This paper examines the progress of 15 years of formalised vanpooling in developing a market niche. It offers a strategy for achieving vanpooling's market potential through non traditional financing and fleet management strategies. Two approaches to vanpooling are examined in two case studies: the first using a traditional approach based on capital cost recapture linked to the length of a standard van lease and the second using a capital cost recapture formula based on the actual useful life of a van in mileage. The findings support the premise that capital cost recovery over the useful vehicle life results in significant fare reductions and increased market penetration. The report also concludes that traditional vanpool fleet management approaches frequently result in retiring vans prematurely, leading to higher fares and excluding a large segment of the vanpool market, the 20-to-40 mi per direction commute. It suggests that, where possible, capital cost recovery through fares should be done over the useful van life of from 120,000 to 200,000 mi per unit, or up to 10 years. In addition, the perceived view among vanpool fleet managers that frequent van change-outs are required for customer acceptance, safety, and reliability is unsupported by experience. Although not all programs can use life-cycle capital cost recovery techniques because of the need for capital or borrowing power, those that can will enjoy a significant increase in market share for vanpooling, without subsidisation, at reduced rider fares.
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