Productivity and cost structure of transportation passenger services using private cars (paratransit) in Japan

In Japan, private car passenger services have recently been increasing to help secure mobility for older adults. The policy of using passenger transport with private cars is included in the 2020 revision of the Act on the Revitalization and Rehabilitation of Local Public Transportation Systems. In this study, we examined the profitability, productivity, and operational cost structure of these services through a survey of private passenger transport for passenger services with private car by hired driver (PPHDs) and transfer services with private car by volunteer driver (TPVDs). We found that the production function is correlated with the driver and vehicle in PPHDs and TPVDs as well as the production itself, such as vehicle-kilometers and number of passengers. Cost structures tend to differ in economies of scale, and the cost function also tends to differ in both cases. These findings have practical policy and business implications.