Elasticity of demand

Elasticity is the ratio of the incremental percentage change in one variable with respect to an incremental percentage change in another variable. Elasticity is usually expressed as a positive number when the sign is already clear from context. The factors that could affect elasticity of demand for public transport operations would be the rise in public transport costs. An essential service will have a relatively inelastic demand, for example London commuters travelling into the central business district to work. This means that if the fares increase on London underground it will not significantly affect the number of peak passenger’s trips because there is no close alternative mode to the rail or tube travel apart from the car and the roads and car parks have inadequate facilities to cope with the additional flows this will leave the commuter spending a lot of time in traffic.

For leisure trips that are not essential then demand will be relatively elastic, for example a family trip to the countryside may not take place if fares are high, while at lower fares or with a pricing policy the price per person would be reduced resulting in more unnecessary trips. In the case of a long distance business trip of more than 200 miles, then air travel is the only practical option if a return journey has to be made in one day.

This leaves this service relatively inelastic because there are no substitute modes available but some one using air travel for leisure needs can shop around for a cheaper fare. Taxi’s are relatively inelastic because when people are out at night then they have no other way of getting home and taxi drivers can take advantage of the commuters. The bus service for students in Belfast is another example of an inelastic service because students have no choice but to use the service, Translink don’t take advantage of this.

Most modes of public transport are inelastic because anyone using it usually does so because they don’t have the funds to pay for there own private transport and the government should take advantage of this. b) Since the 1950’s the United Kingdom has moved away from public transport and more towards the use of private transport. In 1952, just 27% of distances travelled were by car, 42% by bus or coach and 18% by rail. A further 11% was by bicycle and 3% by motorcycle.

The distance travelled by air was negligible. By 2003, 85% of distances travelled were by car, with just 6% being by bus and 6% by rail. Air, pedal cycle and motorcycle accounted for roughly 1% each. In terms of journeys, slightly over a thousand million are made per annum by main line rail, 1.1 thousand million by London Underground and other metro systems, 4.5 thousand million by bus, and 21 million on domestic air flights. This shows how much we have changed in the UK in 50 years despite the governments desire to encourage public transport.

In Northern Ireland a survey done in 1999 showed that most people using public transport did so because they had a low income and had no choice. This means that this service is a last resort for people on low incomes. Public transport has become neglected because of past government policy. The Translink companies are publicly owned and were subjected to government priorities which unfortunately let the service get neglected because they had to reach profit targets. I think if bus fares were to be lowered, it might work on the short term but Translink is already restricted to limited capital and would result in the service getting worse.

Transport costs are high for those people relying on public transport everyday. Car ownership would be a lot more expensive with your annual running costs like tax and mot and it’s this area of people that should be sought after to use public transport. If it can be proved that people will be saving a lot of time and money by using the bus then a few might get out of there cars and use the buses. This is the group of people that are going to be attracted by a cheaper service because some of them are probably struggling to pay all of the expenses of running a car and if they can save time then that would be perceived as another way to save money.

The biggest disadvantage to lowering the fares on the buses is keeping the customers happy because the people that are using the buses already complain about the comfort, heating and ventilation, so if the fares are lowered this situation can only get worse as most of the short term expenditure goes towards wages, fuel and servicing of the buses. The people that are use to cars are use to a high standard of living and won’t want to start travelling on an uncomfortable bus even if it is cheaper. Lowering fares has got some good advantages because it might attract some people onto the service but will this is only a short term solution and it wouldn’t before people would be willing to start paying the higher fare again.

If this was to be forecast as a long term solution then there would have to be a lot of money invested from the government into the running of the buses and there is no way that a profit could be made. The wages, fuel and serving could be afforded but if a bus needed some real attention and required big money spend on it then there would be no funds available. There would have to be major cut backs, which would start with a decrease in wages, this means that bus drivers would be stretched. Translink would have to make drivers redundant and buses would be sold to finance the company.

If there is less buses and less drivers then they will have to try and squeeze in more journeys in less time, this will lead to buses being late and the service being regarded as unreliable. If there is less funds available then the buses are going to become run down because there will have to be less money invested into the servicing of them. There won’t be as many new buses bought and there equipment will not be as up to date, leading to a service that’s not as safe our reliable. The lack of servicing will mean that there will be less work in the depots, this means that there won’t be as many workers required in the depots and it could even result in closing some of the smaller depots down and sending all the work on to the bigger depots.

I believe this method could work as a short term solution to people’s lack of public transport usage but it is only going to result in the service becoming run down. This method will probably attract a few more people onto the buses but as the buses become old, uncomfortable and unreliable more people will end up back in there cars. This plan would require a lot of finance from the government and it will end up being the tax payers that have to pay for the public transport repairs.

This is only going to leave the people on low incomes happy and they are already restricted to the service anyway so the congestion problems will not be improved. I my opinion the only way to get people to use public transport is to prove that using a bus will save u a lot of time than a car, and the best way to do this is to invest money in more bus lanes and set up a bus priority scheme. If people now they are saving a large amount of time then they will soon work out that this also saves them money so if the service is fast and comfortable then the customers will soon get sick of sitting in there cars in traffic.