Traveler Response to Transportation System Changes Handbook, Third Edition: Chapter 12, Transit Pricing and Fares (2004) / Chapter Skim
Currently Skimming:
Pages 1-59
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 1... ...
12 – Transit Pricing and Fares OVERVIEW AND SUMMARY This "Transit Pricing and Fares" chapter addresses transit ridership response to fare changes as applied to conventional urban area bus and rail transit services. Topics covered are: changes in general fare level, changes in fare structure including relationships among fare categories, and free transit.
|
From page 2... ...
paratransit fare changes are covered in the "Underlying Traveler Response Factors" -- "Change in Fares" subsection of Chapter 6, "Demand Responsive/ADA." Transit pricing issues encountered in analyzing bus routing and system changes are addressed in Chapter 10, "Bus Routing and Coverage." Fares and fare modifications applied to bus circulator services are specifically found in Chapter 10 under "Response by Type of Service and Strategy" -- "Circulator/Distributor Routes." Three additional instances of reliance on other chapters for rounding out transit pricing coverage do not relate to individual transit service types. Transit fare changes implemented together with service frequency changes are addressed in Chapter 9, "Transit Scheduling and Frequency," under "Response by Type of Strategy" -- "Frequency Changes with Fare Changes." Special fares, discounts and free rides offered in conjunction with transit marketing are examined in multiple "Mass Market Promotions" and "Targeted Promotion" applications within Chapter 11, "Transit Information and Promotion." Special fares and purchase methods offered as elements of TDM programs, in addition to the coverage of "Unlimited Travel Pass Partnerships" provided here in Chapter 12 under "Response by Type of Strategy" -- "Changes in Fare Categories," are examined in an overall TDM context in Chapter 19, "Employer and Institutional TDM Strategies." Objectives of Transit Pricing and Fare Changes The most common objective of transit pricing and fare changes is to increase revenues in response to actual or forecast increases in operating costs.
|
From page 3... ...
long-distance services and lower fares for slow, local services. Most transit systems consider fare equity when transit pricing and fare changes are made, but few transit systems make changes solely for reasons of fare equity.
|
From page 4... ...
In this Handbook, the term fare structure is used to describe the overall fare system used by a transit operator, including: • The relationships among the fares (prices) charged for each fare category.
|
From page 5... ...
groups. Elasticities are discussed further in Chapter 1, "Introduction," under "Use of the Handbook" -- "Concept of Elasticity," and in Appendix A, where derivation and application formulae are provided.
|
From page 6... ...
Because fully detailed analyses of relative fare changes and new purchase methods are so scarce and potentially problematical, no generalizations based on quasi-experimental data can be made at this time about the following: • Unique price elasticities of different purchase methods (e.g., percent change in riders using monthly passes versus percent change in price of monthly passes)
|
From page 7... ...
excepted, show only extremely limited propensity to shift to off-peak riding in response to off-peak fare reductions. Individual market segments described by type of fare purchased have been found to have sharply differing sensitivities to fare change.
|
From page 8... ...
Practically all the known observed values of fare elasticities fall in the range between zero and −1.0, which in economic terms, means rider response to fare changes is inelastic. Thus if a transit system wants to increase total fare revenues, it should increase fare levels, but expect some ridership loss.
|
From page 9... ...
The formula does not follow mathematical conventions used by most economists. The estimated percent loss in ridership is expressed as a positive, rather than a negative, number.
|
From page 10... ...
Inclusion of systems with HRT/Metro tends to lower fare elasticity averages, as in most of the national averages assembled in the late 1970s by the International Collaborative Study of the Factors Affecting Public Transport Patronage. Mean fare elasticities and standard deviations obtained were −0.37 ±0.06 for Australia (including several estimates for work purpose travel only but no HRT)
|
From page 11... ...
The results of the Simpson & Curtin formula and the APTA study are also relatively consistent with the findings of other research. The Ecosometrics study, for example, found an average bus fare elasticity of −0.35 for 12 fare changes in the United States and Europe (Mayworm, Lago and McEnroe, 1980)
|
From page 12... ...
It is probably reasonable to speculate that, like HRT, CRR elasticities are sensitive to the availability of viable travel alternatives. Partial evidence for the Washington, DC, area suggests CRR fare elasticities higher than those presented in Table 12-4, in the presence of highly developed competitive automobile and Metro facilities.
|
From page 13... ...
for this apparent relationship of higher fare elasticities in smaller cities is that the option of auto travel is most convenient and least expensive in such cities, or, conversely, the higher levels of transit service that can be sustained in larger cities better serve to retain riders. Another explanation is that differences in transit mode are at work, except in the APTA bus-only study, and are correlated with population size.
|
From page 14... ...
within the expected range for a small-city bus operation. On the other hand, the increase to a $1.25 cash fare elicited heightened interest in the savings of buying tokens, even though the relative savings changed only from a 26.7 percent to a 28.0 percent discount.
|
From page 15... ...
1980; Fairhurst and Morris, 1975)
|
From page 16... ...
