Author(s): Supriya Ghosh Mathematics Public Transportation Fare Model is not transparent — Here are some key insights for Fare calculation Source : https://unsplash.com/photos/_vBjaSqDJrY Fixing fare for a public transportation system is very challenging and is always inclined towards social service or public welfare. While there are many modes of public transportation, this article will focus on the Bus Fare Model. Public transport’s operating costs are rising due to fluctuating currencies and fuel prices, as well as the increasing cost of spares. However, increasing fares can be difficult due to political pressures and economic conditions. If operating costs continue to rise and are not balanced by an increase in fare, the result is that profit margins begin to fall. This directly impacts the bus operators/owners. A proportionate rise in fare, in combination with an increase of cost to balance the margins and ultimately revenue is desirable. This is not the only problem. Fare increases are often made to offset revenue loss. People who travel long distances or use multiple buses to get to their destination will find that transportation costs are very high. It can become so expensive that people don’t want to travel. They prefer to stay in their home town and continue working from it. In the end, this means that the income per person or per capita income also falls. The per capita income of an individual falls, which can have a negative impact on their savings and economic growth. So increasing fares has multiple implications and can’t be done often. It is important to find a sensible way to increase passenger fares. This will allow the market to fluctuate in input costs, but not cause economic distress for commuters. We must find a way to balance. Buses are usually owned by and run by private taxpayers. The government controls the fare rates to stop them charging commuters arbitrarily. This article will cover one method of fixing fares for public transport. There are many other methods available, but I’ll be focusing on the Formula based Empirical Approach for our calculations as it is the most commonly used. Let me first give you an overview of the cost component of the Bus Transport System. Now let’s calculate the multipliers individually for each component. Multiplier is an acronym that denotes the numeric value of each component. It can be used to calculate further. 1. For fuel cost, calculate Fuel Multiplier. To determine the Fuel multiplier we must consider the following factors: the First is the Fuel Price Increase Rate, and the Second is Efficiency Equation. This is the number of times that the fuel price has increased from the last fare revision. This is the Bus’s current Fuel Efficiency. The current Fuel Efficiency of the Bus changes based on how Bus performs under different traffic and road conditions. We will not be discussing the Linear Regression method that is used to calculate number 4. To cover this topic, I will write another article. 2. WPI Multiplier to Operation and Maintenance Cost (Wholesale Price Index). This indicates how much the WPI has risen since the last Fare revision. 3. CPI Multiplier to Staff and Other Cost indicates how much the CPI has risen since the last Fare revision. 4. The Investment Multiplier to Capital Cost Investment Multiplier = This is the difference in Actual Capital Cost of Buses compared to the Standard Cost. This is how I explain it further. Let’s say that the actual money used to buy the Bus costs 3 million. If the Standard, or baseline price set by the Government authority for the Bus category is 2.5 million, our Investment Multiplier is 3/2.5 =1.2. The final Empirical Formula for Fare Increase is: Fare Revision Multiplier = 0.75 Fuel Multiplier (+), 0.1 WPI Multiplier ( (+), 0. 25 CPI Multiplier (+) 0. 15 CPI Multiplier (+) 0. 25,, and 0. 15 numbers multiplied by Multipliers are a portion of the individual cost components shown in the table. This can also be represented as : Source : https://unsplash.com/photos/0SkI8mNcVsI and https://unsplash.com/photos/s8u1Gv2uF3o Now let us consider an Illustration depicting a Case. Calculating the New Fares for various Fares slabs/Stages using the above-calculated Fare Revision Multiplier. The table below shows the Fare Revision (New Fares) calculated at various multiplier levels. The Fare stage and fare can be chosen at random and customized according to your needs. Multiplying the lower multiplier ranges in each column by the base fare value to calculate standard Fare is done. The first column multiplier range is 1. 01 multiplied with Fare value 6. — 1. 01 6 = 6. 06 The second column multiplier range is also 1. 11 6 = 6.66. It is 1. 11 8 = 8. 11 8 = 8. The multiplier in the illustration is 1. 14, It lies within the range 1 .11-1. 20, The green highlight indicates the new fare, after revision. Disclaimer: There are many ways to calculate Fare. They are all used according to the circumstances and situations. This is the easiest way to calculate Fare. Each country and state has its own method of calculation. This will help you understand the basic concept. This concludes my remarks. I hope you found this useful. Follow me on LinkedIn at Suriya Ghosh and Twitter @isupriyaghosh. The public transportation fare model isn’t transparent. Here are some key insights. This story was published originally in on Medium. People continue the discussion by highlighting it and responding. Published via
