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?

Last chance for a say of Simplified Fares

If you haven’t already make sure you submit of AT’s simplified fare proposal. It’s a nice, quick and easy form to fill in so doesn’t take long. I’ve talked about it here and in general I think the changes are good although there are a few little improvements I think are needed.

I think the boundaries suggested are good although the overlap areas need to be larger to help address the issue of short trips over a boundary being very expensive. Another option – although one that is likely to be more complex to explain is a short distance fare.

RPTP Integrated Fares Zones Map

I think the standard HOP fares proposed are good and will see prices reduce for most people which is a pleasant surprise. Public Transport getting cheaper and more useful is bound to see huge increases in usage.

Simplifed Fares Prices

I think more work is needed on the pass options for which AT say one will be available. This is ok for the likes of myself who travels on PT a lot and over long distances but the changes work against those who only do shorter trips. In addition I’m disappointed that the monthly pass is going up in price when almost all other fare options are decreasing.

I like how AT have said that in the future they will move to daily and weekly caps however again I’m concerned the same issue will exist of the cap being very high and only benefiting a few people. AT say they are also planning a Family Weekend pass which is good.

I would also like to see more done to integrate ferries into the fare structure. I realise AT are a bit hamstrung in this due to Fullers running the Devonport, Stanley Bay and Waiheke services commercially however as a monthly pass user I find it absurd that I can take unlimited trips on buses and trains but that it doesn’t cover me if I want to use a ferry – which is the option I have if I want to go home via the city with my bike.

So if you haven’t already go to the AT site and fill in the form to give your feedback. It closes at 4pm today.

A closer look at Simplified Fares

On Monday Auckland Transport launched consultation for an amended Regional Public Transport Plan and that included a large section on integrated fares – or Simplified Fares as AT call them. Since writing the post AT have released a lot more information about their Simplified fares proposal so I thought I was worth while addressing the topic in more detail.

A key point on simplified fares is that you are charged based on your journey, not what services you use – with the exception of ferries. They define a journey as

  • up to 3 trips on buses or trains,
  • up to two transfers, as long as you tag on within 30 minutes of tagging off your previous service,
  • complete your travel within 2 hours.

Simplifed Fares Journey description

And example they give is someone who might travel from Albany to Newmarket taking a bus and a train. Currently it would be treated as two trips and be charged two sets of fares – albeit with a 50c transfer discount. Under Simplified Fares it would be a single journey and only charged a single fare.

Following the introduction of Simplified Fares it will be interesting to see is how they report on patronage and if they change to reporting journeys or if they just keep reporting boardings – preferably they’ll report both.

The zones AT are proposed are as I showed the other day.

RPTP Integrated Fares Zones Map

As mentioned at the time I think a little more work is needed on the zone boundaries, perhaps having all of them them overlap by 1-1.5km on all boundary lines to help address the issue of short journeys across a boundary being penalised heavily. As an example (below) the 195 and 209 services currently travel down Godley Rd in Green bay and then on and through Blockhouse Bay. If someone was to get on the bus on Godley Rd and travel to Blockhouse Bay they would have to pay a two zone fare.

Simplifed Fares Isthmus-West boundary

Another alternative would be for AT to introduce a short journey fare which is how the issue is dealt with in some other cities – such as Perth.

There’s one other feature on the map that’s bound to cause some concern and complaint and that is the boundary of the city zone compared to the current stage one zone. This appears to affect just south of Mt Eden and Orakei train station and is indicated on the map below with a black dotted circle. It means trips from those locations to the city will now pay a two zone fare whereas they current pay just a single stage fare. Depending on the fare levels AT set that could see costs for those users almost double.

Simplifed Fares Isthmus - Mt Eden&Orakei

One aspect of the information that has surprised me is that AT have given an indication as to the prices they’ll charge for the zones. The indicative fare table is below.

