The Case for the Urban Bus
7.69. The D&H model expressed per capita bus patronage as a function of real per capita income, real bus fares, bus vehicle kilometres, real motoring costs and demographic variables. Fare was defined as the average fare-box revenue, excluding concessionary reimbursement, divided by the number of passengers. 7.70. D&H tested both constant elasticity and variable elasticity models and found more statistical support for the latter. They also tested constrained and unconstrained models, the latter allowing fare elasticities to vary by local authority area. We have adopted the variable elasticity, constrained model results, which give average England-wide point fare elasticities in 1995 prices of: -0.41 (Short-run) -0.86 (Long-run) 7.71. These figures are England-wide averages although D&H also estimated separate constant elasticities for metropolitan areas and English shire counties: -0.26 (SR; Met areas) -0.54 (LR; Met areas) -0.49 (SR; Shire counties) -0.66 (LR; Shire counties) 7.72. These figures give lower average elasticities than the variable elasticity model and also suggest that the difference between met areas and shire counties are smaller in the long run than in the short run. We weighed up this contrasting evidence and decided to adopt met area point elasticities (in 1995 prices) of: -0.3 (Short-run) -0.75 (Long-run) 7.73. In order to calculate variable elasticity demand model parameters in 2011 prices, we need to know the average fare (more rigorously speaking, average revenue per trip) from the dataset on which the original models were estimated as well as a comparable average fare in 2011. D&H quote an average fare in 1995 prices of 56p for the entire study area, the DfT Bus Statistics Table BUS0405a provides an index of bus fares going as far back as 1995, which also provides information on metropolitan area fares relative to the national average, and we can obtain current average commercial fares from farebox revenue data (DfT Bus Statistics Table BUS0501). In order to be able to estimate fares by market segment, we assumed concessionary and child fares were 70% of the average revenue per trip in 1995, and child fares were 50p in 2011 (equivalent to around 70% of the average farebox revenue per trip). 7.74. Based on the information above, we estimated the average revenue per trip in metropolitan areas in 1995 (53p) and 2011 (73p) as well as the average fare for each market segment (respectively, 65p and 115p, for adult non-concessionary passengers) – preceding figures are in current prices. 7.75. Having inferred average fares by market segment, as well as short and long run point elasticities for the metropolitan market as a whole, we proceeded to estimate the demand function parameters for each of the market segments under consideration. 7.76. For older and disabled concessionary pass-holders, we used the results from the DfT‟s research into Concessionary Reimbursement (Institute for Transport Studies 2010), from
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