Annex 3 Choice of Fare Structure

Graduated Fares

Graduated fare systems (sometimes called ‘stage fares’) provide a closer association between price and distance traveled than other systems, with the price per kilometre typically ‘tapering’ with distance. This aligns price with the cost of service provision and so strikes a balance between consumer and producer interests. In this system, each route has a series of distance-related ‘fare-stages’ and payment varies according to the number of ‘stages’ travelled. Usually there is no facility for transfer tickets, with separate fares for each vehicle boarded. However, unless the degree of taper is extreme, the price penalty on transit is relatively small. Stage fares systems generate an extensive range of fares across a network and even an extensive range of fares within one long route. As with other fare systems, the number of fares increases when special conditions apply for particular user groups, such as students or pensioners.

The current structure, presently notified by the State Government (as prescribed under the Motor Vehicles Act) is a stage fare system. The Figure below compares the fare rate for three operators in India, i.e., Brihan Mumbai Electric Supply Transport Undertaking (BEST), Delhi Transport Corporation (DTC), Bangalore Metropolitan Transport Corporation (BMTC).

Figure 1 Comparative Analysis of Fares in Indian Cities

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