Simplifed Fares Prices

It seems most passengers will be better off with the changes – or at least pay roughly the same as they do now which is a good result from AT. They describe the main impact of the changes as:

  • Commuters to and from the city to pay similar fares
  • Longer distance trips to be cheaper
  • Trips across zones to be substantially cheaper
  • A small increase for short trips

For me a trip to town using HOP would drop from 5-stages for $6 to 3-zones for $5. Many other journeys I randomly checked – other than those mentioned above – seem to be in similar situation of becoming cheaper than they are today providing the person is using HOP. Those savings also get much larger compared to today if your trip involves a transfer. AT have a couple of example journeys here including the Albany to Newmarket one mentioned earlier.

It’s a different story if cash is being used and so as I’ve mentioned before, it will be critical that AT look for more ways to get HOP into peoples hands. One suggestion I’ve made in the past would be having bus drivers keep a stash of cards pre-loaded with regular the regular note denominations. If a note is presented they quickly hand over the pre-loaded card and tell the person to tag on and their change will be on the card.

AT have given some more detail about their plans for other fare products such as daily/monthly passes. There will be a single daily and monthly pass priced at $18 and $200 respectively. By comparison currently those passes have a zone based element to them which means there are some lower priced monthly pass options if you aren’t travelling as far. It would be a shame to see those lower priced monthly passes disappear so perhaps AT should look at something like a two-zone pass which as the name suggests is restricted to travelling through two zones.

The issues with ferry fares sitting outside of the rest of the fare system are not new however as happens now AT say ferry travel will be included in the future daily pass. That’s good but it seems that at the at the very least AT should also include ferry travel in the monthly passes. AT have also said they want to introduce ferry monthly passes and family passes.

Overall I think the changes are positive and for most will be cheaper and easier than what exists today. That should be useful for further growing patronage. It’s just a shame they we won’t see them implemented till mid-2016.

RPTP update: Integrated Fares, LRT and more

In 2013 Auckland Transport adopted the current Regional Public Transport Plan (RPTP) – a document required by legislation and which sets out how the regions public transport system will be developed and operated. The 2013 RPTP was significant as among other things it officially added the New Network to Auckland’s plans. There were however a number of issues left unresolved and in the last 18 months there have been other developments in AT’s thinking on PT in Auckland. As such AT are now consulting on a variation to the RPTP to include all of this. The consultation will cover and be limited to only four specific areas:

  • The proposed introduction of simplified zone fares
  • Proposals for a new light rail transit (LRT) network on some major arterial routes
  • Service and infrastructure changes arising from the Ferry Development Plan which was approved by the AT Board in December 2014
  • Revised service descriptions arising from community consultation on the new bus network

Submissions on the RPTP variation open from today to 05 June and AT hope to have the variation adopted in July. Below is a bit more detail about each of four areas mentioned above.

Simplified zone fares

This is another name for integrated fares and AT are setting out how they think the system should run. This includes both the fare zones themselves and future fare products.

For HOP card users, fares will be based on the number of zones travelled in as part of a journey. A journey may involve travel on up to three different services, provided the transfer between services is made within the prescribed transfer time limit.

The zonal fare structure will apply across all bus, train and future light rail services. For ferries, the existing point-to-point fares will be retained, subject to further investigation of how they should be incorporated into the integrated zonal structure in future. The different approach to ferry fares reflects the fact that some ferry services are deemed exempt services, and not subject to the policies in this Plan. It also reflects the higher operating costs and premium quality of ferry travel.

The fact that ferry services will sit outside the rest of the fare structure seems to once again highlight the stupidity of the government’s decision to bow to the lobbying of fullers and allow some of the ferry routes (Devonport, Stanley Bay, Waiheke) to sit outside of the rest of the PT system. The zone boundaries are based on approximately 10km intervals from the city centre. We saw a low res version of the proposed zones around a month ago.

RPTP Integrated Fares Zones Map

I still think there needs to be some larger zone overlaps, particularly between the Isthmus to Manukau North/Waitakere zones and Waitakere to Upper North Shore. As an example it seems like the Upper North Shore zone should extend to cover Hobsonville Point.

