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Evaluating the Service Quality and Price Elasticity of Public Bus Transport: A Case Study on the Kathmandu-Pokhara Route

Evaluating the Service Quality and Price Elasticity of Public Bus Transport: A Case Study on the Kathmandu-Pokhara Route

Student: Pramod Raj Pandit

Supervisor: Dr. Pradeep Kumar Shrestha

Submitted Date: January, 2025

Abstract

Public transportation is a critical component of modern urban transportation systems, offering numerous benefits over private transport. Despite these advantages, private transport is often preferred due to several factors, including service quality and fare prices. However, there is limited research on these factors, especially in the context of public bus transport. Therefore, this study investigates the service quality and price elasticity of demand for public bus transport on the Kathmandu-Pokhara route. The study employs both qualitative and quantitative analyses, using the SERVPERF model to evaluate service quality dimensions and the arc elasticity method to determine the price elasticity of demand. The study shows that the overall service quality of public bus transport on the Kathmandu-Pokhara route is disappointingly low, with the tangibles dimension perceived as the poorest and the reliability dimension relatively better. Furthermore, Impact Performance Analysis identifies key areas for improvement, emphasizing aspects such as providing better assistance to passengers, boosting their confidence in the service, ensuring that staff maintain composure, enhancing overall security, and effectively prioritizing passenger needs. Correlation and multiple regression analysis reveal significant positive relationships between SERVPERF dimensions and both commuter satisfaction and demand, with the responsiveness and reliability dimensions significantly influencing commuter satisfaction and demand, respectively. In a price elasticity analysis based on car ownership and income levels, higher demand elasticity is observed among commuters without private cars and those with lower incomes, indicating greater reliance on public transport and higher sensitivity to fare changes, and vice versa. Furthermore, sensitivity analysis indicated that improving service quality dimensions, particularly reliability, reduced price elasticity of demand which implies that enhancing service quality can make commuters less sensitive to price changes. Therefore, by addressing both service quality and pricing, this study provides comprehensive recommendations to enhance commuter satisfaction and demand on the Kathmandu-Pokhara route.

Keywords

Commuter satisfaction, Commuter demand, Kathmandu-Pokhara route, Price Elasticity, Public Transportation, Service Quality, SERVPERF dimensions.