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.