Why Is Fare-Free Transit The Exception Rather Than The Rule?

Transit agencies spend a lot of money to make money. In many cases, the amount spent equals or even surpasses the amount they bring in from fares. So why charge them at all? Dave Olsen takes a look at Fare-Free transit, what's holding it back, and how to make it a reality.

 Dave OlsenBecause I've been researching and well, dreaming, of Fare-Free Transit for well over a decade now, it seems like its merits and strengths are so obvious that only a fool would overlook it.

Of course, there are no fools running our public transit organizations around the civilized world; rather, many have Master's degrees or better and take their work very seriously (some may even say too seriously).

Whether by chance or luck, I've also taken a similar path, completing a Master's degree and in so doing, learning how to run a transit organization. I didn't actually run one, of course, but my theoretical adventure in the classroom sure was fun (at least in part because not one bus rider called in to complain!).

What I did learn was that there is only one way to run a transit system. And that, I believe, begins to explain why Fare-Free Transit is the exception rather than the rule.

I'm not sure from whence the idea of Fare-Free Transit came to me, but I've since discovered that it not only works but works extremely well when implemented with the same vigour as fare-based systems.

Existing Successes

Hasselt, a small city in Belgium, is one of the best examples of how to convert existing fare-based systems, especially run-down or underfunded systems, to Fare-Free. Not surprisingly, the decision to convert to Fare-Free was a political one. The new mayor and council decided that pouring more money into the endless money pit we call roads and highways was not going to get them re-elected. Yes, you read that right.

Instead of spending billions more on a third ring-road/freeway, they commissioned a complete transportation plan that took space away from the already congested car driver and gave it to the timid cyclist, nature- and shopping-loving pedestrian, and eternally patient bus rider.

For a year, they expanded their transit system. They added routes (from 3 in 1996 to 11 in 2007), buses and trams, more stops, bus-only lanes, and more frequency (from 18,000 service hours in '96 to 95,000 in 2007). Then, on July 1st, 1997, they took out the fare boxes. Ridership jumped 783% that first day, 900% that first year, and 4 years later it was up 1223% and continues to climb. Becoming Fare-Free got residents and visitors alike onboard, while the planned increase in capacity kept them coming back.

The USA, meanwhile, is home to one of the best examples of starting up a transit system from scratch, Fare-Free or otherwise: Island Transit on Whidbey and Camano Islands (and now beyond) in Washington State.

Before start-up, their first executive director did some comprehensive research into the costs of collecting fares. He discovered that the costs were similar to the projected revenues, so they decided to stay true to their mandate: to get people onto public transit.

Soon after, Martha Rose came to the helm of Island Transit. More than 20 years later, she's still there and the system continues to be proudly Fare-Free. In that time, she has had to withstand intense political pressure at both the state and local levels to convert Island Transit to the "norm", but despite funding cuts and personal attacks, ridership and routes continue to grow.

At every level - inside staff, maintenance staff, operators, buses, solar-powered bus stops, and park and rides (every one of which includes covered bike parking), Island Transit's system shines. The refreshing absence of advertising anywhere in the system definitely adds a large part to that shine, but ask anyone who works at or uses Island Transit why they support it so strongly and the overwhelming reason everyone gives is the simple fact that it is free to use.

Now given that public transit is a public service, it could make sense to maximize the public good that that service brings, which is exactly what Island Transit and other Fare-Free systems have done. However, I'm writing "could" here because in the mad rush to privatize and maximize profit for anything that moves (including public services) this playing field has been fundamentally altered over the past few decades.

In particular, public transit has suffered from this economic mis-focus, and ironically enough, it has only worsened perennial problems like chronic underfunding and running incomplete systems that can't compete with the private automobile.

Interestingly (but also sadly), my research continually brings out how little the stewards of our public transit systems know about the costs of fare-collecting in general, but especially as they pertain to their own systems.

Rare is the system that has taken the time to look and actually calculate: the last one that I'm aware of that did this (in Skagit County, Washington) discovered what Island Transit did almost 3 decades ago: that collecting fares is as or more expensive than the revenue it brings in.

A bus in the Island Transit system -- with no fare box.

Imagine any corporation or even neighbourhood co-op that didn't know how much it cost to run their business enterprise! But that is indeed the "norm" in the public transit world and it sheds more light on why Fare-Free systems are the exception rather than the rule.

