Assessing free-fare public transport in Chilean cities through optimization models

Many public transport services receive operating subsidies from national, regional, or local Governments, part of which are directed to reducing fares. In recent years, different cities, most of them located in Europe, have advanced in the provision of free-fare public transport, which could help reduce car use and thus limit negative externalities related to its use. Using cost minimization models with variable mode share, in a circular structure with radial lines, optimal fares for bus services were estimated for 33 small and medium-sized cities in Chile. Through a linear regression model, we determined that the optimal fares decrease for cities with higher population, lower average income, a higher proportion of students, and with a CBD surrounded by natural boundaries such as seacoast. Based on the model's results, together with feasibility criteria that included competition of buses with other transportation modes, the regulation of existing systems and the quality of available data, recommendations are provided to select the best cities for a test of free-fare public transport in Chile. The methodology is applicable to cities in other countries, and future research may incorporate the effect of the valuation of crowding by users, as well as the generation of additional trips due to a drop in bus fares.