Looking to the future AT say they hope to replace the monthly passes with weekly caps that will automatically limit the amount that customers will be charged for travel in any calendar week. They also say that in future that using stored value on a HOP card will be a minimum of 33% off the cash fare to encourage HOP use. As a comparison currently all fares 3 stages and over are just 20-26% of cash fares. AT also mention wanting to look at ways of using fares to grow patronage – especially in the off peak where there growth doesn’t affect operational costs. This includes wanting to:

  • Investigate and implement off-peak fare discount options to spread peak demand and encourage off-peak trips
  • Introduce 24/72 hour pass options to encourage off-peak travel by residents and visitors
  • Provide fare incentives for weekend family travel

All of these things are aspects we and many readers have suggested for a long time so it’s great to see AT pursuing them. One thing that is important to note is that it’s not likely all new fare products will be introduced at once and instead AT are likely to stage implementation over a period of time.

Light rail

PT services can’t be implemented if they aren’t in the RPTP and so AT are adding in the references to light rail now so that it’s possible for them to proceed with the project in the future should they wish to. We’ve already covered off AT’s light rail proposals quite a bit already and the proposed variation focuses most attention on the changes that would be needed to implement light rail on Queen St and Dominion Rd. There isn’t a huge amount of new information in the document with one notable exception – mention of light rail to the airport.

Subject to the outcome of these investigations, approval to proceed and funding, AT proposes a staged implementation of light rail, with completion of the initial stages (Queen Street and Dominion Road, with a possible link to Wynyard Quarter) within the 10-year planning horizon of this Plan. A possible extension of this route to the airport is also under investigation, along with metro rail options

The potential extension to the airport is also shown in the map below. I still believe that duplicating and extending the Onehunga line would be a better option due to a speed advantage compared with going via Dominion Rd- although it would possibly be a more expensive option.

RPTP potential LRT + RTN Map

Ferry development plan

Ferries are often touted as an area Auckland should focus on more and frequent suggestions included adding ferries to places like Browns Bay, Takapuna and Te Atatu. The RPTP suggested a review of the role of ferries and so last year AT created a Ferry Development Plan that was approved by the board in December. The outcomes from the development plan are included in the proposed variation. While I haven’t seen the full plan it appears from the variation information that AT’s have taken a sensible approach.

The Ferry Development Plan focuses on improving existing services and infrastructure and on greater integration of the current ferry network with local bus routes and supporting feeder services. It calls for service level improvements on existing ferry services to reach the minimum levels specified in the RPTP, with further increases to be implemented in response to demand. It also identifies a number of ferry infrastructure improvements and renewals that are needed to address capacity and customer amenity and safety issues at key ferry wharves.

The Plan also evaluated proposals for extensions to the existing ferry network, including new services to Browns Bay, Takapuna and Te Atatu. It concluded that due to the high infrastructure costs involved with new services, the priority for additional resources should be on improving the frequency and capacity of existing ferry routes, rather than network expansion.

The reality is the immediately viable ferry routes have already been developed and with the bus infrastructure that exists (or will shortly) it will be very hard for ferries to compete on speed, frequency, coverage and operating costs with some of the other locations mentioned. Getting service on existing routes up to regular all day every day frequencies will help make them a much more viable form of PT and useful not just for commuting.

New Network service descriptions

As mentioned at the start the RPTP sets out how the PT system will run and that includes exact and minimum frequencies. Since the RPTP was adopted AT have consulted on the new network for Hibiscus Coast, Pukekohe, South Auckland, West Auckland. The variation will update the RPTP with the changes that have already been consulted on.

There are also some changes to the network categories and maps with the new ones shown below.

RPTP Network Categories

As our network exists now, as you can see not much of the network meets the frequent definition being just a few bus services and the Southern line north of Penrose although arguably it should also be considered frequent between Westfield and Puhinui. You will also notice many of the ferry routes don’t exist on the map as they don’t have all day frequency.

RPTP Current Network

By 2018 with the new network implemented and all electric trains rolled out this is what we should have.

RPTP Proposed 2018 Network

And by 2025 with the CRL and even more bus improvements this is where the city will be.

RPTP Proposed 2025 Network

New Network and Integrated Fares Update

At the Infrastructure Committee two weeks ago not only was there an update on AT’s light rail plans but also on the status of the New Network and Integrated Fares including some maps of what is proposed.