Changing the relative pricing of the purchasing options has drawn attention through the promotion of a strategy known as "deep discounting." This strategy calls for establishing the discount for multiple-ride ticket or token prepayment at a minimum of 25 percent of the base fare, the equivalent of selling 10-ride tickets at a cost of 7-1/2 times or less of the price of a oneway cash fare. This is accomplished either by raising cash fares, where generation of new revenues is of immediate concern, or by reducing the prepayment price.
|
From page 17... ...
The documented results suggest that the deep discounting approach is useful in addressing the objectives of minimizing ridership losses in the face of the need to increase revenues, and in minimizing cash fare payment. Fewer riders appear to be lost when larger fare increases are targeted to users with low fare sensitivity than when uniform fare increases are given to all riders.
|
From page 18... ...
Interactions at the market segment level in response to deep discounting are complex and less well studied than aggregate impacts. Three factors -- trip frequency, willingness to take advantage of savings, and sensitivity to cost (i.e., fare elasticity)
|
From page 19... ...
programs led to an overall revenue loss of −0.5 percent (Lago, 1994)
|
From page 20... ...
Peak Versus Off-Peak Fares Another type of change to the relative prices in a fare structure is introduction of differentiation between peak and off-peak fares, with lower fares charged for travel in off-peak periods than in peak periods. This change is made for one or more of the following reasons: • To better reflect the higher costs of providing service in peak periods.
|
From page 21... ...
Fare Discounts for Senior Citizens All transit systems receiving federal funding in the United States are required to offer senior citizens half fare discounts during off-peak periods. Perhaps as a result, there has been little experimentation or change in senior citizen fares relative to base fares in the past 25 years.
|
From page 22... ...
In the case of a monthly or weekly pass, the so-called breakeven number of trips is equal to the pass price divided by the cash fare. Experience indicates that transit users who ride more than the breakeven number of trips are the primary potential buyers of such passes.
|
From page 23... ...
Pass introduction may be used to soften the impact of a cash fare increase, in which case some degree of revenue gain may be expected. In Atlanta, introduction of a monthly pass concurrent with a 67 percent cash fare increase provided a revenue increase from those who became pass users of 36 percent (Parody, 1982)
|
From page 24... ...
An innovative prepayment mechanism with characteristics of a permit plan, the Fare Cutter Card, was tested in a Bridgeport, Connecticut, demonstration. After paying a $15.00 initial fee for the monthly permit, a reduced cash fare of 25¢, as compared to the normal 60¢ cash fare, was paid for every trip.
|
From page 25... ...
tell. This outcome is at least suggestive of a very positive response to the changes in fare structure and pricing and related conveniences.4 In London, the May 1983 fare structure revisions and introduction of Travelcard, a pass good on both buses and the HRT "Underground," led to a 30 percent increase in bus passenger miles and a 48 percent increase in Underground passenger miles.
|
From page 26... ...
Some of the examples for which ridership results are available were associated in a major way with bus service changes, and are reported on in Chapter 10, "Bus Routing and Coverage," under "Response by Type of Service and Strategy" -- "Service Changes with Fare Changes" -- "Service Changes with Unlimited Travel Pass Partnerships." Other examples are listed in Table 12-14. 12-26 Table 12-14 Introduction of Unlimited Travel Pass Partnership Programs By all appearances, these unlimited travel pass programs are becoming quite successful.
|
From page 27... ...
in the suburban city of Boulder, a stronghold of travel demand management (TDM) , while the highest percentage increase occurred in more typical suburbs.
|
From page 28... ...
12-28 Seattle -- Lake Union Mode Share ChangeOfferingsLocationEmployer and Type Table 12-16 Sampling of Employer Offerings and Shifts in Mode Share -- Metro FlexPass Customers
|
From page 29... ...
12-29 Multiple sites, all in Seattle CBD ring -- First Hill, Lake Union Multiple sites -- south King County, north Pierce County Seattle -- Lake Union 100% vanpool subsidy -- 3 counties Table 12-16 Sampling of Employer Offerings and Shifts in Mode Share -- Metro FlexPass Customers (continued)
|
From page 30... ...
The "typical" program in the Table 12-16 selection has achieved in two years a 133 percent increase in transit usage and an 18 percent SOV reduction with FlexPass, $65/month vanpool subsidy, $20/month vouchers for carpooling, bicycling and walking, and Metro's guaranteed ride home program (King County Metro, 1998; Koss, 1999)
|
From page 31... ...
A small urbanized area system that experimented with reintroduction of zone fares was Broome County (BC) Transit in New York State.
|
From page 32... ...
For two of these, both off-peak and all-hours fare elasticities were calculated, providing six CBD cases. Overall, the 14 cases are almost equally divided between off-peak only and all-hours freefare observations.
|
From page 33... ...
essentially anecdotal, however. On balance, it seems most likely that CBD free-fare programs do attract more ridership than average bus fare elasticity values would predict, but that other applications fall within normal ranges of ridership response to lowered or otherwise altered fare levels, particularly when city size is taken into account.
|
From page 34... ...
