Public Mass Transportation

PUBLIC MASS TRANSPORTATION

Dear Consultant:

As a new member of the Board of Directors for the Mythaca Bus Company, you want to balance the desires of the traveling public, public officials, and taxpayers. Several issues will soon come before the Board, and you want to be ready to consider them in an informed and rational manner. The exercises below will prepare you for the upcoming votes of the Board.

Please complete the exercises below completely and clearly. Show your calculations clearly. You may submit your assignment as a member of a group of CE361 students not to exceed three in size. Signatures of all group members must appear on the top page of the work submitted.

1. Transit ridership forecasts. Average daily ridership for the Mythaca Bus Company is 10,253. The base fare is $1.00. The MBC staff is recommending that the base fare be raised to $1.50. The most recent fare change was from $0.75 to $1.00 in 2001. After that fare increase, average daily ridership dropped from9251 to 8241. Since then, the average daily ridership has grown gradually to 10,253.

A.(10 points) Elasticity of demand with respect to fare. Using the shrinkage ratio equation, calculate the fare elasticity in Year 2001. Was the demand elastic or inelastic in Year 2001?

B.(10 points) What will average daily ridership be if the current base fare is raised to $1.50, assuming the Year 2001 fare elasticity applies? How will fare revenues change as a result of the fare increase?

C.(5 points) If the Board members do not want the average daily ridership to drop below 9000, what is the maximum possible value (to the next lower $0.01) of the new base fare?

D.(10 points) Service elasticity. What if a change in service is proposed, instead of a fare increase? In a city similar to Mythaca, average daily ridership dropped from 8722 to 7150 last year after bus schedule frequency went from four times per hour to twice per hour.

• Calculate the elasticity of demand with respect to frequency for that “similar city”.
• Calculate the elasticity of demand with respect to headway for that “similar city”.

E.(10 points) If MBC were to reduce its service from four times per hour to twice per hour, and if the service elasticity from the “similar city” applies, what would be the average daily ridership in Mythaca? If the current MBC operating costs are $42,000 per day, compute MBC’s farebox recovery ratio before and after the proposed service change. Assume that every one percent reduction in service causes a one-half percent reduction in operating costs.

1. Transit performance measures. Go to and click on “Modes of Transportation”, then Indiana Public Transit Annual Reports. Using the 2005 Indiana Public Transit Annual Report, …

1. (10 points) Update the Lafayette row in FTE Table 10.4.
2. (5 points) Compute the fuel consumption rate (mi/gal) of vehicles in the Lafayette fleet.

1. (15 points) Life-cycle cost calculations. Repeat the analysis in FTE Table 10.6, but with fuel $/gal = 2.0812.