A study of passengers’ willingness to pay for business class seats of high-speed rail in Taiwan

Abstract

To enhance the transportation market share of high-speed rail (HSR), the operator has conducted a promotion for off-peak periods since early 2008. However, it has been difficult to increase the usage rates for business class seats after the implementation of this promotion. The objective of this article is to investigate passengers’ willingness to pay (WTP) for business class seats of the HSR in Taiwan. The survey framework is designed to determine the value of WTP. Results obtained from both the conventional model and the spike model, a model that can handle zero responses in WTP, show that the fare for business seats is the most important factor in choice behaviour. Long distance travellers strongly emphasise compartment noise levels and security, while medium distance travellers primarily consider the cost of the ticket relative to income. This article also verifies that the application of the spike model is similar to the conventional model when there are not a high proportion of zero responses.

Keywords:

• high-speed rail
• willingness to pay
• spike model

Notes

Note

For simplicity, we only derive the WTP with income variable. It is straightforward to derive the WTP with other variables included, such as Q and X. However, it shall be noted that these two kinds of variables shall be specified as alternative specific variables instead of generic variables for estimation purpose.