Otahuhu Bus-Train Interchange design

In my post about the AT board meeting last week I highlighted that construction of the Otahuhu Bus-Train Interchange station is currently out for tender. This interchange is crucial to enabling the new network for South Auckland to be rolled out

The AT website contains a few new images of what’s proposed for the site and which are different to what we’ve seen before.

First up the overall layout

Otahuhu Interchange plan diagram

I agree with some of the comments from the AT Board Meeting post that said having a single entrance meaning buses travelling though the station have to loop around isn’t ideal. I guess the only counter to that is that having another entrance/exit adds an additional intersection which may not be idea.

Here’s what the interchange may actually look like. First up an aerial overview of interchange.

Otahuhu Interchange aerial overview

The main entrance

Otahuhu interchange plaza area in front of entrance

Walking along Walmsley Rd from the North

Otahuhu Interchange from Walmsely Road

Overall it looks like a very nice station and a great addition to the network. Currently the station is not highly used however once complete the bus interchange should see a lot of people flowing through every day.

Of course it also needs to be supported by improved walking and cycle connections. There are plans to improve the connections to the Otahuhu Town Centre but these don’t seem to include improvements such as along Walmsley Rd into the nearby residential areas.

AT July Board Meeting

On Monday the Auckland Transport board hold their next board meeting and as I normally do, I’ve gone through the reports to see what’s being discussed. Starting with the closed session we have a number of topics that could be quite interesting. These include:

Items for Approval/Decision

  • Regional Passenger Transport Plan (RPTP) –  I assume discussing the changes based on the updated RPTP consultation they conducted recently
  • Media Advertising – Given it’s coming from the PT team it seems to be about how AT advertise PT in the media.
  • CRL Business Case Summary – This should be interesting. I wonder if it is something new that will soon be released to the public or is a rehash of the old business cases.

Items for Noting

  • Infringement Revenue – I assume this will be discussing what happens with infringement revenue
  • LRT Stakeholder Engagement Plans – AT are continuing to progress their LRT plans (and a tender closes today for a Technical Advisor for the project) and so engagement with stakeholders is bound to increase. This appears to be information on how they’ll do that engagement.

On to the main report and first up are the project updates.

Te Atatu Road Upgrade – It appears that since the report was written the contract for this $30 million project has been awarded to Higgens Contractors and work starts 4 August. The project effectively widened to provide a flush median and sporadic on road unprotected cycle lanes and shared paths as well as replaces the roundabout at the intersection with Edmonton and Flanshaw Roads with signals.

K Road Cycleway – Around a year after we last heard anything there’s finally a mention in the board paper. Unfortunately it doesn’t give us info on when it might actually start being built.

K Rd Cycleway

An artist impression from last year. I believe the design has evolved a lot since this

Eastern Rail Cycleway (Glen Innes to Tamaki Drive) – The report says the NZTA should be awarding the contract to construct the first stage from Glen Innes to St Johns Rd by the end of this month while design and consent works continue on the rest of the project.

Onehunga Mall Streetscape – Construction starts mid-August on an upgrade of Onehunga Mall. The first improvements will be to the footpaths.

Onehunga Mall Streetscape Upgrade Concept

Onehunga Mall Streetscape Upgrade Concept impression

Mission Bay Street Upgrade – An upgrade of Tamaki Dr in front of the block of shops to the east of Patterson Ave in Mission Bay is also planned. The report just says they will be widening of a section of Mission Bay’s town centre and I can only assume they mean of the footpaths. Consultation will happen this year but construction won’t start till next year after the Christmas season. This is what a local board report says

The proposal is to widen the footpath, by removing the car parks along that stretch of Tamaki Drive. There will be a new mobility park installed in Patterson Ave, as a result of removing the existing mobility car park. Parking on Patterson Ave will remain as it is, with exception of the allocation of the mobility park. This will require the use of two existing car parks.

Ōtāhuhu Bus-Train Interchange – The detailed design is complete. There is currently a tender out for construction which closes mid-August and be awarded in September. Completion is now not till June 2016 and the new network for South Auckland continues to be on hold till this project is finished.