Earlier compilations provide the original 1976 implementation results for the Amherst fare-free transit operation in Massachusetts. The service came about when free university bus service was expanded into the surrounding community.
|
From page 35... ...
These reasons may help explain the variability that is found in fare elasticities observed among transit systems. People have many ways to react to travel situations that do not meet their liking.
|
From page 36... ...
Limited evidence supports this common belief. Fare elasticity results from the off-peak free-fare demonstrations in Denver and Trenton, listed in Table 12-22, show that captive riders -- or riders with no automobile owned -- are least responsive to fare changes (De Leuw, Cather and Company, 1979a and 1979b)
|
From page 37... ...
The off-peak free fare demonstrations in Denver and Trenton provide some evidence, albeit not overwhelming, that high income riders are more responsive. Elasticities by income level from these demonstrations are given in Table 12-23.
|
From page 38... ...
Typically, where significant socio-economic differences have been identified, it has been noted that new bus riders attracted by overall fare decreases tend to have higher incomes and higher auto ownership than previous bus riders (Pratt and Copple, 1981)
|
From page 39... ...
cally every weekday, if not more. With the advent of "deep discounting" proposals, more attention has been focused on using fare prepayment with discounts as a marketing device and reward system not only for everyday riders, but also for less frequent riders.
|
From page 40... ...
RELATED INFORMATION AND IMPACTS Sources of New and Lost Ridership New transit rides are almost always attracted when fare levels are reduced or fares are eliminated. The rides come from two sources: • Existing riders who decide to take more trips, and • New riders who either divert from other modes such as the automobile, or did not make the trip before the fare reduction.
|
From page 41... ...
Before-and-after surveys were conducted to assess the impacts of the July 1980 fare increase implemented by Mercer Metro in Trenton, New Jersey. The increase involved raising the base fare from $0.40 to $0.50 for travel during all periods.
|
From page 42... ...
Studies of free fare demonstrations during off-peak periods in Denver and Trenton show distinct differences in the percentage of new rides that were diverted from the automobile -- 46 percent of the Denver new rides and 16 percent of the Trenton new rides. This is quite likely due to socioeconomic and structural differences between the two cities: Denver, a new, western city with a diverse economy, and Trenton, an old eastern city with a historically industrial base.
|
From page 43... ...
Fare revenues at many transit systems cover between 25 and 35 percent of operating costs. While fare policy is important, its role in increasing transit revenues has been limited because of the significant ridership losses that must be incurred to generate large revenue increases.
|
From page 44... ...
Fare decreases in conjunction with transit service increases have a synergistic effect to the extent that while both divert a measure of travel to transit from the automobile, service increases tend to produce an excess of capacity that can absorb additional riders attracted by reduced fares. Transit productivity losses can thus be minimized, or productivity may even be enhanced (Pratt and Shapiro, 1976)
|
From page 45... ...
CASE STUDIES Introduction of a Monthly Pass in Atlanta Situation. The Metropolitan Atlanta Rapid Transit Authority (MARTA)
|
From page 46... ...
The purchase of the pass appeared to encourage users to make more transit trips. Individuals who purchased a TransCard increased their transit usage, which was already higher than average, by 1.6 trips per week compared to the before TransCard condition.
|
From page 47... ...
London Transport Fare Elasticities and Travelcard Impact Situation. London Transport (LT)
|
From page 48... ...
Results. The analysis provides estimates of fare elasticities from two primary perspectives: • Conditional Fare Elasticity.
|
From page 49... ...
the fare change. The limitations of available data may have influenced this finding, or it may reflect the ready availability of British Rail commuter service as a competing mode.
|
From page 50... ...
in the downtown. A "Dime Shuttle," a 10¢ downtown circulator service, traversed the CBD and carried 58 percent of all intra-CBD bus trips.
|
From page 51... ...
prior to implementation of the ride free area, 31 percent would have been made by walking, 19 percent by the Dime Shuttle, 15 percent by other buses, 8 percent by auto, and 2 percent by taxi or other means. A survey of 642 downtown employees determined that 7 percent of the downtown work force, 4,900 persons, used bus service outside of the ride free area more often than before because of the free CBD service, representing perhaps a 1,000 to 2,000 daily transit trip increase.
|
From page 52... ...
Sources. Colman, S
|
From page 53... ...
distributed. There was a 7 month lag between obtaining the sample and completing the interviews.
|
From page 54... ...
REFERENCES Andrle, S., Kraus, J., and Spielberg, F., "Lessons from the Broome County Distance-Based Fare Demonstration: Effects of Zone Fares and Off-Peak Discounts on Ridership, Revenue, Pass Sales, and Public Opinion." Transportation Research Record 1297 (1991)
|
From page 55... ...
Donnelly, R M., and Schwartz, C., Transit Pricing Demonstration in Bridgeport, CT: A Case Study.
|
From page 56... ...
Koss, K., King County Metro, Seattle, WA. Personal interviews (January 6, 1999, and February 8, 1999)
|
From page 57... ...
New York City Transit, MTA, Office of Management and Budget. NYCT Statistics (March, 1999)
|
From page 58... ...
Tucker, J
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.