OECD ITF Roundtable on Valuing convenience in public Transport

Valuing Convenience in Public

Transport in the Korean Context
September 13, 2013

Sungwon Lee, Ph.D.
Vice President
The Korea Transport InstituteContents
Ⅰ Valuing Convenience: An Empirical Case Study
Ⅱ Seoul’s Transport
Ⅲ Accomplishments in Public Transport Reforms
Ⅳ Discussions

I. Valuing Convenience: A Case Studyof Seoul
1. Needs for Scientific Transport Policy Intervention
2. Quantitative Policy Impact Analysis
3. Policy Implications

1. Needs for Scientific Transport Policy
Intervention
 Huge social costs due to transport:- Congestion cost alone exceeds 27 trillion won
annually (about 240 billion US dollars) in Korea
 We usually know about policy impact directions but
not about effectiveness- This requires quantitative policy impacts analysis- Econometric analysis on demand elasticities

Materialization Plan of Creative Economy inTransport Logistics

Social Costs in Transport Sector
Unsafe Traffic

Highest level of traffic accident death rate out of OECD (32 nations)- 2.64 death per 10,000 cars in ‘11 (OECD average death: 1.06 people)

Additional social expenses due to annual increase in congestion fee
Congested Road

- Congestion Cost : 25.9 Trillion Won(‘07) → 26.9 Trillion Won(‘08) → 27.7 Trillion
Won (‘09)

Road Traffic that

Road traffic takes up 94.4% of greenhouse gas emissions in transportation

Accelerates Global- Transportation Greenhouse Gas Emission in ’09년 : 82.56 million tons CO2eq (Road

Warming
Increase of Physically
Disadvantaged People

Traffic: 77.94 million tons)

Increase in physically disadvantaged due to entering the aging society- 12.418 million in ’11 (24.5%) → Expected to increase to approximately 13.120
million in ‘16 (25.7%)

Decrease in industry competitiveness due to additional logistics expense
High Logistics Cost

- National Logistics Cost in ’09 : 115.499 Trillion Won (Annual average increase ofabout 1.26%)

2. Quantitative Policy Impact Analysis* Stated preference methodology for impact analysis
of hypothetical transport policy measures- Bases for scientific transport policy intervention
 Econometric testing of transport policy related
hypotheses- Perceived vs. real cost of transport*Source: Sungwon Lee et al. (2008)

Valuing Convenience Concept and definitions of convenience in public
transport- Amenities- Comfort level- Time related attributes: headway, in-vehicle time As people are more and more addicted to privatemodes of transport, people demand more comforts
in public transports
 Importance of valuing convenience in public
transports

Table 1. Elasticities of Demand for Urban
Transportation
DemandAttributes

Fuel consumption

Elasticities

Short runLong run

OverallFuel price

-0.27

-0.73

-0.48

Car useFuel price

-0.33

-0.30

-0.39

Car ownership

Fuel price

*

*

-0.21

Car ownership

Car price

*

*

-0.87

Traffic

Toll fee

*

*

-0.45

Demand for bus

Bus fare

-0.30

-0.65

-0.41

Demand for subway

Subway fare

-0.20

-0.40

-0.20

Demand for rail

Railway fare

-0.70

-1.10

-0.65

Mass transit

Fuel price

*

*

+0.34

Car ownershipTransit fare

*

*

+0.10

Note: Short run means usually within a year, and long run means 5 to 10 years.
Source: UK Department of Transport

SP Methodology and Estimation
Results
 If variables are too numerous and too widely varied impossible to create all the possible sets of SPquestionnaires
 Use fractional factorial plan which analyzes only
main effects and guarantee the orthogonality ofvariables following Kocur et al.(1982) andHensher(1994)
 SP design of mode choice between passenger cars
and alternative modes of bus and subway
 Explanatory variables
 travel expense, travel time, and service levels

Table 2. SP Design of Mode Choice between
the Alternative Modes
Modes

Basic mode
(private
automobile)