Otahuhu interchange

AMETI – Movement appears to be happening with the extension of the busway from Panmure to Pakuranga along with discussions of how it travels through Pakuranga

Lodgement of the Stage 2A NoR for the busway from Panmure to Pakuranga (Ti Rakau Drive) is pending resolution of the cultural mitigation process; this is expected by late July to permit on-going dialogue between lead iwi Ngati Paoa and other relevant iwi.

A joint review of the AMETI delivery strategy with regards to the timing of the Reeves Road flyover and Stage 2B (busway between Pakuranga and Botany) components has been carried out between AT, Council and the NZ Transport Agency, with final dialogue scheduled for July.

Newmarket Crossing (Sarawia St Level Crossing) – AT say in August they will be seeking approval to lodge a notice of requirement for the project however that means it will still have to go through a considerable process before it is built. This is important as AT claim it’s the one thing that’s stopping them from being able to increase the frequency on the Western Line.

Newmarket Crossing May 2015

On to other areas

Some new ads for the benefits of bus lanes. This is an area I think AT have been doing very well in lately.

Bus Lane Ads 2015-07

Moving on to the projects and initiates that make up AT’s key strategic priorities.

Ticketing and Fares – AT have giving some a high level summary of the response to the integrated fares consultation a few months ago. All up 1556 submissions were received and the broad results are below.

  • Do you think the proposed zone boundaries are about right? Yes 60% No 20%
  • Do you think the proposed products are about right? Yes 51% No 37%

We won’t know the final outcome and any changes that would be made till later this year.

Electric trains – In total 54 trains are in the country and of those 47 have been accepted for carrying passengers. The last three sets arrive early August and all trains will be on the network by the end of the year

New Network – at the time of writing the report there were over 1000 submissions on the network for the North Shore. Consultation for the Isthmus and East Auckland is being targeted for September/October. The first area to go live will be Hibiscus Coas in October this year.

Capacity – The first two of Howick & Eastern’s 15 double deckers have come off the production line in Scotland. They will arrive for testing in October and then the remaining ones will be built in Tauranga. Ritchies have 18 double deckers on order and I’m aware one is already on the network.

Infrastructure – There are a number of bus priority improvements that are due to start or be completed this month

  • Onewa Road T3 lane (city bound) – construction progressing and due to be completed in July
  • Park Road bus lane (hospital to Carlton Gore Road) – consultation completed; construction due to commence in July
  • Parnell Road bus lane (St Stephens to Sarawia Street – outbound) – consultation completed; construction due to commence in July
  • Manukau Road/Pah Road transit lanes – internal consultation completed – external consultation commenced
  • Great North Road bus lanes (New Lynn to Ash Street) – final concept plans completed – consultation underway
  • Totara Avenue signal removal – improvements to New Lynn bus interchange; construction due to be completed in July
  • Esmonde Road bus lane – construction to commence July

Customer Experience – Some more things for bus users not to look forward to

AT’s partner for bus shelters, Adshel, are launching 35 digital screens at prominent Auckland bus shelter locations, in a move that will offer advertisers unrivalled impact and targeting opportunities and in line with global leaders like London, San Francisco and Stockholm, where roadside digital advertising has seen large demand. Spanning sites across the Auckland CBD and key fringe suburbs such as Ponsonby and Mission Bay, the new format provide more opportunities for advertisers, and this will increase the revenue share available for AT.

June-15 Patronage

We learned the other day the patronage results for rail in June, now we have them for all modes and once again they are extremely good – helped a little bit by there being an extra business day compared to June last year. The results are also significant as June is the end of the financial year so the results are what are compared against targets and compared against other metrics.

