Fare System of Urban Public Transportation Services in Davao City, Philippines

A model of modal choice and destination choice was developed to simulate urban travel demand in Davao City, Philippines, and to evaluate fare-setting scenarios relevant to the possible introduction of a new public transportation (PT) system. This nested logit model, combining modal choice and destination choice, was estimated with local person trip survey data collected in 2015 that included data points on 3,531 households, 7,639 individuals, and 15,372 trips. Then, six fare scenarios were developed, incorporating four elements of the fare system, boarding charge, per-kilometer charge, charge distance, and transfer charge, based on the fare system in use in the Philippines. Five evaluation indexes were then applied: average individual benefit, new PT operator’s profit, social surplus, modal share of PT, and regional equity with respect to accessibility. The results demonstrated that (a) a lower fare increases an individual’s benefit from the trip, (b) a new PT operator’s profit assumes positive values in a wide range of fare scenarios, (c) a lower fare improves net social surplus, (d) a lower fare leads to higher modal share of PT, and (e) a higher fare tends to compromise the regional equity of accessibility. These results also suggest that from the viewpoint of enhancing social surplus, increasing the boarding charge is a preferable strategy at a higher fare level, whereas the mitigation of the per-kilometer charge is a preferable strategy at a lower fare level.