Economic and socioeconomic assessment of replacing conventional public transit with demand responsive transit services in low-to-medium density areas

The emergence of demand responsive transport (DRT) services is restructuring mobility in the urban universe. They provide a high level of service and in many cases compete with public transportation modes. However, in less dense areas, where conventional public transit (CPT) services such as buses are inefficient and costly, DRT services could be an alternative that is both profitable and provides passenger satisfaction. This paper investigates the economic and socioeconomic potential of replacing CPT with DRT services. In particular, it focuses on the development and combination of two models. The first is an agent-based model, which describes movements of vehicles and assigns them to passengers according to a utility function. The assignment equilibrium problem is solved for demand that is elastic to generalized cost alone. The second is an economic optimization model, based on a simulated annealing algorithm, which aims to determine supply conditions that maximize the benefit for the operator, the user, the environment, and society. Four economic problems are discussed and formulated accordingly. In addition, supply optimization is carried out in particular with respect to fleet size, trip fare, and vehicle capacity. Finally, these models are applied to a real case in the Paris metropolitan area where a bus service has been replaced by a DRT system. The results show that though this shift is not beneficial from a societal point of view, bus demand is attracted by a DRT service consisting of 30 vehicles and charging a fare of 0.5 pound. The operator would aim to propose a taxi-service, with small-sized vehicles and higher fares, in order to in-crease their profitability. User utility, on the other hand, would suggest that public authorities should regulate fares and vehicle capacity (more than 6 seats). Fare regulation, in particular, will depend on the fleet size, ranging linearly from 0 pound for 25 vehicles to 4 pound for 70 vehicles. Finally, we find through the sensitivity analysis that thresholds exist for demand and fixed costs (respectively 85% and 90% of reference values) beyond which the bus line is more beneficial to society than the DRT service.