Ability to Pay (ATP), Willingness to Pay (WTP) and Fare Elasticity of Non-vehicle Passengers in Ferry Service Selection: A Case Study of the Merak-bakauheni Route

Abstract

The Merak-Bakauheni corridor is Indonesia's most critical maritime transit route. The introduction of an Executive Ferry Service to complement the Regular Service has triggered an unbalanced passenger distribution, which persists amidst a 468% fare disparity (IDR 84,800 vs. IDR 18,100). This study aims to analyze the mode choice behavior by contrasting the absolute purchasing power (Ability to Pay/ATP) with the perceived premium service value (Willingness to Pay/WTP) of non-vehicle passengers who have previously utilized this ferry route. Utilizing a Stated Preference (SP) framework, primary data from 111 respondents from various passenger groups were modeled via Binary Logistic Regression. The optimized utility model confirms that ticket fare is the primary determinant for 51.4% of passengers. The empirical findings reveal a significant economic disparity: while the passengers' average ATP is high at IDR 871,443, their extracted WTP threshold for the Executive Service is merely IDR 69,543. Consequently, demand is highly elastic, with an estimated own-price elasticity of 2.55 and a cross-price elasticity of 1.28. The study concludes that the passenger distribution imbalance is driven not by a lack of affordability, but by the failure of the premium service's perceived value to justify the price markup. It is recommended that operators adjust their price ceiling closer to the estimated WTP threshold to restore traffic equilibrium and optimize long-term revenue across the dual-service system.