factors affecting the use of bus and rail services in a deregulated environment
TRANSCRIPT
Transportation 18: 175-193, 1991. © 1991 KluwerAcademic Publishers. Printed in the Netherlands.
Factors affecting the use of bus and rail services in a deregulated environment
ADRIAN HARRINGTON 1 & BRUNO PAROLIN z 1 FormerlywithPassengerPolicyBranch, NSWDepartmentofTransport, Australia; 2 School of Geography, University of New South Wales, P 0 Box 1, Kensington NS W 2033, Australia
Accepted 2 January 1991
Key words: bus, deregulation, long distance, passenger, rail
Abstract. In 1987, the NSW Government commenced deregulation of the long-distance bus industry in NSW. This immediately led to greater inter-modal competition and contest- ability within the context of changing passenger markets.
This study ufilises categorical data analysis methods to examine the emerging passenger markets of inter-modal competitors (bus and rail) and to assess the relative importance of socioeconomic and travel related variables which affect the use of bus and rail services along the high volume Sydney-Canberra and Sydney-North Coast corridors.
Conclusions from the study indicate varied passenger markets within a relatively new contestable environment which are mode and corridor specific. Results are indicative of the need for competitors to develop marketing strategies conducive to the demands of the travelling public in order to enhance viability and commercial opportunities.
Introduction
The Australian transportation industry has traditionally been charac- terised by high levels of government regulation. Only recently have both federal and state governments begun to reevaluate the regulatory frame- work and encourage greater contestability in areas of passenger and freight transport.
In 1987, the State Government of New South Wales (NSW) com- menced deregulation of the intrastate long-distance bus industry with the immediate effect of increased inter-modal competition (bus and rail) and contestability by independent bus operators within the context of changing passenger markets. For inter-modal competitors operating in a deregu- lated environment, an understanding of the composition and needs of the passenger market is now important.
This paper examines the emerging characteristics of long-distance bus
176
and rail passengers in a deregulated environment within NSW. The focus of this research is upon identifying different market segments of bus and rail services and to assess the relative importance of socio-economic and travel related characteristics which affect the use of bus and rail services along the high volume Sydney-Canberra and Sydney-North Coast corridors.
Background
The deregulation of intrastate bus services in NSW reflects a major change in government policy towards the long-distance bus industry. The State Transportation Act of 1931 has provided the main legislative control of all intrastate road transport in NSW. This legislation, rather than aiming for an efficient and competitive system, was used to limit road-rail com- petition in order to foster the financial viability of the State railways (Department of Motor Transport 1988).
As a result of non-competition between transport services, intrastate travel by private bus in NSW was severely limited. The first long-distance bus service commenced in 1956 between Sydney and Canberra and although it was in direct competition with rail services, the Department of Motor Transport (DMT) applied strict regulations on the service fre- quency and operating times to restrict competition between the modes. The second intrastate bus service to commence was the Sydney-Broken Hill service in 1970, and it also had strict restrictions placed on pick-up and set-down points. By 1986, there were 17 long-distance intrastate and 14 interstate bus services licensed to carry passengers. These services were not considered competitive threats to rail services as most services were in areas where either no rail facility was available or the existing rail service was considered inadequate, in relation to passenger service. In fact, only five of these services linked country areas with Sydney.
In 1985, the DMT undertook a review of long-distance passenger services in NSW and concluded that:
existing transport services were not meeting the needs of the travelling public, and the protection of existing transportation services, at the expense of the travelling public and other State interests, could not be justified (DMT 1988).
The report recommended that a series of trial liberalisafions be under- taken to assess the impact of increased competition on the travelling
177
public and competing modes of transport, especially rail services, before pursuing full-scale deregulation.
The DMT initiated trial liberalisation on the Sydney-North Coast and Sydney-Canberra corridors in November 1986 for a period of six months. The trial was extended four times between November 1986 and Novem- ber 1988 and an additional corridor was added to the trial -- the Sydney- South Coast corridor. Throughout the trial, the Sydney-Canberra corridor was retained as an express route. On the Sydney-North Coast corridor, bus operators were required to carry passengers at least 160 km and were not granted pick-up and set-down rights for passengers travelling between Sydney and Newcastle. The number of operators providing services during the trial varied across the corridors; on the Sydney-Canberra corridor there were four operators, on the Sydney-North Coast there were 11 operators, and on the Sydney-South Coast four operators commenced services.
