Bus operators serve many markets characterized both spatially and temporally. An objective of these companies is to tailor fares and service provision to these myriad markets. The past 20 years have seen an unprecedented desire by bus companies to analyse costs and revenues at the micro level to permit this tailoring. This was initially on a route-by-route basis and later on a time-of-day/day-of-week (or time period) basis. The methodology was developed in three stages: (1) apportioning methods for allocating costs and revenues to route level were developed in the United Kingdom and the U.S.A. in the period 1968 to 1974; (2) further developments post 1974 were chiefly in the U.S.A. and Australia and concentrated on prediction methods for incremental costs resulting from expanding/contracting service at particular times of day; and (3) there was a resurgence of interest in the U.K. post 1979 with analysis of both allocated and incremental costs and revenues. This assumed great practical interest with deregulation of the industry in 1986.The paper traces the development of the literature over the period and indicates that costing methodologies have been extensively analysed but revenue methodologies are still in their infancy. On the costing side, two methodologies, one from the U.K. and one from Australia, are available. The paper describes these two techniques and, in comparing them, identifies a trade-off between predictive accuracy and simplicity of application. The paper concludes that the development of micro-level analytical techniques has proved to be both practical and desirable. Areas for potential future research are also identified.
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