So instead of maximizing the public good that transit exists for (read: spending our transportation taxes on transporting people, which gets their cars off of our congested streets), our purveyors of public transportation are consumed with revenue-passengers and ways and means to squeeze every last cent out of people that are doing the "right" thing: Turnstiles or more buses? Smart cards or more buses? Transit Police or more buses? Legislation to criminalize transit users or more buses? And when exactly can fares be raised again?

Imagine if the questions posed were instead: what will bring more people onto our system? How can we make it more convenient to use? How can we grow our system every year? How can we coordinate/integrate better with other transportation systems?

If you've been saying, "sure, but what about funding? If you take the farebox away, how do we pay for our system?", you're definitely not alone.

Post-Fare Funding

There are many different ways to fund any public transit system. The farebox is one and ranks at or near the bottom of reliability. Cut back service? Down goes revenue. Increase fares? Down goes revenue (it's the Simpson-Curtain rule). And one day, our service providers may even know how much net revenue is actually being collected by their fareboxes.

On the Fare-Free side, Island Transit uses a sales tax to fund its operations. For every $100 spent in Island County, 60 cents of tax is collected and sent to them via the state taxation system. They know how much comes in, and they know how much is spent collecting it: nothing!

Hasselt in Belgium uses a property tax and guaranteed federal funding. Approximately 1% of the civic tax base is devoted to their transit system, which covers 25% of its cost. The remaining 75% is covered by the federal government through a long-term agreement. Residents of Hasselt now pay less tax overall than they did previously when their transit system used fareboxes and their city catered primarily to the automobile.

With the Olympic Games coming to Vancouver in 2010, that city's staff has proclaimed the need to reduce traffic by 35% during the games themselves. Melbourne in Australia accomplished this and more during the Commonwealth Games recently held there by making their transit system Fare-Free. Vancouver's plans did not include making the system Fare-Free. Rules are rules, you know.

They do have experience with Fare-Free though: after a 4-month lock-out, Vancouver's transit system (aka Translink) ran Fare-Free for 3 days. The jam-packed bus riders loved it, as did the drivers, who are still astonished that they were able to keep on time all shift long. Compare that to a recent trip I took on a so-called "Express" service: it took more than 15 minutes to load its passengers, all of which - if the system was Fare-Free - could have boarded through 3 doors and sat down in less than a minute.

More recently, Translink has been overwhelmed with the success of the U-Pass, a mandatory but deeply-discounted transit pass first issued at two large universities (the Univerity of British Columbia and Simon Fraser University). Despite its success, and the success of a similarly discounted Community Pass that is only available to a select few residents at SFU, Translink also shows no signs of extending these pass programs to the general public - i.e., essentially going Fare-Free - now or during the upcoming games. They have stated repeatedly over the years, however, that they are committed to spending hundreds of millions of public dollars on smart card technology (instead of on hundreds of needed buses), all the while continuing to pass up potential passengers with overcrowded buses.

Because I know the Vancouver area well, I've calculated a funding system for its transit system that would more than double the current operating budget and provide yearly funding for new transit vehicles; this same funding mechanism could be used in any urban area with similar results. Its beauty is its simplicity: employers pay $1 per day per employee that travels to the workplace. Telecommuters are exempt and small companies pay less than big companies. But notice that the funding comes from where the money is and will continue to be, unlike many current transit funding schemes that tax gasoline or cars.

Just imagine your transit system removing the farebox and funding transit in this way: anyone that could would get out of their car, climb on the bus (assuming your transit system prepared for this mass influx appropriately) and not only get to work on time feeling refreshed, but go shopping, playing, visiting, learning and generally rejoining their community, all for free! Corporations wouldn't even notice the added cost (despite their wailing) and businesses could convert some of their existing employee parking to bike parking and use the rest of these expensive asphalt properties that they don't sell to developers for more customers and clients, who now would travel without congestion.

The possibilities for urban renewal are many and vast, and -- added to the need to critically reduce our carbon output and the epidemic of death and injury by automobile -- it makes Fare-Free Transit a planner's and politician's tool like no other.