Following the success of the respective trials, the State Transportation Act was amended in June 1988 and was proclaimed to apply from 27 November 1988. The decision to licence an intrastate passenger service is now solely based on whether the service is in the best interests of the public. This amounts to encouraging competition in the intrastate pas- senger market as the new legislation removes the Governments ability to protect the State's railways. In fact, most bus services are now competing directly with rail services for passengers.
The relaxation of entry controls has been very successful in stimulating competition between bus operators. There are now 40 bus companies conveying intrastate passengers over 84 routes throughout the state. On the denser routes, there are at least two bus companies competing for passengers.
Literature
Research on deregulation of the long distance bus industries in the United Kingdom (UK), United States (US) and Australia has primarily been concerned with an examination of industry structure (Button 1987; Cross & Kilvington 1985; Robbins & White 1986; BTE 1987) and industry application of contestability theory (Jaffer & Thompson 1986; Carnahan 1987). Despite the contributions of research to understanding the effects of deregulation, little research has been carried out into the emergence and composition of bus and rail passenger markets in a deregulated environment.
A major conclusion emerging from existing literature is that the with-
178
drawal of government regulation removes the protection of existing companies from competition and, initially, there is a high degree of uncertainty among bus operators and competing modes of transport as to how the market will react. As a result, it takes time for equilibrium in the marketplace to emerge (Button 1987).
Deregulation of the intercity bus industry in the US in 1982 has been highly successful in stimulating competition within the industry, and it is unlikely, according to Button (1987), that a single carrier will be able to dominate the market, Companies are responding to competition by increasing the frequency and quality of services, especially on the major trunk routes, and abandoning some low-volume unprofitable routes. Button also concludes that companies have shown "unexpected flair for innovation" with one of the most innovative being the hub and spoke bus network.
Bus operators in the US are also providing connections between small communities and airports to connect with timetabled flights. The clientele of these services is different to the normal inter-city bus clientele, with the airport service attracting higher-income earners and business travellers. Although this market profile is related to the profile of airport users, the bus companies, through their marketing strategies, have made conscious attempts to diversify their market. Button (1987) concludes that deregula- tion has increased the flexibility of bus operators to respond
. . . more rapidly to continually changing circumstances and thus react to the changing needs of these communities and adopt new technolo- gies as they emerge.
The evidence from the UK literature reveals that deregulation, rather than creating intra-industry competition, has lead to increased inter-modal competition between bus and rail services (Robbins & White 1986; Cross & Kilvington 1985). The domination of the coach market by the public- owned National Bus Company (National Express) and the concentration of operations on the more lucrative trunk routes brought National Express into direct competition with British Rail. Robbins and White (1986) argue that long-distance coach traffic following deregulation increased by 50% and " . . . much of this growth has been directly at the expense of British Rails Intercity Network".
Despite attempts to form a consortium of independent bus operators to challenge the market dominance of National Express, the consortium disbanded after two years. Robbins and White (1986) believe the failure of the consortium was primarily due to their inability to provide a service to meet the demands of the travelling public and match the established
179
reputation and resources of National Express. Of the independents that have survived, their success is attributed to either their specialisation on just one or two routes, or their offering to the travelling public a product that is different to the one offered by National Express (Kilvington & Cross 1986). Independents who have adopted the later strategy have done so by specialising in upmarket luxury coach travel. These services have proved popular with males, the middle-aged and employed travellers -- a clientele very different to that of National Express and British Rail.
In new South Wales, the Bureau of Transport Economics (BTE) moni- tored the impact of trial deregulation on the Sydney-Canberra and Sydney-North Coast corridors for the DMT. The BTE concluded that on both corridors there was a large degree of intra-modal and inter-modal competition and the relaxation of restrictions on intrastate buses had an adverse impact on competing modes of transport. The BTE estimated that during the first six months, between 47,000 and 57,000 passengers diverted to the bus from other modes on the Sydney-Canberra corridor, and between 26,000 and 36,000 passengers diverted to the bus on the Sydney-North Coast corridor. On both corridors, over half the diverted passengers came from rail services. This, according to the BTE (1987), was due to the fact that neither the State Rail Authority (SRA) nor the regional airlines made any attempt to alter fare or service levels in the face of direct competition from buses.
