1.

Computation of Ticket Price

Public Transport Authority (PTA) required its users to purchase ticket in order
to enjoy services provided by Aubin Grove Station. This section attempts to
compute preferred ticket price, advised by relevant parties and stakeholders.
The following assumptions are taken in consideration.
Total project cost
: 80 million AUD (including labour cost and
machinery cost)
Usage period
: 30 years
Break-even point
: 9 years
Market interest rate
:6%
Rate of return (ROR)
:9%
Number of passenger annually
: 20 million
Ratio of children to Adults
: 1 in 4
Rate of ticket price for children
: Half of adult ticket price
O&M cost
: 15% of total project cost
Annual income
: To be calculated

1.1 THE TICKET PRICE FORMULA

Perth Central
station

Aubin Grove
station

Figure 1: Perth Central station to Aubin Grove station route.

The route interconnecting Perth Central Station and Aubin Grove Station.
Price of ticket will be calculated based on formula below:
Ticet Price=Base ticket price+

( Number of trips1)Base ticket price

3

1.2 BASE TICKET CALCULATION

The base ticket price of an adult and a child price is calculated using the
assumptions made in section 1.0 above. In order to compute the pricing, the
annual income must be found first such that at break-even point:

PV cost= PV income (

Benefit
=1)
Cost

Thus an equation that relates TPC, annual cost (O&M cost), and the annual
income can be formulated as:
80+ A cost

(1+i) 1
( 1+i) 1
= Aincome
N
i(1+i)
i(1+i)N

With a ROR of 9%, O&M cost of 12 million AUD per year, and a break-even
period of 9 years:
80+12

(1+ 0.09) 1
(1+ 0.09) 1
=A income
9
0.09(1+0.09)
0.09(1+0.09)9

Therefore,
A income=25.34 million AUD per year
Since ticket price of children is half of that of adults, therefore 5 million of
children is equivalent to 2.5 million of adults. Comparatively, 17.5 millions of
adults passenger are assumed in calculation.
Adult base ticket=

25.34
=1.45 1.50 AUD per person
17.5

Children base ticket=

1.50
=0.75 AUD per person
2

1.3 TICKET PRICE CALCULATION

Assuming a family of 2 adults and 2 children travelling back and forth from
Perth Central City and Aubin Grove Station.
i.

Adult ticket price:

Ticet Price=Base ticket price+

1.50+

( Number of trips1 ) Base ticket price

3

(21 ) (1.50)
3

2 AUD
ii.

Child ticket price:

Ticet Price=Base ticket price+

( Number of trips1 ) Base ticket price

3

 0.75+

( 21 ) (0.75)
3

1 AUD
Hence, the total ticket price would be:

Ticket price=( 2 2 ) +( 1 2 ) =6 AUD

Table 1 below shows overall ticket prices for both adults and children
interconnecting Perth Central station and Aubin Grove station.
Station
Perth Central
Station

Category
Adult

One way ticket

1.50 AUD

Return ticket
2 AUD

Child

0.75 AUD

1 AUD

Aubin Grove
Station
Table 1: Ticket pricing for both adult and children.

