1. ‘STATED PREFERENCE’ FERRIES REVIEW

2. What is the Policy Question? To better understand how people ‘value’ different ‘attributes’ of their ferry service…… Then perhaps? We can understand how ferry users will respond to future (hypothetical) changes in ferry services……

3. By ‘attributes’ we mean: The fare The journey time The journey frequency The time-table On-board services

4. People can ‘reveal’ their preference through everyday behaviour…. E.g. Ferry service x removes all their toilet facilities – 20 per cent people shift to ferry service y, which is £10 more expensive Valuing ‘Attributes’ ?

5. ‘Revealed’ Preference ‘Ad Hoc’ – not very useful for the Ferries Review ‘Ad Hoc’ – not very useful for the Ferries Review Very difficult to analyse (i.e. separate out other factors) Very difficult to analyse (i.e. separate out other factors)

6. ‘Stated’ Preference We ask people their preferences in a controlled experiment……. We ask people their preferences in a controlled experiment……. It is no panacea – people almost always react differently between a hypothetical opposed to a real world scenario…… It is no panacea – people almost always react differently between a hypothetical opposed to a real world scenario……

7. But We have a strong interest group And If we can design ‘as close as’ real world scenarios then we have a better chance of robust results ‘Stated’ Preference

8. The Questionnaire Lots of different types (for each route basket) Lots of different types (for each route basket) Separate questionnaires for foot and motor vehicle passengers Separate questionnaires for foot and motor vehicle passengers Nine hypothetical scenarios, three alternatives Nine hypothetical scenarios, three alternatives

9. The Surveys 1,354 completed surveys (response rate of approximately 35 per cent) 1,354 completed surveys (response rate of approximately 35 per cent) Across 10 ‘baskets’ of routes, varies between 15 and 80 per cent response rate Across 10 ‘baskets’ of routes, varies between 15 and 80 per cent response rate Proportion of visitors versus residents – approximately 3:1 Proportion of visitors versus residents – approximately 3:1

10. Shetland Islands to the mainland Shetland Islands to the mainland Shetland Internal Shetland Internal Orkney Islands to the mainland Orkney Islands to the mainland Orkney Internal Orkney Internal Western Isles to the mainland Western Isles to the mainland Western Isles Internal Western Isles Internal Inner Hebrides to the mainland Inner Hebrides to the mainland Inner Hebrides Internal** Inner Hebrides Internal** Firth of Clyde Firth of Clyde Mainland to mainland Mainland to mainland

11. Aggregate – Foot Passengers Residents(pence)Visitors(pence) Crossing Time (one less minute) 7.014.71 Sailings per day (one additional sailing – currently less than 10) 247.00- Gap between sailings (one less minute – currently more than 10 sailings per day) 5.12- Schedule Adjustment Time later than ideal time (one additional minute) 2.92- Enhanced Facilities (shop, bar, children’s play area, etc.) 144.00- Days per week (an additional day) 46.10-

12. Aggregate – Foot Passengers Crossing Time Band (one minute less) Residents(pence)Visitors(pence) 30 minutes and under 10.619.50 30 to 60 minutes 15.6313.52 60 to 120 minutes 16.1813.86 120 to 240 minutes 17.6814.80 Greater than 240 minutes 24.0419.50

13. Is it useful? A simple example Foot passenger only service – currently 60 minutes - £5 for a single ticket. Foot passenger only service – currently 60 minutes - £5 for a single ticket. New service – 40 minutes - £10 for a single ticket New service – 40 minutes - £10 for a single ticket But we know that people trade time at 16 pence a minute? But we know that people trade time at 16 pence a minute? Implies an additional £3.20 for a new service with a reduced crossing time of 20 minutes Implies an additional £3.20 for a new service with a reduced crossing time of 20 minutes

14. Same Data - New Tool (Price) Elasticity of Demand What happens to demand as a consequence of a change in price? What happens to demand as a consequence of a change in price? Is the quotient of the percentage change in demand and the percentage change in price. Is the quotient of the percentage change in demand and the percentage change in price.

15. Aggregate – Foot Passengers Crossing Time Band ResidentsVisitors 30 minutes and under -0.49-0.38 30 to 60 minutes -0.65-0.53 60 to 120 minutes -0.67-0.56 120 to 240 minutes -0.66-0.55 Greater than 240 minutes -0.72-0.61

16. (Price) Elasticity of Demand Now suppose we have a 60 minute service, and that there are 100 passengers a day on that service. Now suppose we have a 60 minute service, and that there are 100 passengers a day on that service. Let us also suppose, that unlike before, there is no service improvement in terms of reduced journey time. Let us also suppose, that unlike before, there is no service improvement in terms of reduced journey time. But that we want to increase patronage to 150 passengers per day. But that we want to increase patronage to 150 passengers per day.

17. The relevant figure is -0.65. The relevant figure is -0.65. Patronage needs to increase by 50 per cent. Patronage needs to increase by 50 per cent. Then the fare level will need to fall 77 per cent (.50/.65). Then the fare level will need to fall 77 per cent (.50/.65). (Price) Elasticity of Demand

18. Conclusions New set of tools for: New set of tools for: –Understanding how people value their service in terms of key service attributes –Understanding how future service profiles might impact on patronage

19. But we shouldn’t get too carried away? ‘Stated Preference’ is not the real world Conclusions