A second major issue in the literature on long-distance bus deregula- tion has been an examination of whether the post-deregulation industry is characterised as being perfectly contestable. The theory of contestability postulates that the number of competing firms need not be large for welfare to be maximised and for resources to be allocated efficiently. So long as a firm can enter and exit from an industry without cost, the fear of possible entry from a rival firm rather than competition itself acts as an effective market discipline (Baumol et al. 1982). Empirical investigations by Jaffer and Thompson (1986) in their study of the UK bus industry and Carnahan (1987) of the bus industry on the Sydney-Canberra corridor have found that in both cases a perfectly contestable market did not even- tuate. Both studies concluded that the dominance of existing operators in terms of infrastructure and market reputation acted as a significant barrier for new firms entering the market.
Kilvington and Cross (1986) provide one of the few empirical studies of bus and rail passenger profiles following deregulation of the long- distance bus industry in the UK. It was found that the majority of both bus and rail passengers were either young or old, with this segmentation being stronger on rail services. Women were over-represented on bus but not rail services. The occupational status of bus and rail passengers is similar,
180
with students and retired groups being important markets for both. Close to 50% of bus and rail passengers have a car available to them when making the journey, and it is concluded that competition between modes is a three-way process -- coach, car and rail. Passengers on both modes travelled mainly for discretionary purposes with a few passengers on either mode travelling for business. Finally, the authors indicate that as a result of the concentration by National Express on the more lucrative trunk routes, the passenger composition on high-volume intercity flows has moved closer to that of rail. At the same time, independent operators concentrated on the specific market segments.
The BTE undertook a limited analysis of the composition of bus and rail passenger markets in their monitoring of trial liberalisation on the Sydney-Canberra and Sydney-North Coast transport corridors. The BTE found that the main reason for using both modes over both corridors was for discretionary travel. Females dominated passenger markets of bus and rail services over both corridors. In addition, rail services attracted more concession users than the buses on both corridors, despite the fact that %. . approximately half the bus passengers were under 30 years of age whereas approximately 60% of rail passengers were over 30 years of age" (BTE 1987).
In briefly reviewing the more relevant literature on deregulation, it is evident that the removal of government regulations has a profound effect on the competitive environment. Although most of the literature has concentrated on the form of market structure, and the effects on service levels, routes and fares, there is a little empirical research into the market profiles of bus and competing modes. Knowledge of the passenger market is crucial if operators are to effectively utilise marketing strategies to capture a greater slice of the market and remain competitive. The remainder of this paper reports on results of identified market segments for the long- distance passenger market following trial deregulation of buses in NSW.
Methodology
The results reported in this paper are based on the analysis of surveys of bus and rail passengers undertaken by the BTE to monitor and evaluate the impact of trial liberalisation on the travelling public and on competing modes of transport. The BTE surveyed bus and rail passengers travelling on the trial corridors during both the peak period (14 to 21 January 1987), and the off-peak period (2 to 8 April 1987). The sample frame consisted of bus operators who were granted permits to convey passengers
181
over the trial corridors and rail services that competed directly with these bus services.
A required sample size of 900 for both the peak and off-peak surveys was based on the assumption that 10% of bus and rail passengers diverted from other modes of transport (BTE 1987). The lower than required sample size for the off-peak survey is associated with lower than antici- pated patronage levels and limited resources available for BTE follow-up field work.
Table 1 provides a breakdown of the number of usable questionnaires that were returned by passengers on each corridor travelling by bus and train.
The questionnaires sought information on the travel purpose of passen- gers, their attitudes to particular aspects of the mode on which they were travelling and their socio-economic characteristics. A summary of the more relevant variables obtained from the questionnaires and used in this research are shown in Table 2.
The determination of market segments requires information on individ- ual's demographic and travel characteristics (Thompson & Cunningham 1987). The only demographic variables in the dataset are sex, age and occupation; and are all included in this study. Unfortunately the questionnaires did not elicit the income of passengers. As overseas studies have shown, income levels of passengers have important effects on public transport patronage with rail and bus passengers generally having a lower income level than air travellers (Morrison & Winston 1986).
