A time series analysis of passenger rail demand in major Australian cities

The paper uses cointegration and error correction approach to examine train passenger boardings in four major Australian cities. It suggests that demand is highly price inelastic, thereby implying that a decrease in fare would not lead to a rise in total revenue, although it could lead to a rise in patronage to some extent. City population and number of kilometres run are the most influential determinants. This is both encouraging and challenging, especially because the Australian urban population is steadily rising and the system is already supply-constrained, particularly in peak periods. The study also suggests that private vehicle and rail travel are at best weak substitutes and, in some cases, are possibly complements. Passengers have fewer options in the short run, while, in the long run, they may respond more comprehensively to changes by changing their personal circumstances.