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How To Raise Fares

A couple of weeks ago, I was on a bus in Chicago and noticed something that I had not noticed before- that how you paid to get on the bus affected how long you took to get on the bus. People who flashed monthly passes boarded in a few seconds.  People who put in dollar bills got on a lot more slowly, as they fumbled for the right number of bills.  People who had to pay change took longer still. 

So to speed buses’ on-time performance (pun intended) transit agencies should encourage the former and discourage the latter.

Michael Lewyn | August 13, 2010, 11am PDT
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A couple of weeks ago, I was on a bus in Chicago and noticed something that I had not noticed before- that how you paid to get on the bus affected how long you took to get on the bus. People who flashed monthly passes boarded in a few seconds.  People who put in dollar bills got on a lot more slowly, as they fumbled for the right number of bills.  People who had to pay change took longer still. 

So to speed buses' on-time performance (pun intended) transit agencies should encourage the former and discourage the latter.

How can this be done? One way is to manipulate the fare structure to disfavor change-fumbling and encourage faster modes of payment- and the national transit funding crisis provides a perfect opportunity to do this.  

Suppose a transit agency has lost 20% of its revenue due to the recession.  The typical transit agency response is either to cut service (the worst possible option, as I have pointed out elsewhere).* The second worst option is to raise fares just enough to cover the deficit- a policy that reduces ridership of course, and does no affirmative good.

But if the agency wants to make buses run faster, it can combine fare increases with positive steps to encourage use of passes and/or dollar bills.  In particular, the transit agency should raise fares to the next dollar increment, and use any surplus to either increase service or reduce the price of weekly and monthly passes.  Thus, riders would have to pay more, but at least they'd be getting some positive benefit from their fare increase.

For example, suppose the Anycity Transit Agency (ATA) currently charges $1.25 per ride, and needs to raise fares to make up for lost government support.  The unimaginative but common decision would be to raise fares to $1.75 (and/or cut service).  In no way does this decision leave riders better off; they have to pay more and fumble for even more quarters than usual. 

Instead, ATA should raise fares to $2.  Even after accounting for revenue lost due to lower ridership, ATA is left with a surplus. ATA should use this surplus to lower the price of monthly passes (as well as increasing service).  This combination of fare increases and lower fares speeds up bus performance in two ways.  First, riders will be encouraged to use passes (the fastest mode of payment). Second, riders will not need to fumble for quarters, so even one-time riders will have a faster (if more expensive) commute.   In addition, cheaper passes may create ridership increases at least partially offsetting what ATA has lost due to its base fare increase. 

 

*See http://www.planetizen.com/node/36466

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