470511903

If people are equal, why do different class fares for urban

public transport exist?

Have you ever squeezed yourself into a bus at peak hour, and wondered whether such a sardine can-
like situation would have happened if all passengers paid equally by doing away with travel
concessions? Such a move would limit unnecessary travel and ease up capacity, and resources used
for concessions can be used in up improving the system’s capacity and quality of service, right?

Price Differentiation in Urban Public Transport

Price differentiation in urban transportation may come in different forms, and may vary based on the
distance travelled, the time when travel is done, based on costs incurred in serving the passengers,
based on the routes used, or based on the patrons’ ability to pay, or sensitivity to price changes.1 Such
strategies are implemented in order to maximize cost recovery, maximize profits, increase levels of
service, and resource allocation efficiency. 2 Price differentiation mechanisms based on “class” or
group segmentation, are used either to account for different variations of a transport service (e.g.
coach seating or first class), or to promote equity and inclusion - for example, concessionary fares for
disadvantaged groups. The latter is of much interest in terms of policy discussions and would make
for a good dinner conversation topic as it involves the use of subsidies.

Concessionary Fares as a Price Differentiation Measure

Granting of concessionary, or discounted transit fares to disadvantaged segments of society is a
common urban public transport pricing intervention that aims at easing mobility-constraints of such
segments by making public transport more affordable.3 In the case of New South Wales (NSW), for
example, concession entitlements are provided to pensioners, veterans, eligible school students,
vision impaired, asylum seekers, for instance. 4 The provision of discounted fares may also improve the
viability of public transport systems, by increasing ridership, as well as contributing towards less
pollution-intensive transport system by incentivizing the use of alternative modes to a car. 5

One might ask “isn’t a flat fare structure necessary for upholding equality for everyone?” The concept
of equality, in this case, should be viewed within the context of the ability to access opportunities, and
avoiding discrimination due to the ineptness of the system to account for the needs of the more
vulnerable segments of society.6 As urban public transportation plays a key role in either enabling or
deterring social participation and inclusion, viewing it under the lens of equity or fairness, is necessary.
Equity refers to how resources and impacts, in this case, those related to urban public transportation,

1 Jui-Hsien Ling, “Transit Fare Differentials: A Theoretical Analysis” Journal of Advanced Transportation 32, No.3 (1998): 297
https://onlinelibrary.wiley.com/doi/pdf/10.1002/atr.5670320304
2 Nils Fearnley, “Efficient Pricing of Urban Public Transport with Budget Constraints” 9th Conference Competition and Ownership in Land Transport (2005): 6

http://www.thredbo-conference-series.org/downloads/thredbo9_papers/thredbo9-workshopC-Fearnley.pdf
3 Donald Houston, Sara Tilley. Fare’s Fair? Concessionary Travel Policy and Social Justice”, Journal of Poverty and Social Justice. Vol 24 No 2 (2016):

http://eprints.gla.ac.uk/116808/9/116808.pdf
4 New South Wales Government. “About Opal,” accessed May 8, 2018, https://www.opal.com.au/en/about-opal/
5 Disa Aspund, Roger Pyddoke, “A new model for analyzing differentiated fares and frequencies for urban bus services in small cities : Case study for the city of

Uppsala” (2017): 31.

http://www.k2centrum.se/sites/default/files/fields/field_uppladdad_rapport/a_new_model_for_analyzing_differentiated_fares_and_frequencies_for_urban
_bus_services_in_small_cities_2017_8.pdf
6 Australian Human Rights Commission. “Your rights at retirement,” accessed May 8, 2018, https://www.humanrights.gov.au/publications/your-

rights-retirement/2-your-right-be-free-discrimination
 470511903

are distributed.7 It may concern the distribution of such between those who have the same ability and
needs, as well as between those who differ in terms of ability to pay, mobility ability, and needs.8

Concessionary travel is much welcomed by the riding public, particularly by those who directly, or
indirectly benefit from it. However, concerns regarding its effectiveness in delivering maximum
benefits to society in general abound. As mentioned, there might be perceptions that the system is
unjust as others are paying higher prices than others. Complexities in pricing may also potentially be
a barrier to taking public transport. 9 Others may argue that the subsidies used for concessions may
have been used in other initiatives that would have resulted in greater welfare for the targeted
segments.10 In 2017, for example, the NSW government allotted 16.4% of the budget for public
transport services on concessions. That’s 1.2 billion dollars which could have been spent on other
matters, including capacity expansion and improvement projects. There may also be significant
leakages, as mechanisms for ensuring that the targeted groups are the ones benefitting are not
perfect. It’s also easy to criticize, as the costs are quite explicit, while the benefits are much less
evident and difficult to quantify.11 Existing evidence suggests, though, that significant benefits may
result in such schemes. A cost-benefit analysis of the concessionary bus travel in the UK, for example,
shows that for every pound spent yields at least 2.87 pounds in benefits. 12

The Counterfactual
Getting rid of concessionary fares and embracing a public transport fare structure that disregards the
issue of equity entails imagining an alternative scenario that provides for potential radical changes in
society. Social isolation of the elderly, for example, may be aggravated. The proportion of school, and
work journeys done through private cars may substantially increase, thus adding to road congestion,
and pollution. The rationale for intensifying public transport investments may be watered down, as
ridership will be affected, which may further feed the argument for prioritizing a car-centric future.
Disposable incomes will be affected and may hamper efforts towards a more just and equitable
society. While resources used for concession subsidies may seem substantial and making a case for
flat public transport fares deserve a closer look, these should all be taken within the context of the
order of magnitude of the potential societal, economic, and environmental costs of the counterfactual
scenario.