Perhaps the last piece to this puzzle of why Fare-Free Transit is the exception rather than the rule comes from the early work of author Daniel Quinn. He has helped me understand why our culture is stuck in its belief that there is only one right way to live, and all must adhere to it. So, it seems, with transit planning. Derrick Jensen's work on the other hand, speaks boldly and clearly about why we simply have to change our ways in order to stop the insanity that is destroying our own planet. Fare-Free Transit can't stop global warming alone (the US military alone spews half of all the greenhouse gases we create as a species), but if more of us had this kind of bus to get on, one can only guess at how far it would take us toward creating the change that our children need to survive.

Dave Olsen has written many articles about Fare-Free Transit, including a five-part series which originally appeared in The Tyee. He is a car-free, single parent who writes a blog about related transportation issues, and runs his own consulting company when he isn't building cob houses.



One gets what one pays for...

Well, as an obligate daily transit-rider of 40+ years, and having lived in two cities which experimented with Fare-free Transit, I'm forced to regard the concept as a triumph of idealism over experience.

In both trials, buses quickly became rolling daycare centers for the indigent, hapless, hopeless and inebriated. Local gangs, who had previously treated transit routes through their neighborhoods as 'neutral ground', extended their territories and took their turf wars on the road, adding the potential for terrifying 'street theater' to several routes. Most memorably, in the city having the greater draw as a convention center, the more entrepreneurial local ladies of the evening (and afternoon) began plying their trade at the rear of the longer articulated buses. Naturally, regular business and school commuters having any reasonable alternative began abandoning the systems for personal vehicles.

Not The Intended Result. (and the experiments were terminated).

A (re-)reading of 'The Tragedy of the Commons' might be appropriate here....

Free Transit And Sprawl

Free transit could also encourage sprawl.

In the San Francisco Bay Area, people who commute on BART from the most remote suburbs currently get a subsidy of about $5 per trip. If two people in a family commute, that comes to $100 per week or $5000 per year for that family.

Free transit would raise the subsidy to those sprawl commuters to $10,000 or $15,000 per year. If they had to pay the full cost of commuting, they would be less likely to buy a house in the remote suburbs.

More generally, free transportation generates more transportation. Even if we only build transit lines in the central city (not in the suburbs, where they encourage sprawl), free transit would mean that people would be less likely to shop and work near their own neighborhoods.

Ideally, we should do the opposite. Rather than making transit free, we should charge full cost for all forms of transportation - including environmental costs, so people would travel less and walk and bicycle on more trips.

Currently, we subsidize transportation in exactly backwards order. The automobile is the most expensive and most environmentally destructive form of transportation, and we give it the biggest subsidies. Transit is also very expensive but less environmentally destructive, and we give it big subsidies. Bicycling and walking are the most economical and least environmentally destructive forms of transportation, and we give them the smallest subsidies.

Charles Siegel

True, Charles, but myopic.

When public transit is free, the value of dense property will rise dramatically relative to sprawled property. Though some will choose to continue long commutes, the aggregate benefit will be towards density.

Who Is Myopic?

Build public transit to the sprawl suburbs, and property values will rise dramatically within easy driving distance of the transit stations. There is one new development in Pleasanton (on one of the most remote BART lines) that advertises that it is "only" 5 miles from the BART station; this is deep sprawl, where people drive every time they leave home and shop only at big box stores.

Environmentalists are generally against building transit to locations where it would promote sprawl, and providing free transit to these locations would obviously do even more to promote sprawl.

Even within the city, free transit would shift trips from walking and bicycling to transit.

Our current policy of subsidizing transit is a necessary balance to the huge subsidies to the automobile, but it is not the ideal policy.

It is myopic to deny this elementary principle of economics: if we subsidize transportation, we will have more transportation.

Subsidized transportation works against attempts to reduce the need for transportation and to get people walking again.

(PS: I myself bicycle on most trips, which has virtually no cost and no subsidy. If I took the bus instead, it would take me longer to get where I am going, it would be less healthy, and it would require a subsidy of maybe $8 per round trip currently and maybe $12 per round trip with free public transit. Does it make sense to give someone a $12 subsidy so he can ride the bus to a restaurant and eat a $10 meal, instead of eating at a restaurant he can walk to? What a waste of money!)

Charles Siegel

Still thinking too small...

You are still thinking too small. Free public transit would begin the tipping point against the private auto. The city would be much more attractive and hold more people more comfortably. As more people turn away from the car, it would start to lose it's subsidies. The price of living five miles from a remote train station and commuting would rise to match its unsustainable nature. The suburbs would become organic farms.