For the 12 months to the end of June, patronage was 79.25 million trips which is up 9.5% on the 2014 result. That’s an increase in almost 7 million trips over the course of a year and given the strong weekday growth probably represents around an extra 30,000 trips being taken each working day. When you think of it this way it’s not surprising that so many trains and buses have been full to the point of leaving people behind.  The changes for individual modes were:

  • Bus (excluding Northern Express) – 57 million trips, up 6.6%
  • Northern Express – 2.8 million trips, up 17.2%
  • Rail – 13.9 million trips, up 21.7%
  • Ferry – 5.5 million trips, up 8.3%

2015-06 - Total Patronage Chart

2015-06 - Patronage Table

As you can see from the numbers above the Rapid Transport Network (rail and busway) continue to shine with stunning levels of growth once again highlighting that investing in frequent and high quality services is really pays off. And of course the growth is likely to continue strongly following the roll-out of the electric trains on Monday – which should really help drive up patronage – and the Northern Busway which is about to get a capacity and free advertising) upgrade in the form of new double-decker buses which should improve (the new network for most parts of Auckland doesn’t start rolling out till next year).

The results meant that AT smashed it’s patronage targets for the year – although in fairness the Council had agreed to lower them to stupidly low levels. The Long Term Plan sees some much rougher targets

2015-06 - Patronage vs targets

And here’s an update as to how rail patronage is tracking vs the 20 million trip target the government set back in 2013

2015-06 - Rail Patronage vs Govt Target

 

The patronage increases along with the roll-out of the electric trains on the rail network are clearly having an impact on subsidies with the per passenger kilometre figures continuing to fall.

2015-06 - Subsidy per PAX KM

Not everything is good news though. On the rail network the key stats of punctuality and reliability are some of the worst I can remember seeing. If such poor outcomes continue it must surely start having an impact on patronage at some point.

2015-06 - AKL - Rail Punctuality

 

Things are a bit brighter for buses with results improving since AT started using actual data to monitor where buses where – as opposed to AT being provided data from the operators. While they might be much smaller than the other companies, Urban Express are out performing them on these stats.

2015-06 - Bus Reliability

Overall it’s been a pretty good year for patronage growth in Auckland. Let’s hope that the same thing happens again this new financial year and that AT and the bus companies have the ability to respond to the capacity needed

Submit on the East West Connections

Post from Ryan Mearns of Generation Zero

In June NZTA and Auckland Transport finally came out with a new proposed route for the East-West Connections, which is a new road route long pushed by business groups that would link SH1 and SH20 either north or south of the Manukau Harbour. An earlier proposed route that cut through the heart of Mangere was dropped in January 2014 after a huge public outcry, and an excellent local campaign. This new route effectively involved joining SH1 at Syliva Park with SH20 at Onehunga, with a direct connection that looks a lot like a motorway.

East-West Preferred Option

This area does suffer from traffic congestion, and does have a large amount of truck traffic, much of it leading to the major Kiwirail terminal and inland port along Neilson Street. So this is one area where we would support some investment to reduce congestion hotspots. However NZTA admitted that it would cost over $1 billion dollars. This is a huge amount of money, and for example is roughly equivalent to the government contribution of the CRL. There is already severe strain on the transport budget from the government spend-up on RONS and the Auckland accelerated motorway projects, so this is bad news for those of us that want the government to progress projects such as the Northern Busway extensions and North-Western busway.

 

The primary concerns we have for the project are that;

  1. The design of the proposed new motorway makes it even more difficult to build rail to the airport. To ensure either light or heavy rail can one day go to the airport, any designs for the motorway should preserve the rail corridor.
  2. The only public transport upgrades proposed are discontinuous shared bus and truck lanes which are poor quality and potentially unsafe. The project should focus on improving public transport in the area to reduce congestion with a network of high frequency bus services with continuous bus lanes.
  3. Current bike infrastructure in the area is disconnected and of low quality. The solution is to provide high quality bike connections linking Onehunga, Penrose, Mangere, Mangere Bridge and Otahuhu.
  4. The new motorway proposes to block off the limited public access there is to the Manukau east of Onehunga, with the cycleway on the land side of the motorway. The project should not have to reclaim the Manukau Harbour and should ensure any works near the harbour improve public access, rather than separate the community from the harbour.
  5. Congestion is an issue in the area, but a billion dollar motorway is not the way to go. The Government should focus any road spending on cheap upgrades to fix localised congestion spots.

