Is increasing the frequency an effective measure for the renaissance of inter-city coach? A longitudinal study of the relation between volume and frequency

In recent years, inter-city coach (ICC) services have seen a gradual decline in passenger volumes due to various external influences. Typically, ICC companies respond to this situation by reducing the frequency of their services. However, this reduction in frequency can affect passenger choice, potentially leading to an even further decrease in volumes. This suggests a potential endogeneity between ICC volumes and frequencies. To investigate this often-overlooked issue, our study establishes a simultaneous equation model. We use four years of longitudinal ICC journey data and apply Ordinary Least Squares (OLS) and Fixed-Effect Three Stage Least Squares (FE3SLS) regression methods to compare the differences brought about by endogeneity. Our findings indicate that the interaction between volumes and frequencies will be underestimated without considering the endogeneity. Furthermore, we segment the ICC market to explore the heterogeneity of different routes. Our results show that the volumes of long-distance routes are most significantly impacted by frequency changes. Moreover, volumes of routes connecting counties appear to be more sensitive than those between cities. While increasing service frequency may boost volumes to a certain extent, it is crucial for ICC companies to develop differentiated strategies based on market segmentation. Shifting the operational focus to county-connecting routes could help avoid direct competition with other transportation modes, such as high-speed railways.