Analysis of Price Elasticity of Hanoi MRT Line 2A in Comparison with Manila MRT Line 3 and Jakarta MRT

Abstract

A trade-off analysis between setting appropriate fares and attracting enough users is very important to ensure profitability for a sustainable public transportation system. The objective of this study is to estimate the elasticity of public transport users in Hanoi due to changes in fares and services. The estimated elasticities were then compared and analyzed with previous fare elasticity studies Manila and Jakarta. The analysis results show that users were inelastic in their demand for fare increases in Hanoi, although the elasticity was higher than in previous surveys in Manila and Jakarta. These findings suggest that Hanoi can raise the fare level of the railway and increase fare revenue without reducing the number of users. In addition, further development of the rail system and better improvement of accessibility to the station could significantly reduce price elasticity and lead to an increase in fare revenue without reducing ridership, even if fares are increased.