The effectiveness of differential pricing on route choice

Abstract

The use of differential pricing as a means of traffic management has been advocated by specialists in the field of transport for quite some time. Because of technical and political reasons, a full-scale pricing scheme for the use of road space has yet to be introduced. Applying the principle to a highly automatic rail system, however, is technologically much more feasible. The Mass Transit Railway Corporation of Hong Kong has implemented a so-called “revenue neutral peal pricing policy” after the completion of a second cross-harbour route- the East Harbour Crossing — in May, 1990. Passengers travelling from Kowloon to the central business district (including Jordon and Tsim Sha Tsui on the Kowloon side and stations from Sheung Wan to Causeway Bay on the Island side) during the morning peak hour are confronted with the following choice: either (i) make use of the Nathan Road Corridor and pay 80 cents on top of normal face; or (ii) take the less congested but in general longer route via the East Harbour Crossing and get a 80 cents discount. The present paper attempts to analyse the effectiveness of this differential pricing policy in diverting passengers from the overcrowded section to the less heavily utilized route. A personal interview survey comprising a total of 1094 successful cases was conducted for this purpose. The logit regression model was employed to analyse the route choice. It is found that income, habit and journey time are the most important variables determining the route choice. The effect of cost or fare difference, although large in terms of magnitude, is only marginally significant in the statistical sense. It is suggested that efforts to change the passengers' habit and measures to shorten the train transfer time at the Quarry Bay Station for the East harbour Crossing users would be more effective in achieving this end. This is especially the case given the current political development in Hong King which renders further enlargement of the price difference a highly difficult proposition.