Fare System of Urban Public Transportation Services in Davao City, Philippines

A model of modal choice and destination choice was developed to simulate urban travel demand in Davao City, Philippines, and to evaluate fare-setting scenarios relevant to the possible introduction of a new public transportation (PT) system. This nested logit model, combining modal choice and destination choice, was estimated with local person trip survey data collected in 2015 that included data points on 3,531 households, 7,639 individuals, and 15,372 trips. Then, six fare scenarios were developed, incorporating four elements of the fare system, boarding charge, per-kilometer charge, charge distance, and transfer charge, based on the fare system in use in the Philippines. Five evaluation indexes were then applied: average individual benefit, new PT operator’s profit, social surplus, modal share of PT, and regional equity with respect to accessibility. The results demonstrated that ( a) a lower fare increases an individual’s benefit from the trip, ( b) a new PT operator’s profit assumes positive values in a wide range of fare scenarios, ( c) a lower fare improves net social surplus, ( d) a lower fare leads to higher modal share of PT, and ( e) a higher fare tends to compromise the regional equity of accessibility. These results also suggest that from the viewpoint of enhancing social surplus, increasing the boarding charge is a preferable strategy at a higher fare level, whereas the mitigation of the per-kilometer charge is a preferable strategy at a lower fare level.

Unbundling services: the route to profitability for airlines in India

Purpose – This paper aims to explain how airlines in India and customers can both benefit by the unbundling of services. Design/methodology/approach – The paper explores how a recent regulatory change allowing unbundled services will affect the airline industry in India. Using illustrations, it highlights the benefits to the airlines and to the customers. It recommends the strategies that airlines can follow. Findings – Airlines in India can now offer unbundled services. However, regulatory authorities need to allow greater flexibility to airlines. Given more flexibility, airlines can design offerings that will improve their profitability while simultaneously benefiting customers. Practical implications – The government needs to go beyond the current regulatory changes. Providing increased flexibility will benefit both airlines and customers. Airlines would need to understand customers more intimately, experiment in the market, lobby for flexibility and develop strategic agility to benefit from the changed regulations on unbundled services. Social implications – It concedes that airlines can now design unbundled services such that only those customers who value a service get charged for the service. Those customers who do not need a service can get away by paying a lower fare. The government has taken the first steps in the right direction. Once it provides greater flexibility, the airlines in India can benefit significantly. Originality/value – The paper considers the unique context of the airline industry in India where recent regulatory changes are likely to make the industry more dynamic and improve profitability of airlines. It provides insights in to the challenges faced under the current system and recommends strategies for the government and companies to follow.