NZTA are taking feedback on the East West Connections until the end of Friday. They do have an online form, however it bizarrely focusses on the bus-truck lanes, which are effectively an entirely different project. To help people get the key points across Generation Zero have created a quick submit form, which will send your feedback straight to NZTA.

Click here to go to the form to submit your feedback to NZTA.

More information on the project is available on the NZTA and Auckland Transport websites.

The economics of fare policies, part 3

For those that don’t read Transportblog on a daily basis, this is the third part of a series I’m writing on the economics of public transport fare policies. Part 1 discussed a key rationale for public transport subsidies – lower fares keep people from clogging up already-congested roads. Part 2 considered the case for distance- or zone-based fares to ensure that people taking longer (and hence more expensive) trips pay more.

In the comments on those posts, several sharp readers asked about the relationship between fare levels and ridership, and whether there are any opportunities to improve outcomes by targeting lower fares to highly price-sensitive groups. These are excellent questions to ask!

In this post, I’ll take a look at the first question: In the aggregate, how does ridership respond to changes in fares? Hopefully, this will give us the theoretical tools to take a look at the second question in the next installment of the series.

In economic terms, we are asking about the “price elasticity of demand” for public transport. Fare elasticities measure how responsive people are to higher (or lower) prices. They’re usually estimated empirically by analysing data on changes in fares, patronage, and other control variables (e.g. per capita income or GDP) over time.

There are many studies on fare elasticities from around the world, some of which are summarised in the Australia BITRE elasticities database and this useful summary paper by Todd Litman. NZTA has also commissioned research into the structure of demand for public transport – see e.g. Wang (2011) and Allison, Lupton and Wallis (2013).

These studies don’t always arrive at precisely the same result, but they agree on one key thing: Demand for public transport is relatively “inelastic”. All else being equal, a 10% reduction in fares will increase ridership by less than 10% in the short and long run.

Shay-Horay2

Some odd bloke demonstrating the concept of elasticity

The implication of this is that if a public transport agency reduces fares, it will tend to collect a smaller amount of money from users and hence require a larger subsidy. And, conversely, raising fares can increase overall revenue, albeit at the cost of unintended consequences for increased traffic congestion.

Here’s Litman’s best-guess estimates of elasticities for public transport. The key figures are in the first row – “transit ridership with respect to transit fares” for the overall market. Litman’s estimates a long-run fare elasticity between -0.6 and -0.9. This means that a 10% increase in fares would be expected to reduce ridership by 6-9% in the long run.

Notice that short-run elasticities tend to be smaller, indicating that people take a while to fully respond to changes in prices. For example, if someone’s fares for their bus to work went up significantly, they may tolerate it for a little while but choose to buy a car (or rent a parking space) six months down the line.

Litman (2014) recommended transit elasticities

Personally, I wonder if Litman’s estimates are a bit on the high side. Figures from Wang (2011) suggest that long-run fare elasticities (in the second row of the following table) are -0.46 in Wellington and -0.34 in Christchurch. This would indicate that a 10% increase in fares would reduce ridership by 3.4-4.6%.

Wang (2011) NZ bus demand elasticities

Both of these tables also contain information on how people’s demand for public transport changes in response to other price changes and service changes, which is another interesting topic. Without going into a great deal of depth, I’d note two things:

  • First, increasing petrol prices do tend to increase public transport demand, but this effect may be relatively modest. Car ownership, on the other hand, can have a big impact, as people who have already paid the fixed costs to own a car have strong incentives to get as much use out of it as possible.
  • Second, improved service quality – meaning better frequency and reliability of buses and trains – has a stronger impact on ridership than lower fares. This has important implications for transport agencies, who are often better off putting their marginal dollar towards upping frequencies.

Lastly, it’s worth considering how this might play out in practice. Let’s assume, for a moment, that fare elasticities of demand are at the low end of Litman’s range, i.e.:

  • Short-run fare elasticity = -0.2
  • Long-run fare elasticity = -0.6.

