Case 2: Boston \& Maine Railroad 1 The Mass Transportation Commission of Massachusetts contracted with the Boston \& Maine Railroad in 1963 to set up a demonstration project to determine the effect of lowering fares and increasing both peak and off-peak service upon commuter revenue costs. The Boston \& Maine Railroad was asked to defer filing petitions for the total discontinuance of railroad commuter passenger service into Boston until after the experiment. The railroad then participated in the experiment, which covered three phases; the first phase lasted for seven months (January to July 1963); the second for five months (August to December 1963); and the third for three months (January to March 1964). In 1962, the B\&M carried some 5.3 million passengers annually into and from the city of Boston on a route structure that fans out from the city`s North Station in a Northerly and Westerly direction. To the northeast, the B\&M Eastern Route serves Lynn, Salem, and Beverly (18 miles). The route the splits, with a line to Rockport (35 miles from North Station) and a line to Newburyport (37 miles) that extends to Portsmouth, New Hampshire. To the north, the B \&M Reading Line (12 miles) serves six suburban stations in three towns. Also to the north, the Wilmington (15 miles) serves Lawrence (25 miles) and Haverhill (33) miles and extends to New Hampshire and Maine. The New Hampshire (Lowell) Route serves Lowell ( 25miles ) and also extends to points in New Hampshire. The Woburn Line diverges from the New Hampshire Route at Winchester (8 miles), continuing to Woburn (10 miles). The Fitchburg Division serves the western segment of the B\&M route structure. Passenger service operates on the Fitchburg line to the industrial center of Fitchburg (50 miles), and the line extends for freight service only to the Connecticut River Line and to points in New York State. Passenger service is also provided on two branches of the Fitchburg Division to Bedford and Hudson. During the first phase, overall service on the B\&M (weekdays and weekends) was increased by 77 percent. Weekday service was expanded by 92 percent; with peak-hour service increasing by 82 percent and off-peak service by 96 percent (see Table 1). This expansion required 386 trains per day, an increase of 182 per day over the 1962 level of service. Four lines; Eastern, Reading, Lowell, and Fitchburg had at least a 90 percent increase in total service. Service on two Lines-Bedford and Hudson-remained unchanged, so that the effect of the commuter fare reduction could be more accurately measured. The fare changes were equally dramatic. Both one-way and twenty ride commutation tickets were reduced by varying amounts, from as little as 12 percent for a one-way ticket between Melrose Highlands and Boston and Fitchburg. The fare reductions, which average 28 percent overall (shown in Table 2), are the average reductions at the major station on each line weighted by the number of passengers using each of these stations. Weekday revenue increased during the first phase on the Eastern Line (by 6.1 percent), the Lowell Line (by 10.4 percent), the Woburn Line (by 2.4 percent), and the Fitchburg Line (by 10.6 percent). There was a decrease in revenue on the Reading and Western lines and on the Bedford and Hudson branches. Overall, revenue increased slightly during weekdays and by more than 1 percent on weekends (see Tables 3 ). Table 1 Service increases (percentages) "ive change in scnetuue. + ne-year limit on one-way ticket Table 3 Ravanne earnar *Based on 148 days in 1963 and 147 days in 1962 + No schedule service Based on 59 days in 1963 and 60 days in 1962. Discussion Questions 1. Do you have enough information to determine whether the demand for commuter rail service in the B\&M service area was elastic? 2. How do you account for the difference in elasticity among the various lines? What reason do you assign for the results on the Bedford and Hudson branches? 3. Present detailed calculations for each line and branch. 4. The B\&M decided to continue with its petition to end commuter service after these experiments were finished. Why do you think the railroad management made this decision? Case 2: Boston \& Maine Railroad 1 The Mass Transportation Commission of Massachusetts contracted with the Boston \& Maine Railroad in 1963 to set up a demonstration project to determine the effect of lowering fares and increasing both peak and off-peak service upon commuter revenue costs. The Boston \& Maine Railroad was asked to defer filing petitions for the total discontinuance of railroad commuter passenger service into Boston until after the experiment. The railroad then participated in the experiment, which covered three phases; the first phase lasted for seven months (January to July 1963); the second for five months (August to December 1963); and the third for three months (January to March 1964). In 1962, the B\&M carried some 5.3 million passengers annually into and from the city of Boston on a route structure that fans out from the city`s North Station in a Northerly and Westerly direction. To the northeast, the B\&M Eastern Route serves Lynn, Salem, and Beverly (18 miles). The route the splits, with a line to Rockport (35 miles from North Station) and a line to Newburyport (37 miles) that extends to Portsmouth, New Hampshire. To the north, the B \&M Reading Line (12 miles) serves six suburban stations in three towns. Also to the north, the Wilmington (15 miles) serves Lawrence (25 miles) and Haverhill (33) miles and extends to New Hampshire and Maine. The New Hampshire (Lowell) Route serves Lowell ( 25miles ) and also extends to points in New Hampshire. The Woburn Line diverges from the New Hampshire Route at Winchester (8 miles), continuing to Woburn (10 miles). The Fitchburg Division serves the western segment of the B\&M route structure. Passenger service operates on the Fitchburg line to the industrial center of Fitchburg (50 miles), and the line extends for freight service only to the Connecticut River Line and to points in New York State. Passenger service is also provided on two branches of the Fitchburg Division to Bedford and Hudson. During the first phase, overall service on the B\&M (weekdays and weekends) was increased by 77 percent. Weekday service was expanded by 92 percent; with peak-hour service increasing by 82 percent and off-peak service by 96 percent (see Table 1). This expansion required 386 trains per day, an increase of 182 per day over the 1962 level of service. Four lines; Eastern, Reading, Lowell, and Fitchburg had at least a 90 percent increase in total service. Service on two Lines-Bedford and Hudson-remained unchanged, so that the effect of the commuter fare reduction could be more accurately measured. The fare changes were equally dramatic. Both one-way and twenty ride commutation tickets were reduced by varying amounts, from as little as 12 percent for a one-way ticket between Melrose Highlands and Boston and Fitchburg. The fare reductions, which average 28 percent overall (shown in Table 2), are the average reductions at the major station on each line weighted by the number of passengers using each of these stations. Weekday revenue increased during the first phase on the Eastern Line (by 6.1 percent), the Lowell Line (by 10.4 percent), the Woburn Line (by 2.4 percent), and the Fitchburg Line (by 10.6 percent). There was a decrease in revenue on the Reading and Western lines and on the Bedford and Hudson branches. Overall, revenue increased slightly during weekdays and by more than 1 percent on weekends (see Tables 3 ). Table 1 Service increases (percentages) "ive change in scnetuue. + ne-year limit on one-way ticket Table 3 Ravanne earnar *Based on 148 days in 1963 and 147 days in 1962 + No schedule service Based on 59 days in 1963 and 60 days in 1962. Discussion Questions 1. Do you have enough information to determine whether the demand for commuter rail service in the B\&M service area was elastic? 2. How do you account for the difference in elasticity among the various lines? What reason do you assign for the results on the Bedford and Hudson branches? 3. Present detailed calculations for each line and branch. 4. The B\&M decided to continue with its petition to end commuter service after these experiments were finished. Why do you think the railroad management made this decision