Of importance in segmenting long-distance bus and rail passenger markets is the inclusion of passenger travel characteristics. The first travel variable (MODE) is binomial and classifies passengers travelling on both corridors as either bus or rail users.
On both corridors interstate buses are picking-up and setting-down
Table 1. Number of passengers surveyed on each corridor.
Route
Peak Off-peak
Bus Rail Bus Rail
Sydney-Canberra 210 125 137 116 Canberra-Sydney 201 156 233 25 Sydney-North Coast 272 270 99 197 North Coast-Sydney 220 263 154 191
Tot~ 903 814 623 529
182
Table 2. Study variables.
Variable Description Recoded values
MODE Mode used Bus Rail
SEX Sex Male Female
AGE Age < 30 30--49 50+
OCC Occupation Employed Not employed
LONGJO Longer journey Yes No
TP Trip purpose Business Discretionary
TDEST Length of stay 1--3 days 4--14 days 15+ days
NFAM No. of family 0 in travel party 1+
NFRD No. of friends 0 in travel party 1+
passengers as they pass through NSW, because the marginal cost of picking-up passengers and filling empty seats on these through services is very small (Carnahan 1987). The importance of through services is assessed by examining if the trip is part of a longer journey (LONGJO). Longer journeys also identify intrastate and interstate passengers.
The individual trip purpose (TP) variable is included because it has been shown that each type of trip purpose has its distance travel charac- teristics which need to be accounted for when segmenting the market (Fravel 1985). The length of stay at the destination (TDEST) is included primarily because of its relationship with trip purpose. Business travel is generally of a shorter duration than discretionary travel.
Kilvington and cross (1986) found that in the UK %.. public transport is failing to capture substantial numbers of persons travelling in groups". This justifies the inclusion of the NFAM and NFRD variables as the size of travel party may have significant implications on the market profile of bus and rail users.
In order to understand the utilisation of bus and rail services in a
183
competitive environment, it is necessary to assess the relationship between the socio-economic characteristics of travellers, their travel behaviour, and the mode they are using for each of the corridors. As all the variables used in this research are inherently categorical, it is first necessary to cross- classify the variables into multi-dimensional tables to facilitate the iden- tification of market segments.
The second part of the analysis involves fitting two logit models, one containing socio-economic variables and the other containing travel variables. The rationale for this is that it allows a separate examination of how well the socio-economic and the travel variables discriminate between bus and rail users. In this analysis the dependent variable is M O D E and the remaining travel and socio-economic variables are treated as explana- tory variables. The logit models tested and detailed in this research are not discrete-choice models since the survey data did not contain respondent evaluations of other alternative travel modes (Wrigley 1985). The objec- tive is simply to assess the relative importance of socio-economic and travel-related variables in discriminating between bus and rail passengers. It was necessary to recode the variables in order to facilitate the fitting of the logit models. The recoded variables are shown in Table 2.
The linear logit model used in this research takes the form:
In Pijbus _ In fjbus = B 1 + B2X,~ + - . . + BnX/j , (1) P,jrail 1 -- f jbus
i = l , . . . , n ,
where Po.bus/Pijrail = the odds of person i using the bus over the train on corridor L
B 1 = the constant, B 2 . . . Bn = the parameter estimates of independent variables.
Equation(l) is a main effects model which does not take account of interactions between variables and therefore implies that the explanatory variables are independent of one another. The models in this analysis are confined to main effects models because, from preliminary data analysis, the inclusion of interaction terms did not significantly increase the good- ness-of-fit of the models.
The objective is then to find the most parsimonious form of the main- effects logit model using the method of maximum likelihood estimation. For both the socio-economic and travel-logit models, the inclusion of all variables in the model did not produce the most parsimonious model. To increase the explanatory power of the model, it was necessary to specify a "reduced form" model by removing some explanatory variables.
184
Research results
Tables 3 and 4 indicate the passenger profiles associated with only the study variables. A complete description of passenger profiles on both corridors is provided in BTE (1987). Note that the age and occupational status of bus and rail passengers is significantly different on both corri- dors. Discretionary travel is generally the most important reason for travel
Table3. Socio-economic characteristics of bus and rail passengers by corridor.