7 Shaowu Cheng, Quan Gao, Yaping Zhang, Evaluating the Impacts of Bus Fare on Social Equity Based on IC Card Data in China. Sustainability 8 1032 (2016): 5,
doi:10.3390/su8101032 DOI 10.1007/s11116-016-9695-5
8 Victoria Transport Policy Institute. Evaluating Transportation Equity Guidance for Incorporating Distributional Impacts in Transportation Planning (2018): 4.

http://www.vtpi.org/equity.pdf
9 Nils Fearnley, “Efficient Pricing of Urban Public Transport with Budget Constraints” 9th Conference Competition and Ownership in Land Transport (2005): 10

http://www.thredbo-conference-series.org/downloads/thredbo9_papers/thredbo9-workshopC-Fearnley.pdf
10 Roger Mackett, “Has the policy of concessionary bus travel for older people in Britain been successful?” Case Studies in Transport Policy, 2, 81-88, doi:

doi:10.1016/j.cstp.2014.05.001 14
11 Oded Cats, Yusak Susilo, Triin Reimal, “The prospects of fare-free public transport: evidence from Tallinn. Transportation (2017) 44: 1089 https://link-

springer-com.ezproxy1.library.usyd.edu.au/content/pdf/10.1007%2Fs11116-016-9695-5.pdfexp
12 Greener Journeys. The costs and benefits of concessionary bus travel for older and disabled people in Britain.
 470511903

REFERENCES
Aspund, Disa and Roger Pyddoke, “A new model for analyzing differentiated fares and frequencies
for urban bus services in small cities : Case study for the city of Uppsala” (2017): 31.
http://www.k2centrum.se/sites/default/files/fields/field_uppladdad_rapport/a_new_model
_for_analyzing_differentiated_fares_and_frequencies_for_urban_bus_services_in_small_citi
es_2017_8.pdf

Australian Human Rights Commission. “Your rights at retirement,” accessed May 8, 2018,
https://www.humanrights.gov.au/publications/your-rights-retirement/2-your-right-be-free-
discrimination

Cats, Oded, Yusak Susilo and Triin Reimal. “The prospects of fare-free public transport: evidence
from Tallinn. Transportation (2017) 44: 1083–1104 https://link-springer-
com.ezproxy1.library.usyd.edu.au/content/pdf/10.1007%2Fs11116-016-9695-5.pdfexp

Cheng, Shaowu, Quan Gao and Yaping Zhang, Evaluating the Impacts of Bus Fare on Social Equity
Based on IC Card Data in China. Sustainability 8 1032 (2016): 5, doi:10.3390/su8101032 DOI
10.1007/s11116-016-9695-5

Fearnley, Nils. “Efficient Pricing of Urban Public Transport with Budget Constraints” 9th Conference
Competition and Ownership in Land Transport (2005): 6 http://www.thredbo-conference-
series.org/downloads/thredbo9_papers/thredbo9-workshopC-Fearnley.pdf

Greener Journeys. The costs and benefits of concessionary bus travel for older and disabled people
in Britain.

Houston, Donald and Sara Tilley. Fare’s Fair? Concessionary Travel Policy and Social Justice”, Journal
of Poverty and Social Justice. Vol 24 No 2 (2016): 187–207
http://eprints.gla.ac.uk/116808/9/116808.pdf

Ling, J. “Transit Fare Differentials: A Theoretical Analysis” Journal of Advanced Transportation 32,
No.3 (1998): 297-314https://onlinelibrary.wiley.com/doi/pdf/10.1002/atr.5670320304

Mackett, Roger. “Has the policy of concessionary bus travel for older people in Britain been
successful?” Case Studies in Transport Policy, 2, 81-88, doi: doi:10.1016/j.cstp.2014.05.001
14

New South Wales Government. “About Opal,” accessed May 8, 2018,

https://www.opal.com.au/en/about-opal/

New South Wales Government. NSW Budget 2017-2018 Budget Paper No. 3 Budget Estimates. (n.d.):
10-6 https://www.budget.nsw.gov.au/sites/default/files/budget-2017-06/2017-
18%20Budget%20Papers%20-%20Budget%20Paper%20No.%203%20-
%20Budget%20Estimates-2.pdf

Victoria Transport Policy Institute. Evaluating Transportation Equity Guidance for Incorporating
Distributional Impacts in Transportation Planning (2018): 4. http://www.vtpi.org/equity.pdf
 470511903

UNIT OF STUDY ITLS 6 1 0 3 GROUP

STUDENT ID NUMBER 4 7 0 5 1 1 9 0 3

MARKING CRITERIA
INDIVIDUAL ASSIGNMENT 2: OP ED

CATEGORY CRITERIA WEIGHT MARK/10 COMMENTS

All issues are addressed

10%
Completeness
and Relevance Arguments and discussion
(30%) are relevant throughout 10%

There is a logical and

coherent argument 10%

Structure, readability,
spelling and grammar. 20%
Organisation –
(30%)
Referencing system is
consistent and appropriate 10%

Quality of personal critical

comments and arguments
20%

Research and
Evidence of adequate
Synthesis
reading 10%
(40%)

Evidence of clear
understanding of the topic
10%

TOTAL MARK 100% GRADE:

Comments