New Network

On the New Network there is the rough timeline of when we’ll see the next steps in the process.

2013, 2014 – consultations completed

  • South Auckland, Green Bay/Titirangi, Hibiscus Coast, Pukekohe/Waiuku, West Auckland

2015 – Consultation dates

  • North Shore Consultation – June to July 2015
  • East and Isthmus – Combined Consultation – September to November 2015
  • Waiheke Consultation – to be decided

2015 – Implementation of Hibiscus Coast

2016 – Implementation of South, Pukekohe/Waiuku, West

2017 – Implementation of North, East and Central

There are also some low quality images of what is proposed for the North Shore and Isthmus/East consultations.

North Shore

Other than the busway it suggests there are four services which will meet the frequent definition of a bus at least every 15 minutes, 7am to 7pm, 7 days a week as well as a number of other services running at lower frequencies. For me personally I quite like that the services that serve Takapuna appear to be greatly simplified which should make it much easier for non-regular users to work out which bus to catch. Currently Takapuna is served by a handful of buses that pass through Takapuna on their way to other locations such as the East Coast Bays (and they tend to be well patronised throughout the day).

The presence of the busway also makes it much easier to develop a connected network on the eastern side of the North Shore which sees most services feed in to the busway stations. The same can’t be said for the western side which looks much like it does today with almost all routes feeding to the CBD. This makes it difficult for someone on the western side of the North Shore to reach the eastern beaches or north to Albany. Given Birkenhead Transport’s previous aversion to changes it seems like AT are still caving in to this patch protection effort. It is something that we will need to submit on when it consultation opens because it really weakens the new network in this part of the city. Of course this wouldn’t be so bad had the original busway plans of a having a station around Onewa Rd had happened but that was dropped after strong opposition from the Northcote Residents Association. Such a station would have allowed people using the buses that feed into Onewa Rd to the frequent Northern Express or Takapuna buses.

New Network North Infrastructure Committe

There’s also a slide suggesting that AT are thinking about how the buses that access the city centre will be dealt with. The two options are shown below with my preference being the second one which would be simpler while still enabling easy and frequent transfers to services covering Ponsonby Rd and Karangahape Rd from the proposed Victoria Park station.

New Network North Infrastructure Committe - City Centre options Central Auckland

This is where the new network will be at is strongest with the highest number of frequent routes including a number of frequent cross town routes. There also appears to have some changes to a few of the cross town routes compared to the current network schematic shown on AT’s website. As an example the frequent route along St Lukes Rd/Balmoral Rd/Greenlane West now carrying on to Orakei Rd and Kepa Rd and Glen Innes instead of terminating at Ellerslie. It seems like a good change. It also highlights how good Mt Albert is for Transit, it’s served by the western line, New North Rd buses, the remnants of the outer link and two cross town frequent lines – an ideal place for some intensification.

New Network Central Infrastructure Committe

Of course I’m sure AT will also need to show at the time how light rail would fit in this mix, particularly as it seems like the tracks will remain north of SH20 so there will need to be an explanation of what happens south of that.

East Auckland

I think it’s worth remembering the southern part of the network looks a bit bare due to that part having been consulted on as part of the South Auckland Network e.g. there’s a frequent route linking Botany, Otara, Papatoetoe and Mangere. I also thought there would be a stronger connection between Botany and Manukau along Ti Iriangi Dr considering it’s meant to be a future Rapid Transit route – although again worth noting there’s also a non-frequent service connecting the two via Harris Rd/Springs Rd/Preston Rd.

New Network East Infrastructure Committe

Integrated Fares

Moving on to Integrated Fares it’s noted that in October the AT board approved the business case for Integrated Fares which will see us move to a Zonal based fare system. All up there are 14 different zones although only seven in the main urban area (eight if you include the Hibiscus Coast). However the second slide on fares suggests there will only be 5 zone fares which suggests there will be a maximum cap (not many would likely go over that anyway i.e. how many people are travelling from the Silverdale to south of Manukau on PT on a regular basis.