Sydney-Canberra Sydney-North Coast
Bus (%) Rail (%) Bus (%) Rail (%)
Sex
Male 41 41 40 Female 59 59 60
NS NS
40 60
Age
< 1 5 5 8 11 5 15--19 15 14 20 12 20--29 32 21 21 21 30--39 16 15 13 9 40--49 11 17 8 13 50--59 9 11 9 11 60+ 12 14 20 29
Occupation
Student 23 26 26 15 HH duties 10 15 15 13 Clerical 14 7 8 4 Plant op. 1 1 2 1 Sales 4 1 2 1 Prof/ tech 21 14 9 8 Tradesman 4 5 7 4 Semi-prof. 2 2 4 3 Labourer 2 4 4 4 Admin. 7 7 3 9 Unempl. 3 3 4 6 Retired 16 10 16 32
** Chi-square significant at the 0.01 level. NS: Not significant. Source: BTE passenger surveys.
Table 4. Travel characteristics of bus and rail passengers by corridor.
185
Sydney-Canberra Sydney-North Coast
Bus (%) Rail (%) Bus (%) Rail (%)
Longer journey
Yes No
35 25 18 65 75 82
31 69
Trip purpose
Holiday 22 24 28 35 Visiting Friends 48 37 38 35 Personal Business 10 15 8 5 Business/Work 7 18 7 8
Length of stay
1--3 days 54 4--14 days 31 15+ days 15
Number of family
0 44 1+ 56
NS
NS
35 40 25
44 56
61 39
31 55 14
56 44
67 33
Number of friends 0 57 1+ 43
21 63 16
50 50
61 39
* Chi-square significant at the 0.05 level. ** Chi-square significant at the 0.01 level. NS: Not significant. Source: BTE passenger surveys.
on both corridors (Table 4), although more rail than bus passengers are using the train for business reasons (18 and 7%, respectively).
Table 4 also shows that bus travel on the Sydney-Canberra corridor is for short stays (1--3 days), while rail travel on both corridors appears to be for longer-term stays. A reason for the difference between the two corridors is related to the large number of business travellers on the Sydney-Canberra corridor compared to the North Coast corridor, and business travel is generally shorter in duration than discretionary travel.
186
On the Sydney-North Coast corridor, travel is associated with families and groups of friends.
The parameter estimates and probabilities for the reduced-form socio- economic logit model (Tables 5 and 6) identify significant differences in the market segments of bus and rail modes on both corridors. The removal of the SEX variable increases the goodness of fit of both main- effects models. On the Sydney-Canberra corridor, two distinct market segments are evident. The highest probabilities of bus use and, therefore, the lowest probabilities of rail use, are for travellers aged under 30 and not employed followed closely by travellers aged over 50 and not employed. Rail passengers on this corridor are more likely to be aged between 30 and 49 and employed, and this reflects the ability of rail services to capture a greater slice of the business market.
The relative size of the parameter estimates for the occupation variable on the Sydney-Canberra corridor are indicative of its importance in describing mode use. Again this result can be attributed to the large percentage of business persons travelling by rail and the large percentage of the unemployed travelling by bus.
Table 5. Paramete r s of mode use for the reduced- fo rm socio- economic model .
Var iable Sydney-Canber ra Sydney-Nor th Coast
Cons tan t 0.577 - 0 . 2 4 1 (8.99)* ( - 4 . 4 9 )
Age
U n d e r 30
3 0 - - 4 9
5 0 +
Occupation
Employed
U n e m p l o y e d
0.288 0.350 (3.45) (5.17)
- -0 .300 --0.061 (--3.05) (--0.73)
- 0 . 0 1 2 - -0 .289 (--0.30) (--7.25)
- -0 .353 (--5.31)
0.353 (5.31)
L 2 = 6.31, d.f. = 2 p = 0.854
- -0 .066 (--1.19)
0.066 (1.19)
L 2 = 2.47, d.f. = 2 p = 0 .2913
* Values in paren theses are cor responding Z values.
Table6. Probabilities of bus and rail use based on socio-economic characteristics.
