AFC system- Fare Policy

1.1 Fare Scheme and 1.2 Concession Policy

Basically this is a topic most related to resident yet a quite complicated one. Most importantly it is out side of my profession, I realized. However, I force myself to write something.

Both Fare Scheme and Concession Policy can be considered as a upper topic, Fare Policy. A fare policy is made up of basic fare strategy, payment method(product) and pricing level. Basically the combination of this three forms the fare of the trip. Usually, based on the O/D, a pricing level (from a fare table) multiply a product fare factor(for example a pass is 70% of a SJT for the same OD), multiply a pricing level for this card profile--which should be the patron profile---then the fare come up last is the fare you pay for this trip.

That discount of fare according to different patron profile is pricing level.The Pricing level is a part mostly related to equity, this make sure different segment of passenger(elder, children, short-trip patron, long-trip patron)is charged differently. Based on the general pricing strategy, the price is multiplied(processed) with a percentage to customize the fare according to different patron characteristics. 

The payment method influences the finance stability of an agency, and fare collection cost and thus administration effort of the agency. Payment method here means how passenger pay for the ride: store-value, post payment, cash, multi-ride, pass. To achieve the highest finance stability and lower fare collection effort, agency mostly offer discount for mluti-ride and store-value card(one kind of prepayment) as an incentive.

Basic Fare Strategy is a "big" word. It cover topics including basic pricing model, inter-agency pricing, etc.

Here is just a tip of an iceberg. A pricing model can be flat fare(most simple and popular), distance-based, O/D-based, time-based, zone-based. To pursue equity and the best balance between ridership and revenue, the agency should opt to choose a comprehensive pricing model. To achieve higher infrastructure utilization rate, the agent can adapt highest fare on single journey ticket(most used by traveler) in the peak-of-peak hour. 

A fare policy is one of the most important part of a pubic transit program since it is linked with the massive patrons. It is easily subject to criticism even for a moderate adjustment of fare, yet transit fare is the critical revenue stream  of an operation company. Therefore, it is important for the operation company to plan and implement an all-rounded fare policy. Usually, agencies setup principle of their fare policy as a guide to a further study. The Principle usually goes like:

1. Develop fare more understandable to patron

2. Charge fares associate with level of service

3. Achieve high revenue while maximize ridership

4. encourage cost-effective fare media

Modern e-payment technology like smart card, open-payment system facilitates the introduction of a more elastic pricing program. Now when agency design the fare policy, they can introduce partnership programs to university, private sector to maximize their revenue. Another issue agency needs to consider is the fare policy in different mode of transportation, and between different agencies. This will be further discussed in the topic-inter-operation of different mode of transportation.

  

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