Alternativemode(bus andsubway)Explanatory
variables# ofLevelsFuel price(per litter)

LevelsLevel 1

Level 2

Level 33

Current level(1,200 won)

Increase to1,500 won

Increase to
1,800 wonIn-vehicle time3

Current level

20% higher

40% higher

Monthly
parking fee

3

Current level(150,000 won)

40,000 won
higher

80,000 won
higherfare

3

400 won lower

200 won lower

Current level(500~1,000won)

In-vehicle time3

40% lower

20% lower

Current level

Out-vehicle
time

3

50% lower

25% lower

Current level

Congestion(comfortable)

3

No congestion

Mediumcongestion

High congestion

Note: US $ 1.00 is equivalent to 1,120 Korean Won as of Aug 15, 2013 Utility functions
Uoricar     1  Fuel   3  Ivt   5  Park
Ualtmode   2  Fare   3  Ivt   4  Ovt   6  Crowd
where altmode = bus, subway, bus + subway
 Surveyed on 662 car users  binary choice withmultiple levels of attributes  4,228 effective datasets
 Main purpose of using passenger cars
Commuting (71.5%)
 Business trips (16.4%)

 Although most variables were statisticallysignificant, fare of mass transit was statisticallyinsignificant
 car users do not consider fare level assignificant since fare is significantly smaller thanuser expense of a car Positive car dummy  prefer car to mass transit
 Demand elasticity of fuel price is much higher
than that of fare level, as fuel expense is far moresignificant than fare
 Car users respond to bus fare changes more thansubway fare changes

 Bigger coefficient of out-vehicle time than that ofin-vehicle time  bigger disutility of waiting thanriding Bus users are more sensitive to in-vehicle time thanother modes  recommend express bus or HOV
lanes Estimated coefficient of parking fees is more than
two times bigger than that of fuel prices
 perceived cost of parking is much greater thanfueling and car users are very sensitive to parking
fees Positive and bigger coefficient of Crowdedness ofbus than that of subway  very sensitive to
crowded bus

Table 3. Estimation Results of Mode Choice
Behavior of Car Users
Variablescar  buscar  bus + subway

car  subway

coefficientt-valuecoefficientt-valuecoefficientt-value

Car dummy

1.63625.505

0.997525.207

0.50605

2.29

Fuel price-1.01E-04-3.067-1.17E-04-5.241-6.10E-05-2.848

Fare of bus or
subway-2.00E-04-1.456-1.41E-04-2.862-5.40E-05-0.637In-vehicle time

-4.21E-02-8.106-2.76E-02-9.376-3.80E-02-10.717Out-vehicle time

-4.41E-02-3.486-2.81E-02-5.053-6.49E-02-7.089Parking fee-3.63E-04-6.36-2.49E-04-6.188-2.61E-04-6.018

Crowdedness

0.830818.38

0.644319.306

0.58023

7.508

2 (Rho square)

0.19

0.20

0.22

No. of responses

943

1,783

1,502

3. Policy Implications
 Estimate price elasticities through Sample Enumeration
method obtain arc elasticity rather than point elasticity
 Fuel price elasticity of demand for passenger car use
 -0.078~-0.171(inelastic) With 50% increase in fuel price, modal change from car
to bus or subway is expected at minimum 3.9% tomaximum 8.5%
 Dual users of bus and subway show higher priceelasticity than single users  more sensitive to fuelprice as they are relatively longer-distance commuters

Table 4. Fuel Price Elasticities of Demand for Car
Use and Change of Modal Share

Car-bus

Car-subway

Carbus+subw
ayFuel Price Elasticities

Modal change from car
to transit modes (%)

10% price increase-0.086

0.86

20%

”

-0.086

1.72

30%

”

-0.086

2.59

40%

”

-0.086

3.45

50%

”

-0.086

4.32

10%

”

-0.078

0.78

20%

”