187
Sydney-Canberra Sydney-North Coast
Subpopulations Observed Expected Observed Expected
Age Occupation Bus Rail Bus Rail Bus Rail Bus Rail
< 30 Employed 0.63 0.37 0.63 0.37 0.52 0.48 0.51 0.49 < 30 Not employed 0.76 0.24 0.77 0.23 0.53 0.47 0.54 0.46 30--49 Employed 0.46 0.54 0.48 0.52 0.37 0.63 0.41 0.59 30--49 Not employed 0.66 0.34 0,65 0.35 0.47 0.53 0.44 0.56 50- t - Employed 0.56 0.44 0,56 0.44 0.36 0.64 0.36 0.64 50+ Not employed 0.72 0.28 0,72 0.28 0.39 0.61 0.39 0.61
The parameter estimates in Table 5 reveal that age is more important than occupational status in affecting the use of bus and rail services on the Sydney-North Coast corridor. The highest probability of bus use is for travellers aged less than 30 and not employed, whereas for rail, the highest probabilities of rail use are for the older age groups who are both employed and unemployed (Table 6). Discretionary travel is very high on this corridor, and the availability of pensioner concessions (one return trip a year on rail services anywhere in NSW for S10) may be instrumental in attracting elderly travellers to travel by rail.
Table 7 shows the parameter estimates for the reduced form travel characteristics model and Table 8 the predicted probabilities of bus and rail use derived from the model. Removal of the NFAM variable from the main-effects model significantly increases the goodness of fit of the Sydney-North Coast model but does not improve the fit for the Sydney- Canberra corridor (Table 7). Many different combinations of independent variables were included in the model for this corridor, and all of them were significant.
On the Sydney-Canberra corridor, bus passengers form two distinct market segments based on their characteristics. The first segment com- prises travellers making short-stay trips (less than three days), travelling alone or with associates and whose journey does not extend beyond Canberra. The second segmentation of bus passengers on this corridor is again the business traveller, who is this time spending more than two weeks in Canberra and either travelling alone or with friends.
Rail segmentation based on travel characteristics on the Sydney-Can- berra corridor is very different to that of the bus. The highest expected probabilities of rail use are for discretionary travellers travelling for either less than three days or more than a fortnight and who are making a longer
188
Table 7. Parameters of mode use for the reduced form travel characteristics model.
Variable Sydney-Canberra Sydney-North Coast
Constant 0.563 -0 .123 (5.05)* (-3.37)
LONJO
Yes
No
-0 .078 -0 .199 (--0.93) (--3.15)
0.078 0.199 (0.93) (3.15)
TDEST
1--3 days -0 .070 0.329 (-0.60) (4.02)
4--14 days -0 .311 --0.183 (-3.15) (--2.89)
15+ days 0.381 --0.146 (4.28) (--3.65)
TP
Business
Discretionary
NFRD
0
1+
--0.266 -0 .056 (--3.15) (-0.95)
0.266 0.056 (3.15) (0.95)
--0.095 --0.110 (--1.28) (--2.05)
0.095 0.110 (1.28) (2.05)
L 2 = 51.45, d.f. = 18 L 2 = 11.73, d.f. = 18 p = 0.0001 p = 0.8162
* Values in parentheses are corresponding Z values.
journey (Table 8). The most notable difference in the segmentation between the two modes is the influence of trip purpose (TP). The size of the parameter estimates indicate this variable to be the most important travel variable on the Sydney-Canberra corridor (Table 7). Bus companies could therefore target business travellers, whereas rail services are most likely to attract discretionary travellers.
A very different result emerges on the Sydney-North Coast corridor. The parameter estimates in Table 7 and the probabilities in Table 8 reveal
Tab
le 8
. O
bser
ved
and
pred
icte
d pr
obab
ilit
ies
of b
us a
nd r
ail u
se b
ased
on
trav
el c
hara
cter
isti
cs.
Syd
ney-
Can
berr
a S
ydne
y-N
orth
Coa
st
Sub
popu
lati
ons
Obs
erve
d E
xpec
ted
Obs
erve
d E
xpec
ted
LO
NJO
T
DE
ST
T
P
NF
RD
B
us
Rai
l B
us
Rai
l B
us
Rai
l B
us
Rai
l
Yes
1-
-3
Bus
ines
s 0
1.00
0.
