Fare policies:a tool for improving the financial performance of Malayan railway

Abstract

This thesis is concerned with improvement of Malayan Railway revenue performance through a fare policies approach utilising the elasticity of demand concept. The latter is developed, albeit experimentally, beyond the rudimentary framework of most previous transportation studies. Its application to MR is opportune, since MR finds itself trapped between Government pressure to become self-sustaining through profitability rather than depend upon subsidies, and its enforced exclusion from taking market-orientated decisions for optimising operational efficiency. The thesis examines relationships between changing fares and changing demand, using the concept of elasticity. Data currently available in MR is proved inadequate for the in-depth analyses required to obtain a realistic elasticity estimate for any service. Analysis of studies of other railway systems contributes to providing a range of elasticity estimates for MR. These are used to simulate both a series of percentage fare increases in selected services, with resultant changes in demand and their revenue effects; hence the viable range of options open to MR in the proposed fare experiment. The passenger opinion Surveys are used in order to determine the actual characteristics of MR services and their passengers. They also provide guidelines for trying out SP methods in the Malaysian context by taking into account the costs and the cultural problems. The study concludes that MR needs to take specific action in order to improve its financial position — in this case to implement an experimental series of fare changes in selected services for about one year. In order to forecast demand and refine elasticity estimates, regular surveys of existing and potential passengers are suggested, using both revealed and stated preference methods for analysis. It follows that Government needs to delegate more decision-power to MR management, allowing it greater freedom to adopt measures aimed at increasing profitability in its services. At the same time, it is hoped that greater responsibility, commitment and productivity will thereby be encouraged among existing MR personnel.