While I do think the map is an improvement on what we’ve seen before I still think there will be some major issues around the zonal boundaries, even where they overlap as the overlap seems to be fairly small. As an example someone going from Fruitvale to Avondale on the train pays the same price as someone from New Lynn all the way to the city centre. This is something that using distance based fares would have addressed.

Integrated Fares Infrastructure Committee

The big winners in all of this will be those that make cross town trips like those in the green arrows below or across the isthmus e.g. from Mt Albert to Sylvia Park. Obviously a key feature is that there is no penalty for transferring however I wonder if there are any trips where the fastest option involved more than 3 legs.

Integrated Fares Infrastructure Committee 2

For the next steps in rolling out integrated fares we should hear more detail next month. I like that they are talking about family and ferry passes although on the latter I suspect they’re still unlikely to include ferry trips in the monthly/daily passes also eligible for buses and trains. This is likely in part due to the key ferry routes of Devonport and Waiheke being enshrined in legislation as outside of AT’s control.

Integrated Fares Infrastructure Committee 3

To implement this and some of the other changes like Light Rail at also note that they need to update the Regional Public Transport Plan (RPTP) which was formally adopted in September 2013 and that should also happen this year. This likely won’t be a full new RPTP but just a refresh of the current one.

Auckland PT fare changes for 2015

Auckland Transport have announced the results of their latest review of public transport fares which should be the last before integrated fares are introduced early next year. They have said that some of the changes are being made now in advance of integrated fares to make that transition easier later on. The changes really depend on how you pay, how far you travel and whether you use ferries or not.

Auckland Transport says the focus of this year’s public transport fare review is to better align short and long distance fares in preparation for a change to a simpler zone based system (integrated fares) next year.

Auckland Transport’s General Manager Public Transport, Mark Lambert, says, “As we continue to pick up the pace of transport changes in the city, improving the fare structure with integrated fares will allow the introduction of the New Network which will see more frequent services on key routes at a minimum average of every 15 minutes, 7am to 7pm, seven days a week.

“This is along with the introduction of the AT HOP card, electric trains on the rail network, the first step towards the construction of the City Rail Link and an investigation of the benefits of light rail. All of these initiatives are designed to give Aucklanders choices that will offer them the freedom to most effectively use that valuable commodity, time”.

The changes to public transport fares through the 2015 review will see:

  • Small increases of between 5 and 10 cents for short distance (stage one and stage two trips) for those using the AT HOP card
  • No increases on longer AT HOP trips on buses and trains, other than for stage five journeys which receive a tertiary concession
  • Stage six and seven child fares, using AT HOP, reduce by 5c and 16c per trip respectively.
  • Some cash fares will increase by 50 cents to increase the incentive for passengers to take advantage of fare discounts that AT HOP provides
  • Some fares on Hobsonville and West Harbour ferry services decrease by between 24c and 50c a trip.
  • Tertiary and child concession fares will now be available on the InnerLink bus service

There will also be some changes to pricing for the CityLink bus service. This service had received funding from the Heart of the City business organisation and Waterfront Auckland however that subsidy has now ended. Auckland Transport therefore, reluctantly, has introduced a 50 cent (adult single trip), 40 cent (tertiary student single trip) and 30 cent (child single trip) fare for a AT HOP card users. Single trip cash fares will be $1 for adults, 50 cents for tertiary students and 40 cents for a child.

Mr Lambert says that on average fares contribute 47% to the total cost of providing public transport services – the remainder is provided through government (NZTA) contributions and rates subsidies. He says while petrol and diesel prices have fallen over recent months, and fluctuated in recent weeks, fuel prices make up only a small percentage of operator costs and by far the largest expense is wages.

Public transport patronage growth has continued strongly during recent fuel price reductions showing that customers are choosing to use improved services rather than sit in traffic congestion, he says.

Latest figures show that public transport patronage is at an all-time high. Public transport patronage totalled 76,480,955 passenger trips for the 12 months to January 2015, an annual increase of 9.4%.
Rail patronage alone totalled 13,000,000 passenger trips for the 12 months to January, an annual rise of 20.0% a rise of two million journeys in one year.