00
0.50
0.
50
Yes
1-
-3
Bus
ines
s 1
+
0.57
0.
43
0.55
0.
45
Yes
1-
-3
Dis
cret
iona
ry
0 0.
74
0.26
0.
63
0.37
Y
es
1--3
D
iscr
etio
nary
1-
t-
0.75
0.
25
0.68
0.
32
Yes
4
--1
4
Bus
ines
s 0
0.83
0.
17
0.44
0.
56
Yes
4
--1
4
Bus
ines
s 1
+
0.33
0.
67
0.49
0.
51
Yes
4
--1
4
Dis
cret
iona
ry
0 0.
56
0.44
0.
57
0.43
Y
es
4--
14
D
iscr
etio
nary
1
+
0.35
0.
75
0.62
0.
38
Yes
15
-t-
Bus
ines
s 0
1.00
0.
00
0.61
0.
39
Yes
15
-t-
Bus
ines
s 1
+
0.67
0.
33
0.66
0.
34
Yes
1
5+
D
iscr
etio
nary
0
0.67
0.
33
0.73
0.
27
Yes
15
-t-
Dis
cret
iona
ry
1+
0.
92
0.08
0.
77
0.23
N
o 1-
-3
Bus
ines
s 0
0.55
0.
45
0.54
0.
46
No
1--3
B
usin
ess
1+
0.
44
0.56
0.
59
0.41
N
o 1-
-3
Dis
cret
iona
ry
0 0.
63
0.37
0.
67
0.33
N
o 1-
-3
Dis
cret
iona
ry
1-t-
0.
74
0.26
0.
71
0.29
N
o 4
--1
4
Bus
ines
s 0
0.56
0.
44
0.48
0.
52
No
4--
14
B
usin
ess
1+
0.
75
0.25
0.
53
0.47
N
o 4
--1
4
Dis
cret
iona
ry
0 0.
61
0.39
0.
61
0.39
N
o 4
--1
4
Dis
cret
iona
ry
1+
0.
78
0.22
0.
66
0.34
N
o 1
5+
B
usin
ess
0 0.
50
0.50
0.
65
0.35
N
o 15
-t-
Bus
ines
s 1
+
0.50
0.
50
0.69
0.
31
No
15-t
- D
iscr
etio
nary
0
0.78
0.
22
0.76
0.
24
No
15
+
Dis
cret
iona
ry
1+
0.
84
0.16
0.
79
0.21
0.67
0.
33
0.46
0.
54
0.57
0.
43
0.41
0.
59
0.53
0.
47
0.49
0.
51
0.54
0.
46
0.41
0.
59
0.00
1.
00
0.34
0.
66
0.00
1.
00
0.29
0.
71
0.34
0.
66
0.37
0.
63
0.32
0.
68
0.32
0.
68
0.50
0.
50
0.35
0.
65
0.38
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62
0.38
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75
0.33
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67
0.53
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33
0.56
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44
0.41
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59
0.51
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49
0.58
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42
0.59
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41
0.55
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45
0.54
0.
46
0.46
0.
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0.44
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0.39
0.
61
0.62
0.
38
0.47
0.
53
0.54
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46
0.42
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58
0.59
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41
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44
0.56
0.
44
0.50
0.
50
0.61
0.
39
0.48
0.
52
0.53
0.
47
0.34
0.
66
0.58
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42
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190
less distinct segmentation on this corridor than the Sydney-Canberra corridor. The highest expected probabilities of bus use are for travellers whose journey's are part of longer ones, who plan to stay less than 15 days at their destination, who are on holidays, and who are travelling in a group. The highest probabilities of rail use on the corridor are for travellers passing ghrough the north coast, who are making a business trip, are staying for more than three days at their destination, and who are either travelling alone or with associates.
The variables TDEST and LONJO are clearly the most important in affecting the use of bus and rail services on this corridor. Obviously, the North Coast is a popular destination for holiday-makers and the bus is able to target a significant proportion of this market. It also appears as though rail services on this corridor are attracting businessmen who may be
-- attending conventions and conferences in the rapidly expanding tourist resorts dotted along the north coast, and
- - who are passing through the north coast and are presumably travelling onto Brisbane.
