Allocating Revenues to Public Transit Operators Under an Integrated Fare System

Document Type

Journal Article

Publication Date


Subject Area

operations - performance, economics - revenue, organisation - performance, mode - mass transit


Transit operators, Transit, Revenues, Public transit, Performance measurement, Methodology, Methodologies, Mass transit, Marginal costs, Local transit, Integrated fare system, Fund allocations


A methodology is proposed and a model is developed to address the issue of revenue allocation that arises in most urban public transport systems that implement an integrated fare system and where the transport services are provided by multiple operators. The methodology and models are practical and easy to implement and at the same time scientifically sound, using data collected on a regular basis. The objective for the methodology is to maximize the provided service while introducing incentives to the operators to increase their service quality. The allocation is based on short-term marginal cost. The methodology comprises four components: selection of appropriate performance measures, development of marginal cost factors, data collection and processing, and revenue allocation by using the output of the previous components. The methodology is described in a top-down approach and can be used for the allocation of revenues in a wide range of integrated public transit systems. An application is presented demonstrating the applicability of the methodology and models.