For more: https://at.govt.nz/farechange

Overall the changes don’t seem too bad and for most people probably won’t have any impact – or at least not too much. For a commuter in the inner suburbs it represents about $1 extra per week. AT say that one of the reasons for the shorter stages going up is that compared to other cities our shorter stage fares are quite cheap but our longer stage fares are expensive so this is a way of helping align those better.

Those that will be impacted the most will be those still paying by cash and hopefully these changes will see even more people move across to using HOP.

For ferries the changes are dictated in part by the commercial services to Devonport, Stanley Bay and Waiheke. For the rest of the services the price changes are also about aligning fares hence the increases to Half Moon Bay but decreases to West Harbour and Hobsonville as they are a similar distance.

The changes are below.

image001-3

image002-1

Lastly because it’s often raised I questioned about Fare Evasion. AT say that on average it’s at 6-8% across the network but as high as 40% at some individual stations with some of the worst being Fruitvale Rd and Henderson. They say every 1% of evasion is equivalent to about $300k in revenue so any actions to improve it needs to take that into account. They did say New Lynn will be gated in June which they think will help address some of it. Also any new stations – such as the new Otahuhu station – will be designed to have gates.

Commuter costs

A report from the Australasian Railway Association highlights one of the reasons why investing in public transport can be so useful – it allows people to save money and in some situations a considerable amount. The report titled The Costs of Commuting: An Analysis of Potential Commuter Savings compares estimates of the cost of commuting by car with the costs for using PT to get to work. It also compares the costs based on just leaving their car at home with not having a car at all. The key findings for NZ are:

  • The average New Zealander commuter pays $11,852.98 per annum in car ownership and running costs
  • For those that decide to not own a car and commute with public transport instead, New Zealand commuters on average can potentially save $9,065.78 each year.
  • On average, if a New Zealand car owner decides to leave their vehicle at home and use public transport to commute to work, they can potentially save $2,119.03 a year

However in the case of Auckland and Wellington those costs could be even higher as the analysis uses what they call a “conservative estimate” of $1,000 per year for parking costs. That works out at about $4 per day which in some parts of Auckland like the city centre, is way less than you can find a carpark for. Further they also haven’t taken into account other vehicle costs such as insurance, or non monetary costs such as the costs to the environment or from congestion. Similarly on the PT side the analysis hasn’t considered potential upsides to PT use such as being able to use phones/tablets, read a book, have a sleep, socialise or even be productive and work.

The estimated savings for the various cities in the study are below.

PT vs Car costs

The savings are further broken down depending on the size of the vehicle being driven.

PT vs Car costs Graph

PT vs Car costs Graph 2

One big issue I do have is that it appears the authors of the report have only chosen to compare the costs for a two locations at the extremities of the rail network which in the case of Waitakere is one of the least used stations in Auckland.

Despite its limitations I do  think the point that PT can save individuals (or households) a considerable amount of money is an important one and it highlights why we need to build projects that make the PT system more useful. By doing so it means more people are able to use the network and in turn benefit from the savings provided. It also means that households may be able to drop from three cars to two or from two cars to one saving them even more money and space.

How much we pay in PT fares

Looking through the NZTA website recently I managed to find some data I’ve wanted to see for some time about our PT system. In particular information is about fare revenue, the amount of passenger kilometres travelled and the number of kilometres services travel. I’ll cover it all off over a few posts but to start with I’ll just look at fare revenue.

Fare revenue is the total amount that passengers pay to use PT services and can be affected by a number of factors such as

  • The number of trips taken – more people will generally mean more revenue
  • The distance people travel – i.e. if users start taking longer trips revenue will grow
  • The age of passengers – e.g. a higher proportion of younger people will likely mean more concession/child fares and therefore less revenue
  • The fare structure – reducing fares, like what happened last year for most users, could mean less revenue
  • The number of people paying by cash – cash fares are more expensive than passes or multi trip/HOP fares
  • The mode people used – e.g. ferries re more expensive than buses or trains

Unfortunately we don’t know what’s changed with all of those factors over the years so for this analysis I’m going to assume most (such as the age of passengers) has stayed fairly constant. Usefully the data is also broken down by mode allowing us to see the changes at that level.

