Ticket prices matter – but rarely as much as one might think
In a new literature review, researchers Alfred Söderberg and Jens Portinson Hylander have analysed the importance of ticket pricing in local and regional public transport. The findings show that price does matter – but seldom to the extent often assumed.
– Price changes generally have a limited effect on overall ridership, but they can have significant consequences for certain groups, particularly low-income households and passengers who lack alternatives. In general, however, factors such as service supply, journey time and quality have a greater and more consistent impact on ridership than fare reductions, says Alfred Söderberg, researcher at RISE and K2.
Experiments with pricing and perceived value for money are ongoing, and the review shows that fares do influence public transport systems in several ways, for example in terms of cost recovery and perceived affordability. At the same time, passengers are relatively inert in their choices, making price a less effective general policy instrument for increasing ridership, but more relevant from a distributional perspective.
– Small average price effects at the aggregate level can still have major consequences for marginal groups. This means that pricing needs to be designed with consideration for different groups’ circumstances, for example through targeted support, says Alfred Söderberg.
The review also presents a conceptual model describing how the effects of ticket pricing are shaped through interaction with factors within the public transport system, such as service provision and ticketing structures, as well as contextual factors such as travel patterns, income and car ownership. The model shows that price effects do not arise in isolation, but within a system where multiple drivers interact. It contributes to a more systematic understanding of when and how pricing measures have an impact.
A persistently relevant issue
The background to the review is a strategic research project initiated by K2.
– Everyone has an opinion on fares, and the question of their importance constantly reappears in public debate. We wanted to clarify what the research actually shows in a Swedish context, says Alfred Söderberg.
The review also includes international research, a comparative policy analysis, and examples of Swedish pricing strategies.
One finding that surprised the researchers is that real fares have declined in recent years, as ticket prices have not increased at the same rate as general price levels. This effect has been particularly evident during the 2020s, but as early as 2014 fares in Sweden began to level off and, when adjusted for inflation, are now roughly at the same level as ten years ago.
The literature review and comparative analysis are based on a selection of studies and Swedish regions. The researchers therefore identify a need for further research on the role of fares, particularly regarding how pricing affects ridership under different conditions.
Key recommendations to the sector based on the study
- Assume that general fare changes typically have limited effects on total ridership, and prioritise measures that improve reliability, journey times and service provision when the objective is to increase public transport’s modal share.
- Recognise that even small average price effects can have substantial welfare implications for financially vulnerable households, and design pricing with clear consideration for affordability and distributional policy objectives.
- Target any subsidies towards segments where travel demand is more discretionary and price-sensitive, such as leisure and off-peak travel, or towards socio-economically disadvantaged groups.
- Link fare increases to visible improvements in service provision and quality in order to maintain perceived value for money and long-term legitimacy.
- Develop flexible payment solutions, such as fare capping and post-payment systems, to reduce financial uncertainty for passengers without necessarily lowering the average fare level.
- Limit the complexity of the ticketing system so that any price differentiation does not come at the expense of user comprehensibility.
- Evaluate new subsidies, campaigns and time-differentiated fares systematically to ensure they deliver the intended benefits relative to their objectives.
Text: Anna Maria Erling