Scotland-wide Older and Disabled Persons Concessionary Bus Scheme - Further Reimbursement Research

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1 Introduction
1.1 This study
1.2 The All-Scotland free concessionary travel scheme
1.3 This report

2 Current Reimbursement Arrangements and Background Trends
2.1 Background to the current concessionary reimbursement arrangement
2.2 Recent Trends in Scottish Concessionary Travel

3 Discount Factors and the Average Fare
3.1 Revenue forgone by operators due to the free scheme
3.2 Principles involved in calculating the average fare forgone
3.3 Data for Method (a) and implications for non-concessionary average fares
3.4 Assumptions about use of tickets by concessionary passholders
3.5 Concessionary journey length and the average cash fare
3.6 Commentary on methods for calculating the average fare forgone
3.7 Conclusions with regard to Discount Factors

4 Reimbursement Factors and Elasticities
4.1 Concepts and terminology
4.2 Sources of elasticity parameters
4.3 Evidence on concessionary fare elasticities from outside Scotland
4.4 Deriving Elasticities from Scottish 2002-3 Data
4.5 Data sources
4.6 Scottish Elasticity estimates
4.7 Preferred elasticity values
4.8 Application of Elasticity Estimates
4.9 Conclusions with regard to elasticity values

5 Additional Costs
5.1 Additional operating costs of increased concessionary demand
5.2 Base additional cost rates
5.3 Relative labour costs
5.4 Base costs
5.5 Impact of differences in average journey length
5.6 Updating additional cost parameters over time
5.7 Conclusions on Additional Costs

6 Reimbursement Calculations
6.1 Summary of key findings on reimbursement inputs
6.2 Projected All-Scotland values for illustrations
6.3 The Reimbursement Calculation process
6.4 Illustrations of alternative Reimbursement Scenarios (2012-13)
6.5 Potential Reimbursement Levels in 2013-14 and 2014-15

7 Recalculation of the Reimbursement Rate
7.1 The National Reimbursement Rate
7.2 Practical steps with regard to future reimbursement rates

MVA Consultancy


Table 3.1 Operator data on adult non-concessionary ticket sales in Scotland, 2011
Table 3.2 CPT Assumptions on journeys, adult non-concessionary passengers
Table 3.3 Revised estimates of journeys, adult non-concessionary passengers
Table 3.4 Concessionary average fare forgone, (MVA/Minnerva assumptions)

Table 4.1 Point elasticities implied by current Reimbursement Factor assumption
Table 4.2 Default DfT elasticities
Table 4.3 Alternative Data on Strathclyde Concessionary Journeys, 2001-2004
Table 4.4 Concessionary Journeys in the years ending September 2002 and 2003, and March 2007
Table 4.5 Summary of non-zero concessionary fares charged in Scotland in year ending September 2002
Table 4.6 Summary of Scottish Elasticity Estimates from 2001-2 data

Table 6.1 Assumed concessionary journeys, fares and price levels for re imbursement illustrations
Table 6.2 Calculation of Reimbursement for Illustrative Reimbursement Scenario (Minnerva/MVA preferred parameters)
Table 6.3 2012-13 Reimbursement estimates, with alternative reimbursement parameters


Figure 2.1 Scottish trends in concessionary journeys, fares and reimbursement, indexed to 2006-7

Figure 4.1 Comparisons of elasticity estimates

Figure 4.2 Potential indices for price adjustment of fare levels


Appendix A - Overview of bus operator reimbursement principles

Appendix B - Glossary of terms

Appendix C - Worked Example

Published Date 12 Feb 2013 Type Mode of transport