Now, let’s consider a hypothetical scenario in which public transport fares are $2 and there are 1,000 daily riders on a given bus route. The public transport agency collects $2,000 in fares every day ($2*1,000 riders).

Now let’s consider what would happen if the agency chose to reduce fares by 10%, from $2 to $1.80. This is obviously great for people who are already on the bus, as they can pay less to get the same service. Daily revenue collected from them drops to $1,800 ($1.80*1,000 riders).

However, the lower fares also attract new riders. In the short run (0-2 years), we predict that a 10% reduction in fares will lead to a 2% increase in ridership (-10%*-0.2). This means that an additional 20 people (1,000 riders*2%) will take the bus and pay a total of $36 in fares every day ($1.80*20).

So far, this is not looking great from a financial perspective. The transport agency has lost $200 in fare revenue from existing riders and gained only $36 from new riders.

Things aren’t much better in the long run, where a 10% reduction in fares is expected to lead to a 6% increase in ridership (-10%*-0.6). This means an added 60 riders who pay $108 in fares every day. Again, this is not enough to cover the loss in revenue from existing riders.

Does this mean that fare reductions are never worth it? Not necessarily – if the reductions in congestion from fewer people driving are sufficiently large, then we should be willing to pay a bit more in subsidies.

singer subsidy cartoon

A second factor is that different people and different types of journeys respond to higher prices in different ways. In principle, we may be able to increase patronage at a relatively low cost by targeting fare discounts to price-sensitive people. But that is a topic for next time!

What do you make of the data on fare elasticities of demand?

The economics of fare policies, part 2

The announcement of Auckland Transport’s new fare policy made me curious about the economics of fare policies, so I’m taking a quick look at them. In part 1 of this series, I argued that 100% cost-recovery isn’t a realistic goal for public transport. While charging public transport users for the full costs of their journey may seem appealing, it will result in the perverse outcome of increased congestion on the roads. In the absence of congestion pricing, subsidising public transport can be a useful “second best policy” to improve the efficiency of roads.

In other words, if you like driving, you should also like public transport subsidies, as they make your life a little bit easier.

However, this principle doesn’t tell us much about how we should price different types of public transport trips. For example, should people pay more to take longer journeys on public transport? Some public transport agencies, like the New York Subway or the Los Angeles PT system, don’t think so – they allow you to ride as far as you want for a flat fare. Others, like the San Francisco BART system and most transport agencies in New Zealand, charge higher prices for longer trips.

To give another example, should people pay more to travel at certain times of the day? Most transport agencies in New Zealand don’t think so – Auckland Transport charges users the same price during peak times and the middle of the day. But other agencies, such as the Wellington’s rail system and the Brisbane public transport agency, do raise their prices during peak times.

So we have some choices available to us. What principles should we use to choose relative fares for different routes, once we’ve decided on an overall level of public transport subsidy?

In my view, it’s appropriate to charge a fare that accounts for the marginal cost of using the network at different times and in different locations. For example, if it costs twice as much to get people between points A and B as it does to get them between points A and C, then the trip between A and B should cost twice as much as the trip between A and C.

If we didn’t do that – i.e. if we set fares at the same level for those two trips – we’d expect people to demand more trips between A and B, which are expensive to provide, and fewer cheap trips between A and C. This can in turn make the whole system less efficient.

Similarly, there may be a case to vary prices by time of day. It tends to be more costly to provide public transport capacity to meet peak demands. This is because it’s necessary to buy buses (or trains) and hire drivers that run for two hours in the morning and evening and sit idle the rest of the time. But it might not be possible to go too far in this direction – after all, putting up peak fares too high means pushing more people back onto congested roads.

So if we set aside time-of-use pricing for the moment, we’re left looking at varying charges for different types of trips. In most cases, this means charging more for longer journeys than for shorter journeys. How can we do this?

