As many of you will know, Auckland Transport (AT) recently released the draft Regional Public Transport Plan (RPTP). One of the more interesting parts of the plan relates to fare systems, which proposes to establish several geographic zones that more or less radiate out from the city centre, as well as some changes to ticket products.
In this post I want to present some of my thoughts on fares. I should say from the outset that I fully understand that I may not be right, nor that everyone will agree, but I want to get these views out there so that we can collectively come to a more informed position than where we started.
First let’s consider the following comment from Lennart:
Why have zones at all? The HOP card should make it easy to calculate fares on the number of km’s traveled. If you include a “tag on fare” as a minimum fare and a maximum fare for travel within the city boundaries you should be done. Can’t be that difficult to let the HOP card calculate the distance traveled between the stop you tagged on and the stop you tagged off…
Is Lennart correct when he suggests that “it’s not that difficult” to implement a distance based fare system with minimum and maximum fares? Yes he is, and such systems already exist (and seem to work well) in cities such as Singapore and Amsterdam. For those who have not been exposed to them, distance based fare systems work as follows:
- When you tag-on you immediately incur a “flag fall” fare of say $2; and
- When you tag-off HOP multiplies the distance traveled by a cost per km, say $0.20.
So, if you have travel 5km then your fare would be $2 + (5km*$0.20) = $3. The key advantage of distance-based fare systems is that you remove the need for zones altogether and all the boundary problems that they entail. Boundary issues will always end up disadvantaging someone. Not having zones also remove the whiff of political favouritism, and also removes the incentive for communities to lobby to be in one zone or another.
One of the more interesting developments in distance-based fares is that you can define distance in terms of the shortest alternative route by road between the stops where you tag on/off stops as if you were to make your trip by car. This means that the fare you pay is quite closely related to the main transport mode with which we want to compete, i.e. cars. This effect is useful, I think, in situations where Auckland’s geography and/or road network mean that there is a much more direct route than what is taken by public transport.
- Myth #1 – If your bus takes a squiggly route then you will get charged more. Not true, because the distance you travel is calculated based on the stop where you tag on and off, not the route the vehicle travels between those two stops.
- Myth #2 – If you travel long distances you will get pinged. Not true, because the “flag fall” means that short trips pay a higher cost per kilometre. The higher the flag fall component the more you favour long distance trips, and vice versa.
- Myth #3 – It does not support an integrated network. Not true, because the flag fall component can be waived when you get off one service and onto another within a specified period of time, e.g. 1 hour. So transfers remain free, and if you do transfer then the distance could be calculated based on your ultimate end stop – not your intermediary stops, so that you don’t get pinged when the network takes you out of the way in order to connect.
- A distance-based fare system based on stored-value HOP cards.
- Fares are calculated in two-parts: a flag-fall component plus a variable component. The variable component simply multiplies the distance you travel by a rate per kilometre.
- “Bulk buy” or “frequent traveler” discounts/caps can then be applied once people reach certain levels of expenditure or travel, e.g.:
- Daily/monthly limits, after which a discount or cap is automatically applied to subsequent trips. This replicates what our periodical tickets are doing now, except that you don’t have to decide in advance whether you need one. I think this is a huge advantage; and/or
- Regular trips (e.g. 10 per week or 40 per month) have a “frequent traveler” cap that automatically kicks in when, for example, people make the same trip more than 4 times per week or 20 times per month.
This fare system simultaneously removes the need for both zones and periodical tickets. Passengers can travel knowing that the system will automatically calculate the best fare product for them given their travel patterns.
I know many of my fellow bloggers will raise other objections to distance-based fares, so I will now move onto another issue with fares and let them do the hard work of balancing my ideas .
Another issue I wish to raise relates to statements along the lines of “we should try to get everyone onto monthly passes“.
Such statements imply we should price monthly passes extremely competitively, so to encourage people to buy them. The problem I have with this idea stems from differences in the types of people that tend to buy different ticket types. First, monthly passes tend to appeal to commuters. Commuters, in turn, tend to 1) travel at peak times and 2) have a job. Or to use economic jargon, they tend to impose high marginal costs while also having high willingness to pay.
On the other hand, passengers who travel by stored-value (or cash) are a more more diverse group and difficult to pin down but I suspect that a greater proportion of them are from lower income households. Suggesting we should discount monthly passes so as to “encourage” people to switch from stored value seems to presume that people who use stored value really want (and could benefit from) a monthly pass.
Personally, I’m not convinced such – and here’s a teary-eyed example of why:
Violet worked her whole life and never had time to learn how to drive, let alone the money to buy a car. As a result Violet always relied on public transport, even when she was a solo mother raising three young children and working three jobs, 7 days per week (as an aside, at that time women were paid less than half of what a man would for the same job). When she retired, Violent bought a unit in Glen Eden. Despite being wholly reliant on public transport, Violet was never in a position where she “needed” a monthly pass because she simply did not travel that much. So Violet would always pay by stored value.
The main point of this (true) story is this: Violet (my grandmother) had no need for a monthly pass no matter what the “discount”. In the long run the only impact that heavily discounted monthly passes would have for people like my grandmother is that it would tend to push up the cost of other tickets, namely cash fares and stored value travel. So I would resist the suggestion that monthly tickets (if we even need them) should be discounted to the point where they inflate the cost of other tickets, especially stored value – because to do so is likely to be regressive.
Finally, I’d like to make a small point of supporting more targeted concessions. For example, I don’t think that SuperGold card holders should travel for free and certainly not during the afternoon peak. Instead, I would support the idea of a more comprehensive “community discount” for anyone who is on a benefit or comes from a low income household. And a discount for off-peak travel, which I note is identified in the RPTP, is something I would support some analysis of.
One interesting thing to note is that if we were to have a system where more people used stored value (as proposed earlier in this post), then it becomes much more effective to deliver these kinds of targeted discounts. It’s quite hard, for example, to combine targeted discounts and/or concessions with monthly passes, unless you complicate the system by having multiple passes (e.g. a standard and an off-peak monthly pass).
That’s the end of my rant really – which ultimately just comes down to three things:
- Distance-based systems have some advantages over zone-based systems;
- Discounts for monthly passes can be perniciously regressive if they result in higher prices for cash or stored-value tickets ; and
- More targeted concessions and discounts – including a new “community discount” for people who live in low-income households, as well as an off-peak discount.
Discuss and disagree; I’d appreciate your feedback because all of this will ultimately inform my submission on the draft RPTP. And I should finish by saying that I think the draft RPTP is a great advance; credit to AT for seizing the initiative on some many fronts.
Even though I prefer distance over zone based systems, I fully acknowledge that the proposed zone structure are a vast improvement on the current fare system and do in most places make logical sense.