-0.078

1.55

30%

”

-0.078

2.33

40%

”

-0.078

3.11

50%

”

-0.078

3.88

10%

”

-0.171

1.71

20%

”

-0.171

3.41

30%

”

-0.171

5.11

40%

”

-0.171

6.79

50%

”

-0.1698.47

II. Rationale behind Policy Reform Estimate cross price elasticity of demand forpassenger car use through sample enumeration
technique 0.016~0.087 (inelastic) in Table 8
 Modal change from car to mass transit with
50% fare decrease  4.35% at most policy of subsidizing transit fare is notexpected to reduce car use

Table 5. Fare Elasticities of Demand for Car Use andChange of Modal Share

Car-bus

Car-subway

Carbus+subw
ayFare (cross price)elasticity

Modal change from car totransit modes (%)

10% fare decrease

0.058

0.58

20% ”

0.058

1.16

30% ”

0.058

1.75

40% ”

0.058

2.33

50% ”

0.058

2.92

10% ”

0.016

0.16

20% ”

0.016

0.33

30% ”

0.016

0.49

40% ”

0.016

0.66

50% ”

0.016

0.82

10% ”

0.086

0.86

20% ”

0.086

1.73

30% ”

0.087

2.60

40% ”

0.087

3.47

50% ”

0.087

4.35

II. Rationale behind Policy Reform Test whether “car users consciously perceive
parking costs more than fuel costs (Button, 1993)”
 whether the estimates of the coefficients offuel price and parking fees are the same
 Asymptotic t-test
 Reject at 5% significance levelˆi  ˆjvar ˆi  ˆj 

Table 6. Results of Asymptotic t Test for
Indifference between Variables

Modes

Asymptotic t Test
Statistic

Results

Car-bus

4.08

Reject nullCar-subway

4.22

Reject nullCar-bus+subway

2.95

Reject nullII. Rationale behind Policy Reform Increase of monthly parking fee by US $33.00
 decrease car use by 13~15%
 Increase of monthly parking fee by US $66.00
 decrease car use by 25~30%
 Each current individual level of parking fee is
not the same  cross price elasticity of parking
fee cannot be estimatedTable 7. Change of Modal Share due toIncreasing Parking Fee

Car-bus+40,000
won
per
Month

Car-subway

Modal
Change (%)

Car

0.660  0.562

-15

Bus

0.340  0.438

29

Car

0.576  0.502-13Subway0.424  0.498

18

0.567  0.495-13

0.433  0.505

17

Car

0.660  0.460

-30

Bus

0.340  0.540

59

Car

0.576  0.428-26

Subway0.424  0.572

35

0.567  0.423-25

0.433  0.577

33

CarCarbus+subway Bus+subway
Car-bus+80,000
won
per
month

Modal change due to thechange of parking fee

Car-subway

Car
Carbus+subway Bus+subway

II. Rationale behind Policy Reform

Time Elasticities, Response to Service
Variable, and Policy Effects
 Estimate cross elasticity of in-vehicle time of transit
for demand for car use using sample enumeration
technique Decrease in-vehicle time of transit by 10~50%
 cross elasticity 0.46 ~0.57
 Speed of subway improves two folds
 29% of car users transfer to subway
 Introducing either express subway transit systemor express bus will be an effective policy in
reducing car use and traffic congestion in Seoul

Table 8. In-vehicle Time Elasticities ofDemand for Car Use and Modal Share

Car-bus

Car-subway

Car – bus +subwayIn-vehicle (cross)time elasticity

Modal change from car to transit
modes (%)

10% decrease

0.459

4.59

20%

”

0.471

9.42

30%

”

0.481

14.43

40%

”

0.489

19.57

50%

”

0.495

24.77

10%

”

0.549

5.49

20%

”

0.559

11.18

30%

”

0.567

17.01

40%

”

0.572

22.89

50%

”

0.575

28.73

10%

”

0.512

5.12

20%

”