One option is to use zone-based fares. This is what Auckland Transport has traditionally done, and what it’s proposing in its Simplified Fares policy. The advantage of zones is their simplicity and transparency. You can pinpoint your origin and destination on a map, and know exactly how much you will pay:

RPTP Integrated Fares Zones Map

However, zone-based fares can result in some odd outcomes near boundaries. For example, under the zones above, if I travelled from Henderson to New Lynn – a four station journey – I’d pay for a single stage. But if I travelled from Fruitvale Road to Avondale – only two stations – I’d have to pay for two stages. Does it really make sense to pay more for a shorter journey just because it crosses a line on a map?

Perhaps it doesn’t. So one alternative would be to move to a fully distance-based fare structure. In effect, you’d pay based on the number of kilometres travelled, regardless of where you were going or how many transfers you made in the process. This has advantages – it eliminates boundary effects, for one – but it’s administratively complex and potentially confusing for users. For example: what happens to paper tickets, which are important for visitors and casual users?

How do you think that we should set prices for different types of public transport trips?

Guest Post: Next Step for the NEX in Silverdale

This is a guest post from reader Bryce Pearce which purely coincidently was scheduled just after AT announce that the New Network will roll out to the Hibiscus Coast in October and that more double deckers will start running on the Northern Busway from January

You may, or may not have heard that under Auckland Transport’s ‘New Network’ the NEX bus service on the Northern busway is to be extended to the Silverdale Park’n’Ride, where it will link with local bus services. Hibiscus Coast New Network Confirmed

While this alone is very good news for the Hibiscus Coast, the question that needs to be asked is – why is the final stop so far away from any walk up catchment?

That’s a good question and, luckily, there is a very simple solution – extend the Northern Express (NEX) bus service to the ‘new’ Silverdale Town Centre.

Doing so would enable a very reliable journey from Silverdale to anywhere else (incl areas on the rail network via a transfer at Britomart) on a frequent basis. It also brings the NEX within walking distance of quite a bit of the Millwater area (forecast to have 10,000 residents) and also ties in well with development within Orewa itself.

Another benefit of this location is that, rather than the shared path alongside Hibiscus Coast Hwy to the Park’n’Ride, it offers a very easy, quite flat, 2.5km ride from the Orewa Town Centre utilising the Te Ara Tahuna Cycleway

How great would this link be to access the stunning, and very popular, Orewa beach on sunny days and pretty much all summer (there is a great selection of food and beverage in Orewa these days).

Silverdale Catchment

There is an existing on-street stop in front of the Silverdale Town Centre that would be appropriate to use as an interchange stop. This has the potential to be expanded and some quality shelters added. This would allow for an easy transfer from/to the N91 / N95 services that would use the same stop (rather than going all the way to the park’n’ride) with the added advantage that it would be much nicer for people to await or alight from services at a shopping centre rather than a station on its own, next to a busy road.

Another advantage of the Silverdale Town Centre location is a central location to add an Auckland Transport Service Centre to assist students and other concession holders with their validation and ticketing requirements. This is very needed in this area right now.

Extending the NEX service through the Silverdale Town Centre would allow other routes to terminate there and save a 4km detour to the Park and Ride. This would allow a more operationally efficient service for all services and potentially allow more frequency and alternative running routes.

Post implementation of the Silverdale Town Centre extension, there is some good justification for the extension of the NEX service right into the Orewa town centre itself.

The 895X could easily be terminated at the Silverdale Town Centre interchange, with passengers changing to the NEX, and allowing for more frequent services between Waiwera, Orewa and the CBD. This could be very beneficial in allowing access to the Waiwera Hot Pools off peak and in weekends.

Here is the map I have drawn out for the following services (using the same colour scheme as the AT map): NEX / N95 / N91 (which would be the same as the N92).

NEX Extension

The remaining question is: Why are Auckland Transport opposed to extending the NEX to Silverdale Town Centre?

This explanation from AT explains their reasons.

There were a number of suggestions for changes to the termination point of the NEX, including Silverdale Centre, Orewa, and Millwater. But to take the NEX through congested local roads would affect its reliability and therefore the quality of the service, and so the NEX will terminate at HC Station in the recommended network.