1.4 PROFIT EXPECTATION & ECONOMIC BENEFITS

Yea
r

Year End
Income

Year End
Expendit
ure

PV
Income

PV
Expendit
ure

Cumulati
ve
Income

0
1

0.00
25.34

80.00
12.00

0.00
23.25

80.00
11.01

0.00
23.25

Cumulati
ve
Expendit
ure
80.00
91.01

25.34

12.00

21.33

10.1

44.58

101.11

25.34

12.00

19.57

9.27

64.15

110.38

25.34

12.00

17.95

8.50

82.1

118.88

25.34

12.00

16.47

7.80

98.57

126.68

25.34

12.00

15.11

7.16

113.68

133.84

25.34

12.00

12.72

6.56

126.40

140.40

25.34

12.00

11.67

6.02

138.07

146.42

25.34

12.00

10.70

5.53

148.77

151.95

10

25.34

12.00

9.82

5.07

158.59

157.02

11

25.34

12.00

9.01

4.65

167.6

161.67

12

25.34

12.00

8.27

4.27

175.87

165.94

13

25.34

12.00

7.58

3.91

183.45

169.85

14

25.34

12.00

6.96

3.59

190.41

173.44

15

25.34

12.00

6.38

3.29

196.79

176.73

16

25.34

12.00

5.86

3.02

202.65

179.75

17

25.34

12.00

5.37

2.77

208.02

182.52

18

25.34

12.00

4.93

2.54

212.95

185.06

19

25.34

12.00

4.52

2.33

217.47

187.39

20

25.34

12.00

4.15

2.14

221.62

189.53

21

25.34

12.00

3.81

1.96

225.43

191.49

22

25.34

12.00

3.49

1.80

228.92

193.29

23

25.34

12.00

3.20

1.65

232.12

194.94

24

25.34

12.00

2.94

1.52

235.06

196.46

25

25.34

12.00

2.70

1.39

237.76

197.85

26

25.34

12.00

2.47

1.28

240.23

199.13

27

25.34

12.00

2.27

1.17

242.50

200.30

28

25.34

12.00

2.08

1.07

244.58

201.37

29

25.34

12.00

1.91

0.99

246.49

202.36

30

25.34

12.00

1.75

0.90

248.24

203.26

Cumulative Cash Flow (AUD, millions) against Period (Years) graph

300

250

200

Cumulative Cash Flow (AUD, millions)

150

100

50

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 1516 17 18 19 20 21 22 23242526 27 28 29 30 31
Period (Year)
Cumulative Income

Cumulative Expenditure

Figure 2: Cumulative cash flow against period graph.

Based on the Figure 2, the expected loss at the beginning of the operation of
Aubin Grove transit station is 80 million AUD (cost of total project). Whereas,
the net income and net expenditure is expected to be zero, reaching breakeven point in 9 years after the project started. Furthermore, a total profit
sum of 44.98 million AUD is expected at the end of usage period.
Total profit calculation:
Profit=CumulativeincomeCumulative expenditure
At 30 years:
Profit=248.24203.26=44.98 million AUD

Therefore, the ratio of benefits to cost would be:

Benefit
Cumulative income
=
Cost
Cumulative expenditure

248.24
203.26

1.22( 1)
Should the government of Western Australia and the Perth Transport
Authority come to an understanding to approve the project, as a revenue of
44.98 million AUD would be generated, provided that all assumptions made
does not deviate significantly from reality. The public would be able to enjoy
hassle free route from Perth Central station to Aubin Grove station. More
parking spaces can be delivered upon completion of this project.

1.5 OTHER TICKETING PRICE FACTORS

1.5.1 ALTERNATIVE MODE

OF

TRAVEL OPTIONS

There are alternative ways travelling to Perth Central City. Further description
and details will be shown below:
1. Bus
According to PTA, six feeder bus services will operate from a
designated transfer facility, with bus access from Russell Road. Three
of these services will operate between Cockburn Central and Aubin
Grove and the remaining services will run as south of Aubin Grove.
(PTA 2014)

2. Car
Aubin Grove include a designated Kiss n Ride drop-off area and 2000
bay car park with access off Russell Road, Wentworth Parade and
Rutherford Road. Travelling on car can be convenient since no waiting
time necessary, and plenty of parking spaces provided. However, one
have to bear massive expense in order to drive a car in city due to
relative costly petrol fuel.
3. Taxi
Taxi experience in Perth can be hassle free. In other words, it is
convenient for local people to take a taxi to Perth City. However, the
waiting period for the taxi will be extended during peak periods. Taxi
fare is relatively expensive compared to train services.
4. Cycling or Walking
Cycling offers the greenest yet costless ways of travel options. With
communitys principle-shared path networks located on both sides of
the freeway, public can have easy access to cycling or walking.
Nevertheless, cyclist and pedestrian are encourage to have enough
stamina during travelling long distance from place to place.

