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Summary A fare structure comprises the full range of fare policy measures short of a blanket fare rise or reduction. These elements include:
Price elasticities are an important consideration in the design of fare structures because they determine the change in demand that will occur as a result of a change in the fare level. If demand is price elastic then it will change significantly as a result of a given change in fare; if demand is price inelastic then all other things being equal it will not change as much. Price elasticities vary across different segments of a market. Factors that affect price elasticities include income levels, service quality, competition from other modes, age and sex, and journey purpose, to name but a few. A fare structure whose primary design motive is profit maximisation will look different from one which has been designed with welfare maximisation in mind. A public sector operator is likely to operate a fare structure that is closer to the welfare maximising model, whilst a private sector operator would be primarily interested in maximising profits. The characteristics of the profit maximising and welfare maximising models are described along with their likely impacts on key objectives and problems. A variety of case studies are examined from continental Europe, the UK, Asia and the US. The impacts of each case study on key problems and objectives are considered. The effectiveness of each policy element across case studies are also summarised.
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