The budget for the expanded park and ride (and shelters?) is $5.9M. This will add just under 400 car parks but will do nothing to remove vehicles from Hibiscus Coast Highway (it may even add vehicles). Why not instead spend a large chunk of that on bus priority measures along Hibiscus Coast Highway? Measures that would make a far larger difference to a much larger number of bus users.

The economics of fare policies, part 1

A few months back, Auckland Transport put out its new fare policy for consultation. The draft policy, which they call Simplified Fares, has two main elements:

  • Standardised fare zones that ensure that journeys within or between zones cost the same regardless of whether you’re travelling by bus or rail [ferries are excluded]
  • No transfer penalties between services, which is a key element in enabling a frequent connective network.

Those are indeed simple principles, but developing and implementing a fare policy is seldom simple. So the whole thing got me thinking: Why do public transport fares work the way they do? And could we do things differently?

As I’m curious, I figured that I should take a quick look at the economics of fare policies. Part one of the series looks at the biggest-picture question: Why do we subsidise public transport?

First, some background. In most developed-world cities, public transport systems are subsidised by taxpayers. Users pay some of the operating costs – ranging from as low as 10% to as high as 80% – but seldom all. In New Zealand, the national farebox recovery policy requires all regional transport agencies to cover 50% of their public transport costs from fares. However, data from the Ministry of Transport suggests that some agencies are closer than others to this target:

MoT farebox recovery rates 2013-14

Is 50% the right number for all regions? I don’t know – and the answer depends in part on what other goals we’re trying to accomplish with public transport pricing. But it’s clear that some level of subsidy must be provided in order for the entire transport system to work efficiently.

To see why, we need to take a look at what economists call “second-best pricing”. According to Wikipedia, it can be desirable to impose a subsidy to “offset” for an uncorrected market failure elsewhere:

In an economy with some uncorrectable market failure in one sector, actions to correct market failures in another related sector with the intent of increasing economic efficiency may actually decrease overall economic efficiency. In theory, at least, it may be better to let two market imperfections cancel each other out rather than making an effort to fix either one.

In transport, we have a situation where people have multiple options for getting around. They can drive, take the bus (or train), cycle, etc. In this situation, a price change in one market – say, a fare increase for public transport – can encourage people to switch to another mode instead of paying more.

As I argued in a recent post on congestion pricing, road space is usually not priced “efficiently”. All road users pay fuel taxes or road user charges based on the total number of kilometres driven or litres of petrol used. But they don’t pay more to drive on busy roads, where they impose delays on other drivers. As this diagram from a 2012 UK study on the external costs of driving shows, the last 10-20% of car trips impose significant costs on society.

marginal-cost-transport

Public transport can play a useful role in smoothing off the big spike at the right hand side of that chart, by providing a more space-efficient option for travelling on popular, congested routes. Another way of saying that is that in the absence of congestion pricing (and in the presence of other subsidies for driving, such as minimum parking requirements), higher public transport fares can result in a perverse outcome – additional congestion and delays for existing road drivers. This is shown in the following diagram:

PT fares and congestion diagram

Effectively, a failure to price roads efficiently means that we have to provide subsidies for public transport to prevent car commutes from being even more painful than they currently are. Public transport subsidies are, in that sense, subsidies for drivers. By making your neighbor’s bus fare cheaper, they in turn make your drive to work a bit easier.

Finally, it’s worth considering how we got into this situation. 80 or 100 years ago, public transport systems tended to cover their operating costs with fares. For example, Auckland’s tram system was profitable, if in need of maintenance and refurbishment, up until its removal in the mid-1950s. (Mees ref?) This changed, in large part, due to the introduction of subsidised motorways.

This article by Joseph Stomberg at Vox describes how the US interstate highway system was developed in the 1950s as an explicitly subsidised – i.e. not tolled – transport mode:

The first step was changing how roads were funded. In the 1930s, there were already privately owned toll roads in the East, and some public toll highways, like the Pennsylvania Turnpike, were under construction. But auto groups recognized that funding public roads through taxes on gasoline would allow highways to expand much more quickly.

