Performance-based Regulation of Mass Transit Railway’s Reliability Performance

Project Year: 2020 - 2021

Funding Source: Public Policy Research Funding Scheme

Project Team Member: Dr CHOW Sin Yin Alice

To inform a future policy debate on MTR’s reliability performance, the project estimates the economic cost of MTR customers due to travel delays during a service disruption. Using statistical modeling of telephone responses to a contingent valuation survey by ~1,500 respondents, our proposed estimation aims to precisely quantify MTR customers’ willingness to pay (WTP) for avoiding a service disruption. Using these WTP estimates, the project calculates annual aggregate customer costs (HK$M per year) caused by MTR’s service disruptions, a key input for a cost-based incentive scheme that can be readily implemented via MTR’s fare adjustment mechanism. If adopted, the incentive scheme is expected to improve MTR’s reliability performance, thanks to its better alignment of MTR’s fines with customer cost of service disruptions.