Charles is right on

I thought Charles' initial comments were right on and did not feel compelled to comment, but for some reason, he's getting challenged here. But, his explanation and reasoning are economically very sound and straigtforward, so I thought. I've made this same argument before, as he has, but since that doesn't seem to be working, let's try this. If you had an extremely high speed express train that could leave a distant destination, in say Gettysburg, PA and would arrive in Metro Center in DC in 10 minutes and offer it for free. What do you think would happen? Two things: First, land values in Gettysburg would increase rather drastically and then, many people would move there who like the suburban PA feel, but need or want to be close to DC. Of course, so many people will want it, that many will not be able to afford living too close to the high speed rail station, but want to take advantage. They ponder, what if I lived a 15 minute car ride from the station and then rode in - still only 25 minutes and then so on - bam, a sprawling area far from any major metro.

Bottom line, offering subsidies is a politicians' way of avoiding the tough choices which are to price all the external costs of transportation and development and add them to the existing internal market costs. You would end up with much more compact cities where walking and bicycling would be more viable and you wouldn't have to worry about giving free 30 mile bus rides from one distant suburb to another.

Free Public Transit and The Restaurant Effect

I am not thinking small. I want the same changes that you want. But I would like to see it done in a more effective way by charging full price (including external costs) for the automobile rather than with free public transit.

Here are the disadvantages of free public transit compared with full pricing of driving:

1) Even if public transit is free, many people would still drive, because the marginal cost of short trips by car is very low if you have free parking, free use of road space, free use of the environment to dump your pollution, and other subsidies to the automobile. Driving to a store a mile away costs about 15 cents for gasoline, and parking is free; people will not shift to the bus to save 15 cents.

2) There would be more long distance commuting and remote development, as I said earlier and as CP points out very clearly by using the example of Gettysburg, PA. Why should we all subsidize that wasteful, long-distance commuting?

3) Free public transportation would generate wasteful use of transportation even by people who did give up their cars. This is the "restaurant effect" that I mentioned in my last post, which you ignore completely

Think about this example of the restaurant effect. Someone is going out for dinner, and is choosing between two restaurants, one that is walking distance and charges $12 for dinner, another that is a bus ride away and charges $10 for dinner. The full cost of the bus ride is $12 round trip. Currently, the restaurant goer pay $4 round trip for the bus, so it would be cheaper to walk to the nearby restaurant. With free public transit, it would be cheaper to go to the more distant restaurant: the full cost would be $22 to go the the more distant restaurant, but the restaurant goer would pay only $10 of that. The full cost of walking to the nearby restaurant would be $12, but the restaurant goer would have to pay all of that.

These particular numbers are not important. The point is that free public transit systematically encourages people to take longer trips and systematically shifts people away from walking and bicycling to a much more expensive form of transportation.

Now, let me add that, as a practical matter, we do have to subsidize public transit to balance the huge subsidies to the automobile. But we should recognize that our huge subsidies to transporation in general have created many of our cities' worst problems, and that we should be moving toward full pricing rather than toward even bigger subsidies.

I hope cap-and-trade is a large first step toward internalizing one cost of the automobile, its co2 emissions. We should also push for commute allowances rather than free parking, road pricing, and the like.

Charles Siegel

free transit and sprawl

People don't choose to live in the outer suburbs - they are more often than not forced there as land and houses are cheaper. Services and employment are usually more accessible by foot/bike in the inner suburbs whereas people who live in the outer suburbs still have to travel to get to them.

People living in the outer suburbs are normally of a lower socioeconomic group and by charging them more/same for transit as people living close in just further disadvantages them...I don't think most people would choose to live on the fringe when it would take them over 45mins to travel to work???

But I do agree that continual subsidisation of the car is completely unnecessary. As long as those people living on the fringes of our cities have equal access to the services, employment and transit as those who live in the inner suburbs.

Re Free Transit And Sprawl

Take a look at the suburbs near the remote BART stations: they are generally higher income than average. You have to go to further out to the totally auto-dependent sprawl before you get the lower-income suburbs you are talking about.

Now, consider two ways to subsidize those low income people who now move to sprawl:

--Give them subsidized transit, so they can continue living in sprawl and spending many hours commuting long distances.