They also decided to call these roads “free roads,” a term that was later replaced by “freeways.” Norton argues that this naming shift was essential in persuading the federal government — and the public — to shift away from tolls. “It started with calling the roads drivers pay for ‘toll roads,’ and calling the ones that taxpayers pay for ‘free roads,'” he says. “Of course, there’s no such thing as a free road.”

In other words, the “original sin” of transport subsidies was the construction of non-tolled highways paid for out of general tax revenues. This choice led in turn to a situation in which we must adopt “second best pricing” in public transport, and offer an offsetting subsidy. I’m not necessarily opposed to this… but it does mean that I am skeptical to complaints that buses and trains are subsidised.

What do you think we should do about public transport pricing?

May 2015 Patronage

The patronage results for May are out and again the numbers are increasing – although not quite to the same level as recent months. This is in part due to there being one less business day in the month compared to May last year. Here are the results.

2015-05 - Patronage Table

2015-05 - Total Patronage Chart

Once again the rail network is leading the growth with an over 12% increase in patronage compared to May last year although AT say if that is normalised to account for the reduced business day it increase is actually 17%. That’s fairly impressive considering just how poor the performance of services has been – more on that soon. The primary driver for patronage growth continues to appear to be on weekdays with AT saying there are now around ~48,000 trips on a weekday on the rail network which is up from ~41,000 a day in May last year.

The other normalised results are:

  • Total – 6.2%
  • Northern Express – 13.3%
  • Other Bus – 3.3%
  • Ferry – 8.3%

With the continued strong growth in the busway it once again highlights that focusing on rapid transit services is the right approach. Combined rail and the NEX services know make up 21% of all patronage across the network and that figure is growing fast. While many areas of the PT system are obviously in need of improvement, the strong growth in the RTN is a message I really do hope is getting to the Minister as RTN’s are the PT equivalent of motorways and really the kind of infrastructure the government (and of course AT) should be investing in.

With the Other Bus patronage a bit lower than the other modes, I wonder if that was impacted by the decision by AT to start charging for the City Link Bus (previously free with a HOP card).

Coming back to the issue of trains, as mentioned growth has been very strong despite an appalling service standard lately. Out of just over 12,000 trains that were meant to run in May, 650 – (or just over 5%) of them were cancelled – or at least didn’t reach their final destination for some reason. On the Western Line around 10% of all services didn’t reach their destination although I suspect many of these were cases of trains terminated at Swanson. Of those that did run around 20% ended up late. That’s a slight improvement on the month before but still dismal. I guess it proves that passengers will put up with a lot of disruption but likely only for so long.

2015-05 - Rail Performance

AT say that five services across the rail network exceeded their planned standing/sitting ratio. This has commonly been reported however interesting one Eastern line service is mentioned which highlights just how very popular there the electrics are in driving up patronage.

Bus performance isn’t quite as bad – although it too could always be better. This sis shown in the table below

2015-05 - Bus Performance

One good thing AT has recently done in is start publishing patronage data in on their website in .xlsx or .csv format without people having to trawl through years of documents. I’m told this is just the first step and that more data other than patronage will be coming over time. This is nice to see.

As well as patronage, HOP usage continues to increase and AT say that 72.4% of all trips were made with HOP which is up from 67.8% in April. I’m guessing the fare changes helped with that boost.

2015-05 - HOP Usage

Lastly the data for May available yet however here is the results from Wellington up to April. Bus patronage continues to bob around the 24 million trips per year mark however rail patronage is numbers are increasing with April seeing annual growth of 5.5%.

2015-05 - Wellington Total Patronage Chart

North Shore New Network Feedback Reminder

This is just a reminder that if you haven’t already, provide your feedback about the new North Shore bus network which is open for 3 more weeks. You can read more about my thoughts here.

North Shore Proposed New Bus Network

AT have also put out these video’s about it encouraging feedback. I’m not quite sure how on earth they’ve had over 80,000 views each, perhaps it’s the attempt at self-deprecation.