0.517

10.35

30%

”

0.520

15.61

40%

”

0.521

20.84

50%

”

0.520

25.99

II. Rationale behind Policy Reform Estimate cross elasticity of out-vehicle time oftransit for demand of car use with sample
enumeration technique  smaller than that ofin-vehicle time Decrease out-vehicle time of transit by 10~50%
 cross elasticity 0.19 ~0.38
 modal change up to 19%
 Policy of increasing frequency of bus andsubway very effective for promoting use of transit
modes and reducing traffic congestion in Korea

Table 9. Out-vehicle Time Elasticities of Demand for
Car Use and Modal Share

Car-bus

Carsubway

Car – bus
+ subwayOut-vehicle (cross)time elasticity

Modal change fromcar to transit modes (%)

10% decrease

0.197

1.97

20% ”

0.200

3.99

30% ”

0.202

6.05

40% ”

0.204

8.15

50% ”

0.206

10.28

10% ”

0.364

3.64

20% ”

0.369

7.38

30% ”

0.373

11.20

40% ”

0.377

15.08

50% ”

0.380

18.99

10% ”

0.208

2.08

20% ”

0.210

4.19

30% ”

0.211

6.33

40% ”

0.212

8.48

50% ”

0.213

10.65

II. Rationale behind Policy Reform Level of service in transit modes is defined as
the level of crowdedness in this study Decrease congestion of transit modes by onestep 18~25% of car users transfer to alternativemodes improving in-vehicle congestion is very
important for promoting the use of transit
modes and reducing traffic congestion in Seoul

Table 10. Car Users’ Response to Service
Variable of In-vehicle Congestion

Change of modal share
Improving one step 25.05 % from car to bus
Car-busWorsening one step 21.92 % from bus to car
Improving one step 17.85 % from car to subway
Car-subway
Worsening one step 17.47 % from subway to car
Car – bus
+ subway

Improving one step 20.71 % from car to bus + subway
Worsening one step 20.46 % from bus + subway to car

II. Rationale behind Policy Reform

Public Transit User Subsidy and the
Policy Effectiveness If 100% public transit user subsidy is implemented, 18% of
current private vehicle user will switch over to public transport If this policy is supplemented by commuter parking fee increase($ 100/month), the modal share change is estimated at 28%.

II. Rationale behind Policy Reform

Table 11. Car Users’ Response to Public
Transit User Subsidy
Policy Scenario s

Co mmut ing M ode

M oda l Sha re

Pr ivate Car

39 .6

P ub lic Tr anspor t

60 .4

Pr ivate Car

36 .8

P ub lic Tr anspor t

63 .2

Pr ivate Car

34 .0

B aseline

25 % P ublic Transp ort
Sub sid y

50 % P ublic Transp ort
Sub sid y

75 % P ublic Transp ort
Sub sid y

10 0% P ub lic
Transp or t Sub sid y

P ub lic Tr anspor t

66 .0

Pr ivate Car

31 .4

P ub lic Tr anspor t

68 .6

Pr ivate Car

29 .0

P ub lic Tr anspor t

71 .0

Co nversion Rate to
Public Tra nsport

90 % Co nf idence
Int erva l

N.A

N.A

4 .7

3 .1~6 .2

9 .3

8 .0~1 0.4

13 .6

12 .4~14.8

17 .7

16 .1~19.2

II. Rationale behind Policy Reform

Summary of Policy Implications
 Could analyze the effects of hypothetical
TDM policies in terms of modal changes
utilizing elasticity estimates Ineffective policy measures
 Small effect of fuel price policy Fare related policy (Excluding user subsidy)
 Effective policy measures Parking regulation or pricing policy Express bus, express urban trains, and HOV
lanes Reducing crowdedness in bus and subway
through increasing frequency
 Public transit user subsidy