--Give them the same subsidy as an earned-income tax credit, so they can afford housing in a better location.

These two could cost the same amount of money. Which of the two is better for the low income people? Which is better for the environment?

Charles Siegel

the US military alone spews half of all the greenhouse gases


Last I checked China had the lead, with US a close second. Where'd you get that fun little factoid, or is it just a slam the military for fun kind of thing to throw out there?

Interesting Stuff

I like the focus on how much transit agencies spend collecting fares. It's easy to forget that while people are paying fares on a typical bus drivers are being paid, fuel is being used, and the time cost of riding transit goes up.

It would be nice to see some detailed studies of the true cost of transit fare collection for standard buses.

Luckily, bus rapid transit avoids the wasted time and fuel of paying fares "at entry" by handling that "on the platform". Electronic fare cards can greatly reduce the time cost of collecting fares on standard buses (as is the case for MTA in Los Angeles).

I agree with the thrust of some of the earlier comments, i.e. that it makes more sense to subsidize proximity (compact, mixed-use growth) than vehicular mobility (which does have a sprawling effect even as transit).

Meanwhile, people are stubborn, driving and suburbia are popular, and the clock is ticking on climate change . . .

Fare-Free Transit: Los Angeles' Solution

Thank you for this interesting post, I find the idea of fare-free public transit to be a perfect solution of promoting mass transportation ridership in the auto-oriented city of Los Angeles. With the decreasing revenue created by the sales and gas tax, the Federal Highway Trust Fund is being forced to cut mass transit service routes and is laying off employees. While the VMT tax system has been suggested to help generate revenue for the Federal Highway Trust Fund, switching to a fare-free transit system seems to be an even easier easy solution to implement.

It would be interesting to see the actual numbers and evidence of the research conducted on the costs of collecting fares, but if these numbers do show that the cost of collecting fares is more than the revenue collected by these fares, then there is no reason not to use fare-free transit. I agree that public transit is a public service, and therefore the United States should follow the trend started by Washington State, and try and get people onto public transit for the sake of the public rather than making profit.

I am confused as why you say, “the refreshing absence of advertising anywhere in the [fare-free] system definitely adds a large part to that shine,” for I do not see the problem with offering advertisement space on fare-free transit. You discuss in this post multiple post-fare funding techniques, why cannot selling advertisement space also be a technique to help generate funds?

Also I would like to add that while I do agree fare-free public transit is a viable option to help promote mass transit ridership, it is definitely not the only effective option. Curitiba Brazil has one of the most successful public transit systems due to their integrated land use and public transit planning along with their sophisticated tube stations. Under Curitiba’s combined transportation and land use policies, Curitiba Brazil only allows high-density zones to be built along large avenues that are only used for public transit. The buses that run on these large avenues are not subject to traffic or traffic lights, and run every 90 seconds. Due to Curitiba’s tube stations, riding the bus is more similar to riding the subway. Riders pay one fare for unlimited bus trips before entering the tube station. And once inside the tube station buses with extendable platforms and extra wide doors, allow all of Curitiba’s bus riders to exit and enter the buses in 15-20 seconds. Therefore fare-free transit is not the “only” way to run a public transit system, however it might be the best way to operate a public transit system that is in an area confined to urban sprawl.

Matthew Kurtz


It's about value

One thing that no one has brought up is how much people value the system if it is free. I've read quite a bit of research that shows that when something is free, people simply do not value it. Rather, the system ends up seeing a lot of abuse and wasteful use. Just as Esullivan points out, people start hopping on for any and all reasons because... Hey, why not? It's free! Not only that, you end up reducing the efficiency of the system because people start hopping on to go only short block. This effect is also compounded in the poorest areas, because the regular bus routes are much more susceptible to this abuse than the rapid transit systems that run through the richer areas. People using a free bus service to travel one block slows a bus down much more than people using a rapid transit system to go one stop in a wealthier area.

Because of this, I think the answer is a nominal fare. Bring the fare down to $1 and suddenly it's affordable for everyone. Fund the operations properly, and it's convenient for everyone. But because it does cost something, it has value and is not abused.

Granted this doesn't help with the boarding times that Dave Olsen brought up, nor does it deal with the cost of handling money. But with the developments in electronic fare payments that have been going on, boarding times and fare handling costs have been dropping very quickly in the past few years.

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