In Auckland fare revenue has almost doubled over the last decade from $85 million in 2003/04 to $162 million in 2013/14 while at the same time patronage climbed from 52 million to 72 million trips. An interesting fact I noticed while looking at this data – and that highlights the factors listed above – was that despite patronage on trains and buses falling during 2012/13 fare revenue from passengers actually increased slightly. I was also surprised at just how similar both ferry and train revenues have been for most of the last decade.

Auckland Fare Revenue

That means the average fare Aucklander’s pay has also increased and risen from $1.64 per trip in 2003/04 to $2.24 per trip in 2013/14. The average ferry fare stands out as being well above the other modes reflecting the fact that ferry services cost more to use. I’m not sure why ferry revenue dropped so much in 2003-2007 period, patronage on ferries were certainly growing.

Auckland Average Fare Revenue 2

At this stage it’s looking like we’re paying quite a bit more for many of our PT services but before we declare that I’ve also made a version of the graph above where the average fare has been adjusted for inflation. Doing so shows that on average for buses and trains, fares have actually decreased while ferries remain volatile.

Auckland Average Fare Revenue Inflation adjusted 2

It will be fascinating to see the impact on these figures from the patronage surge we’re experiencing and from the reduction in fares for HOP users (the majority) in July last year. Overall it seems like Aucklander’s are on average paying the paying slightly less for their buses and trains than they did a decade ago. Can the same be said for our friends down in Wellington.

The overall Auckland and Wellington graphs have a number of similarities, especially with the total figure. What’s particularly interesting is that the increases has occurred despite limited patronage growth for most of the last decade.

Wellington Fare Revenue

What’s particularly interesting is that the increases has occurred despite limited patronage growth for most of the last decade. That means like Auckland the average fare has increased.

Wellington Average Fare Revenue 2

 

And here it is inflation adjusted. Unlike Auckland, adjusting for inflation doesn’t change the outcome for rail which in Wellington is still seeing fares increase on average.

Wellington Average Fare Revenue Inflation adjusted 3

So how do these average fares compare with other international cities? I took look at a number of them in Australia, Canada and the US. In most of those cities, but not all, the average fare is somewhere been $1 and $2. That puts Auckland and slightly above average of the cities I compared but not massively so and as mentioned earlier and I think the average will come down thanks to the fare reduction in July. I also hope the current surge in patronage continues and that too is bound to bring the average down.

Lastly I’m going to look at revenues per Passenger Km travelled. I’ll only compare bus and train fares for this one but include both cities. What we can see is that on average Aucklanders catching the train are paying more per km travelled than those in Wellington but Wellington bus users pay more.

Auckland vs Wellington Fare Revenue

Auckland Transport Early October Board Meeting

The Auckland Transport board meeting is on Thursday and below are sections from the various reports that caught my attention.

The first thing I noticed was the huge number of items on the closed agenda with 18 specific items for decision/approval or for noting. The topics include a number of items that I imagine a lot of people would be interested in these include (but are not limited to).

  • Papakura Pukekohe Electrification
  • Auckland Rail Development Implementation Pathway
  • Rail Procurement Strategy – Presumably around the re-contracting of rail services
  • PT Network Name & Bus Livery – there is some more on this later in this post
  • Wayfinding – there is some more on this later in this post
  • CRL Update
  • Mill Road
  • Rail Fleet Disposal Update – What’s going to happen to our old diesel trains post electrification
  • EMU Implementation/Timetable update – there is some more on this later in this post.
  • Bus Development Initiative
  • EW Connections – The infamous East West Link
  • CCFAS2 – This is the first I’ve heard of a second City Centre Future Access Study. Hopefully his is just fixing up the modelling issues in the first version.
  • Newmarket Crossing – The grade separation of the Sarawia St level crossing. AT’s plan was to build a bridge to Cowie St but residents there are challenging the decision in the environment court.