II. Seoul’s Transport*
1. General Information

2. Changes in Seoul: Urban Sprawl
3. Changes in Seoul: Motorization
4. Changes in Seoul: Infrastructure

2. Changes in Seoul: Transport Conditions*Source: Jin Young Park, Public Bus Service Modernization (2013)

1. General Information
SMA

SMA: Seoul, Incheon and Gyeonggi
Seoul

Incheon

SMA

Gyeonggi
Seoul

2

2

Area

605.2 km
(0.6%)

11,818 km(11.8%)

Population

10.0 million(20.1%)

26.6 million(49.3%)

GRDP

283,651 billion won(22.8%)

585,978 billion won(47.1%)

Korea* Source: e-National Indicators (2011)[Seoul Metropolitan Area in Korea] 33

2. Changes in Seoul : Urban Sprawl
Towns

Area

1 (1989~1996)

5

50.1kmnd

12

146.1kmst

2(2001~2012)

1985

Population

House

2

1.17 million

292 thousand2

1.75 million

671 thousand

2003[Built up Areas in SMA]

34

3. Changes in Seoul : Motorization
Seoul: 0.02 (1980) → 0.11 (1990) → 0.24 (2000) → 0.3 (2011) veh/person(10 thousand
vehicles)[Trends of Vehicle Registration]* Source: e-National Indicators (2011)35

4. Changes in Seoul : Infrastructure
Transport Infrastructure
Seoul

SMA

Road

8,199 km24,070 km

Bus

447 Lines (9,340 Vehicles)

3,694 Lines (26,847 Vehicles)

Railway346.3 km (321 Stations)825.2 km (521 Stations)[Railway Networks and Stations in SMA][Bus Network and Capacity in SMA]

36

5. Changes in Seoul : Transport Conditions
Daily Trips and Mode Share
Seoul

IncheonGyeonggi- Seoul intra-city trips: 20,011 thousand trips per day- SMA intra-city trtips: 49,660 thousand trips per day* Source: Metropolitan Transportation Authority

IncheonGyeonggi
Seoul37

III. Inferences from the Public
Transport Reforms
1. Public Transport Reform in Seoul
2. Bus System Modernization
3. Outcome of the Reform1. Public Transport Reforms
Vicious Circle of Bus Service
Inefficient bus
management system

Increasing vehicles
Lack of bus
priority policies(bus lane & subsidies) Poor punctuality Poor reliability
 Slow speed

 Worsen bus
operating conditions

 stress on driver fromtraffic congestion unfriendly to passenger,
and causing accident Decrease of bus users
 Abolition of bus service
 Bankrupt of bus company

Limited road capacity→congestion
abolition of route,→ reduced operation,
 periodic increase of fare labor dispute→ inconvenience for citizen
 no other options except
periodic fare raising39

Vicious Circle of Bus Service
Unstable Service by deteriorated bus company
 Unpunctuality, abolition of bus routes
Unstable employment

 Continuous reduction of labor (driver’s low salary)
Excessive competition to increase revenue Reckless driving : accident, uncomfortable ride
Routes owned by private bus company
 Hard to adjust routes by demands
40

Bus System Modernization- Operation Scheme : New revenue system- Network : Trunk & Feeder- Fare : Distance-based free transfer fare with smart card
- Information : Bus Management/Information System- Infrastructure : Exclusive bus lane, Station improvement- Fleet : CNG bus, Low-floor bus

41

2. Bus System Modernization
Operation Scheme- Introduction of bidding main routes- Joint management of revenue- Reform of revenue structure based on operating distancePrevious system

New system

Revenue based on number

Revenue based on

of Passengers

Service distance (Veh-km)
42

2. Bus System Modernization
Network : Trunk Lines · Feeder Lines · Circular · Wide Area
 Regional connection between suburbs anddowntown area
 Ensuring operation speed and punctuality

