Related to value of service

This approach requires the setting of fares to reflect the value that passengers receive from the service provided. This would reflect a charge in relation to the distance traveled in the journey, and also a charge for access to the network. It might also reflect some recognition of the time lost in waiting for, and then traveling on, the service – and hence justify higher fares for express services.

Taken in combination, these effects would result in a taper reduction in the unit cost of travel with increasing distance. However this taper would reduce to the extent that the value of access to the network is deemed to increase with separation from the urban centre.

A strict application of this approach, though, would provide some form of fares compensation for poor service, such as long waiting times, slow travel on congested routes, and the need to make interchanges. As these conditions either reflect low local demand levels or increase the unit costs of production, such compensation would be commercially damaging to operators.

It should also be noted that each individual passenger will place a differing value on the service, and demonstrate a differing willingness to pay. Clearly it is impractical to charge fares that are variable at the individual level, and some general value levels have to be assumed in the fare computation.