ATP) for bus users through the use of travel cost budget (TCB) which is defined as the maximum money allocated by a household for transportation within a month as a constraint. The TCB was classified based on income classes into low-income and medium-high income to ensure simplicity. The research was conducted in 2019 by collecting 450 samples from three Trans Koetardja lines using reveal preference (RP) survey after which Ordinary Least Square (OLS) method was adopted to identify the factors significantly contributing to TCB based on the income classes. Moreover, the ATP for each income class was also determined using the household budget method. The empirical results from the OLS showed the TCB usually allocated by medium-high income households is slightly different from those with low-income as observed with 0.306 million IDR/month (20.85 USD/month) and 0.208 million IDR/month (14.17 USD/Month) while the predicted ATP was 7,397 IDR/trip (0.5 USD/trips) and 2,259 IDR/trip (0.15 USD/trips), respectively. It is, however, important to note that 1 USD = 14,677.73 IDR. Furthermore, the factors observed to be influencing the variation in TCB include age, monthly income, gender, and the number of private cars or motorcycles owned within the household.