Trunk
lines

Blue
bus

 feeder to trunk lines and subways
 Meeting local traffic demand

Feeder
lines

Green
bus

 Local lines within the downtown area
 Serving for business and shopping trips

Circularlines

Yellowbus

 Express connection between satellite cities
and downtown area
 Absorbing passenger car commuters

Wide area
lines

Red
bus

43
43

2. Bus System Modernization
Network : Trunk & Feeder

44

2. Bus System Modernization
Network : Trunk & Feeder45

2. Bus System Modernization
Distance based fare
- Subway single trips: fare according to distance-traveled(basic fare : 1,000 Korean won (1 US Dollar) up to 12 km;
extra fare of 100 Korean won for every additional 6 km)- Bus single trips : single fare of 1,000 won

Free of charge for transfers- For transferring trips: accumulated distance-based fare system→(basic fare up to 10km;
extra fare for every additional 5 km)

46

2. Bus System Modernization
Bus Management System : Efficient management of bus services
For Passenger
BIT

ARS

MobileInternet

Bus Company-Real-time Bus
Operation Information-Route and Transfer
Information-Real-time Bus
Operation Info.
-Bus Operation DB

Seoul BMS

•Route and operation Info.
•Bus Arrival TimeOn-board device
installed on every bus

47•Bus real-time
location Info.
•Interval and operation
Info.

•Bus Location•Allocating Buses•Notice•Bus Interval Info.
•Bus Operation Info.

47

2. Bus System Modernization
Bus Information System

Bus Information Service
Bus Shelter

ARS
No. 62bus leftlast busstop

Real-time Bus
Operation
Information

Web

Mobile48

2. Bus System Modernization
Exclusive Bus lane
– Provides faster and reliable travel within the service area
– Seoul Metropolitan Area: 13 corridors, 157km (2011)– Attracts patronage from private vehicles

Median exclusive bus lane

Bus lane Network In Seoul49

2. Bus System Modernization
Bus Station Improvement

BeforeStops Improvement

After

Shelter & Fence
installation50

2. Bus System Modernization
FleetsMajor lines

Articulated buses,
Low-floor buses,
CNG buses

Aux. Trunklines

Low-floor buses,
CNG buses

Trunk
lines

Feeder lines

Medium-sized buses

Circular lines

Medium-sized buses51

3. Outcome of the Reforms
Increase in Public Transport Patronage
7,000
SubwayBus

Number of Passengers(thousand people/day)

6,500
6,000

6,112

6,162

6,286

6,437
6,239

6,218

6,213

6,267

6,282

4,655

4,583

4,615

4,605

4,595

2006

2007

2008

2009

2010

5,911
5,500
5,000

5,174

4,500
4,544
4,000

4,293

4,192

4,180
4,006

3,992

14% ↑

3,500
3,000
2000

2001

2002

2003

2004

2005

Year
※ Subway ridership excludes free-pass holders.
Source : Seoul Year Book52

Trend of Citizen’s Satisfaction Degree for Transit Services
Satisfaction rate for Bus Service,7.0
Public Transit
Year

Degree of Satisfaction (point)

,6.5

,6.19

,6.0
,6.00

,5.5

,5.61

,5.0

Subway

2003

4.76

5.99

2004

4.85

6.08

2005

5.61

6.26

2006

5.66

6.30

2007

6.00

6.33

2008

6.00

6.30

2009

6.19

6.52

2010

6.16

6.71

,6.16

,6.00

,5.66

16% ↑
,4.76

Bus

,4.85

,4.5

,4.0
2003

2004

2005

2006

※ Rating is based on a scale of 0 to10.
Source : 2010 Seoul Survey

2007

2008

2009

2010 Year

53

Valuing Convenience in the Korean Context
Seoul’s public transport reform is successful in attracting public
transport’s patronage
 Increased competitiveness of public transport

Increased convenience level of public transports
 Reduced travel time
 Free transfers
 BIS system improvements
Empirical evidences of the importance of convenience in public transport54

Ⅳ. Discussions

Thank You.
(swlee@koti.re.kr)