1.5.2 ENVIRONMENTAL ISSUES

Driving in Perth's major freeways and highways are free from any tolls.
However, Perth is said to be the most car dependent city in the developed
world. Transportation contributed 14% of total greenhouse gas emissions in
Perth, of which 90 % is generated by the private vehicles (Department of
Transport 2015). Moreover, private vehicles produce enormous noise
pollution to surroundings, causing problems such as stress related illnesses,
speech interference, hearing loss, sleep disruption (eSchooltoday 2015).
These environmental issues can be improved by using public transport such
as train services. Train is able to accommodate more passengers and thus
reducing volume of private cars travelling on road. Furthermore, train
services promote more active lifestyles by encouraging the local people to
walk or cycle to the train station. Lastly, the reduction in car travelling on the
road will have a positive impact on the number of road accidents
(Department of Transport 2015).

Department of Transport. 2015. Public Transport of Perth in 2031.

http://www.transport.wa.gov.au/mediaFiles/aboutus/ABOUT_P_PT_Plan2031.pdf. (Accessed 17th May 2015)

eSchooltoday. 2015. Effects of noise pollution.

http://eschooltoday.com/pollution/noise-pollution/effects-of-noisepollution.html (Accessed 17th May 2015)

Government of Western Australia. 2015. Aubin Grove Station.

http://www.pta.wa.gov.au/Projects/AubinGroveStation/tabid/729/Default.aspx(
Accessed 16th May 2015)
Hyams Lara. August 5, 2012. $80 million for Aubin Grove station. WA News.
http://www.watoday.com.au/wa-news/80-million-for-aubin-grove-station20120805-23nfj.html (Accessed 16th May 2015)
PTA. June 2014. Aubin Grove. http://www.pta.wa.gov.au/Portals/0/docs/Aubin
%20Grove%20Fact%20Sheet%20.pdf (Accessed 16th May 2015)
Transperth Information. 2015. Bus Timetable.
http://www.transperth.wa.gov.au/timetablepdfs/Bus%20Timetable
%20123%2020150201.pdf (Accessed 16th May 2015)
Urbanalyst. July 8, 2014. Tenders called for Aubin Grove Station project.
http://www.urbanalyst.com/in-the-news/western-australia/2597-tenderscalled-for-aubin-grove-station-project.html (Accessed 16th May 2015)

Cash Flow Diagram

Table 1 illustrates the year end income and expenditure for the operation of
Aubin Grove station. Note that cash flow diagram as illustrated in Figure 1
holds true if and only if year end income and expenditure remain constant as
predicted. Nevertheless, the cash flow diagram presented can still be used as
a benchmark if there are slight variations in both the year end income and
expenditure. The usage period is assumed to be 30 years.
Table 1: Year-end income and expenditure.
Year
0
1

Year End Income

(AUD)
0.00
25.34

Year End Expenditure

(AUD)
80.00
12.00

25.34

12.00

25.34

12.00

25.34

12.00

25.34

12.00

25.34

12.00

25.34

12.00

25.34

12.00

25.34

12.00

10

25.34

12.00

11

25.34

12.00

12

25.34

12.00

13

25.34

12.00

14

25.34

12.00

15

25.34

12.00

16

25.34

12.00

17

25.34

12.00

18

25.34

12.00

19

25.34

12.00

20

25.34

12.00

21

25.34

12.00

22

25.34

12.00

23

25.34

12.00

24

25.34

12.00

25

25.34

12.00

26

25.34

12.00

27

25.34

12.00

28

25.34

12.00

29

25.34

12.00

30

25.34

12.00

Based on Table 1, a cash flow diagram for Aubin Grove transit station project is constructed as follows:

Cash Flow Diagram for Usage Period of 30 Years

Year End Income (AUD)

Year End Expenditure (AUD)

40
20
0

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

-20
Cash Flow (AUD in Million)
-40
-60
-80
-100
Period (Years

Figure 1: Cash Flow Diagram for Usage operation of Aubin Grove station project.