The availability of sleeping berths on some North Coast rail services may have been influential in attracting passengers who are making longer journeys.
C o n c l u s i o n s
This study has examined the passenger profiles of bus and rail services that have emerged in the first six months following partial deregulation of the long-distance bus industry on the Sydney-Canberra and Sydney-North Coast corridors. The study has found that there exists a distinct market segmentation based on the socio-economic characteristics of bus and rail passengers on the Sydney-Canberra and Sydney-North Coast corridors. The age and occupation of bus passengers is generally biased towards the young and unemployed, whereas for rail it is biased towards the old and retired.
In terms of travel characteristics, there is a likely market segmentation on the Sydney-Canberra corridor due to the ability of the bus to attract a larger slice of the business traveller market, whereas on the Sydney-North Coast corridor the segmentation is reversed. Bus services are more likely to attract discretionary travellers, whereas rail services are more likely to attract the business traveller on the Sydney-North Coast corridor.
The findings of this research are suggestive of marketing strategies
191
which could be adopted by transport operators. On the Sydney-Canberra corridor, bus operators should target the business traveller making both short and long trips. The level of business travel between Sydney and Canberra is high and there is potentially a larger market here for bus operators. The attraction of business travellers to bus during the first six months of the trial liberalisation was primarily associated with bus operators adopting an aggressive marketing strategy based on price. Yet it is generally considered that journey-time savings and comfort have a higher value to business travellers (Hensher 1977) than cost savings. Bus operators should market their bus services as a quicker and more comfortable alternative to competing transport modes such as the car, train and air services.
The business market is smaller on the Sydney-North Coast corridor, yet there is the potential for bus operators to capture a larger slice of the business market. This could be achieved through marketing strategies directed to attracting the growing numbers of business people attending conferences and conventions at the larger tourist resorts. However, the greatest potential for increases in bus patronage lies in attracting middle- aged travellers who are paying full fare. The large number of young and old travelling on this corridor results in a substantial number of bus passengers eligible for concessional travel. For bus operators to maintain financial viability, their marketing strategies should concentrate on increas- ing the positive perceptions of bus travel to middle-aged travellers by presenting the bus as a viable alternative to the car.
As the passenger profiles indicate, discretionary travel is the most important journey purpose of bus and rail passengers on both corridors. Evidence that the SRA is responding to this can be seen in their establish- ment of Rail Travel Centres and the development of package holidays whereby travel, accommodation and meals are arranged by the SRA. This seems to be a feasible marketing strategy for the SRA in its attempts to increase patronage levels. The ability of bus operators to copy this type of marketing strategy is limited by their resources. Only the larger com- panies, e.g. Greyhound and Ansett-Pioneer, would have the resources required to establish travel centres on a smaller scale and market pack- aged tours in direct competition with the SRA.
It should be noted that the NSW Government is in the process of partially deregulating the intrastate airline industry, thereby increasing competition in the long-distance passenger market. It is imperative that bus operators consolidate their position in the market before this occurs. Just over 20% of all intrastate air passengers are flying to Sydney to connect with interstate and overseas flights (Ministry of Transport 1986). At present very few bus operators provide a service to the airport from
192
rural NSW with most bus companies terminating their services at the central railway station in the city. Bus operators could therefore attract many of these airline passengers if they were to provide direct services to the airport, with their timetables complementing those of the airlines. This type of innovative strategy has proved both popular and successful in the US.
Finally, the static treatment of bus and rail passenger markets in this study hides the fact that the intrastate passenger environment is in a considerable state of transition. Already the SRA is concentrating services on the more denser corridors and, replacing rail services on the thinner routes with bus services effectively reducing competition on these corri- dors. Also, the Very Fast Train proposal between Sydney and Melbourne will intensify competition on the Sydney-Canberra corridor. Thus, it is in the interests of transport operators to keep abreast of changing passenger markets, in order to enhance viability and commercial opportunities. The analysis undertaken in this study presents bus and rail operators with guidelines for developing passenger marketing strategies.
Acknowledgements
We would like to thank the Bureau of Transport Economics and Commu- nications for providing the data, and the two referees for their helpful suggestions.
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