East Asian Journal of Business Economics (EAJBE) (동아시아경상학회지)

East Asia Business Economics Association (동아시아경상학회)
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A Study on the Customer-based Pricing Approach for Railway Fare of Express Train

  • KIM, Gyu-Bae (Department of Business Administration, Daejeon University) ;
  • KANG, Sung-Wook (Transport and Logistics Systems Research Department, KRRI)
  • Received : 2021.10.17
  • Accepted : 2021.11.19
  • Published : 2021.12.30
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Abstract

Purpose - Among the various pricing approaches used to set fares for express trains, this study explores a method of utilizing a customer-based pricing approach. The purpose of this study is to figure out how to apply the customer-based pricing approach to fares of new railway services using express trains. Research design, data, and methodology - This study was conducted through a literature review and case studies. In the literature review, we examined three approaches, focusing on the customer-based pricing approach and its application. In the case studies, we show how a customer-based pricing approach can be applied to determining the fares for railway services. Result - Some studies have used a customer-based pricing approach to set railway service rates, adapting the concepts of customer-based pricing such as demand, elasticity, value and willingness to pay. When setting fares of new railway services, it is recommended to use the customer-based approach in conjunction with other pricing approaches. Conclusion - This study demonstrates that a customer-based pricing approach is a promising tool in making decisions on railway fares. By applying a customer-based pricing approach to fares for new railway services using express trains, railway operators can utilize new service rates and increase the profitability of the railway business.

Keywords

Acknowledgement

This study was supported by a research grant from the Korea Railroad Research Institute.

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