Stomper's idea to ease jams: Should public buses and trains use 'dynamic pricing' like taxis and airlines?

Submitted by Stomper Riddhiman

This story was submitted via Stomp App contribution.

Ask anybody who uses public transport what they dread the most in a day and many will say peak hour.

It's not uncommon to see snaking long queues at MRT stations or people spilling out of bus stops as people commute to and from work.

Stomper Riddhiman, an Economics student at Singapore Institute of Management (SIM) believes that dynamic pricing can help minimise peak hour traffic and the morning and evening rush.

Dynamic pricing, also known as surge pricing or time-based pricing, is the practice of pricing items at a level determined by a particular customer's perceived ability to pay.

This is commonly used by taxi companies and airlines.

Riddhiman believes that the same can and should be applied to public transport.

"Many steps, such as lower fares pre-peak hours, have been implemented to solve issues but peak hour traffic is still huge," he said.

"Perhaps it is time public transport also uses dynamic pricing strategies, just like our taxis and airlines do.

"For a service such as public transport, the demand is always highly inelastic.

"Meaning, during peak hours, we pay a much lower fare for public transport than for taxis.

"If the fares for public transport were to go up during peak hours, commuters will use public transport because the surge for taxi services at the same time is very expensive.

"The difference between fares during peak hours and off-peak hours is huge.

"This leaves a commuter with two other alternatives- walking or using a personal mobility device, which is not a practical thing to do in long distances."

He proposes increasing fares by just a few cents during peak hours.

"There might be some backlash but people will realise it is necessary to pay for all the upgrades and developments to public transport that are underway," he said.

"Just a bit more will make a major difference.

"Such a pricing strategy can help Singapore cover the $573 million cost to upgrade and renew the power supply and track circuit systems on the ageing North-South and East-West lines (NSEWL) that will begin later this year as well as the $1.1 billion five-year Bus Service Enhancement Programme (BSEP) that was completed last year.

"Overall, the simple economics of cost-benefit analysis and price inelasticity of a service could help Singapore make higher revenues without losing anything."