Performance-based regulation of train service delays: Hong Kong

This paper studies performance-based regulation of train service delays in Hong Kong. Motivated by the criticism that the Mass Transit Railway (MTR) offers fare rebates deemed too small for long service delays, our logit analysis of a stated choice experiment’s data collected from 1,559 MTR users in Q4:2020 yields the following findings: (1) the disaggregate willingness to pay (WTP) estimates that ignore passenger attributes are HK$21 to HK$37 for a 15- to 60-minute train service delay announced to occur in a 1-hour period; (2) increasing the period by one hour raises these estimates by ~HK$16; (3) accounting for passenger attributes magnifies these estimates by ~18%; and (4) the aggregate WTP estimates are 1.3 to 4.9 times MTR’s existing rebates for rush-hour delays and 0.5 to 1.9 times for non-rush-hour delays. Hence, aligning MTR’s rebates with the aggregate WTP estimates likely incentivizes MTR to reduce long service delays.