The trend of lots of closed session items continues for the months ahead too according to this document

End of October November December
CCFAS2 Ferry Services Strategy HOP Extension and Loyalty Programme
Integrated Fares Business Case Parking Strategy Digital and Social Media Strategy
PT Security & Fare Evasion Transport Funding Agreement
Bus Service Commercial & Sth Auck Tender Dominion Road
EMU Costings AMETI
Draft RLTP CCFAS2
Customer First Strategy

On to the information that is available and from the business report we have

On specific projects:

  • AT are only just now getting around to talking with locals affected by the alternative cycle route being built as part of the Tiverton/Wolverton upgrade. From memory the alternative cycling route was originally meant to have been completed as one of the first stages of the project but we now have the road finished but the cycling portion yet to start.
  • The new AMETI Link Rd – which has been named Te Horeta Road is almost complete and will open on 1 November. This is the road I highlighted the other day for its unprotected cycleways on what is almost a motorway.
Te Horeta Rd - AT Report

Te Horeta Rd looking South – Looks like there’s already a car in the cycle lane ;-)

  • For the East West Link Connections, AT say an indicative business case has now been completed. In addition to the plans for the Onehunga-Penrose area they say they have also identified some improvements needed to planned bus route between Mangere, Otahuhu and Sylvia Park. Presumably that will mean more bus lanes/priority being added.
  • A separate paper says AT will replace 40,000 of Auckland’s 108,000 street lights with LEDs and a management system for them which allows control over each individual light. It will take place over a 5 year period for a cost of $22 million and over the next 20 years is expected to bring savings of at least $36 million.

Historically AT have travel planning for schools (Travelwise) and for some businesses but never really focused on individuals.

The Birkenhead Personalised Journey Plan ran from April to August 2014. The project recruited 438 commuter car drivers and provided advice on alternative travel options – public transport, carpooling and active modes (including to public transport). Although 76% were aware of the AT HOP card around 30% of recruits had never used public transport for commuting. There were strong perceptions that public transport offered a lesser quality of service and experience than their private car.

The programme was effective in getting participants to try an alternative to driving for their commute, with 61% trying an alternative during the trial period. This was particularly focused for the city bound trips with 86% of completing participants (111 completed full evaluation) trying another travel choice.

The project achieved a 49% reduction in morning peak single occupant trips and 42% reduction in vehicle kilometres in the morning peak. This included an extra 282kms of walking, to destinations or public transport, equating to 5km every week on average per participant and an extra 17,640 public transport trips annually.

The programme achieved a high level of satisfaction with 85% stating they were satisfied or very satisfied with the customer service they received and 60% agreed that the programme had helped them think about their travel options.

A Personalised Journey Planning project is now in development for Titirangi and Green Bay to support the new bus network implementation (which sees higher frequencies and more direct routes).

Getting people to try other ways of getting around is the hardest part so I hope this is something that can eventually be rolled out to a much larger audience.

Not really related to transport other than the impact on the road corridor but about the rollout of Ultra-Fast Broadband AT say

In an effort to reduce the costs of deployment, Chorus are now trialing a new build approach of single sided core network deployment with road crossings being installed to every second house boundary. While this approach is not favored it does provide an upside to AT through less customer and asset disruption. If these road crossings cannot be installed with trenchless technology then deployment is required on both sides of the road.

For PT:

HOP usage increased to 71% of all trips in August, up from 67% in July. I suspect a large part of this was the fare changes in early July which for buses and trains increased cash fares but reduced HOP fares by increasing the HOP discount. They say over 38,000 cards have been sold over the last 90 days. As noted earlier a paper to the board at the next meeting will about the installation of additional gates across the rail system (including potentially security gates). That is the same meeting another report will go to the board with the business case for Integrated Fares.

They say “concept development for 1/3/7 day and customized HOP cards for visitor / tourist PT and tourist attraction discounted access is nearing completion“. I hope this development includes multi day pass options for regular users too. In addition they have come up with “a NRL Nines AT HOP card with discounted tourist attraction passes is targeted for January 2015. This is a collaboration exercise with ATEED and pivots off Auckland visitor research.

A new rail timetable has been approved by all parties which will be implemented in early December and see some substantial changes for the Southern Lines.

The new timetable will provide for full 7-day EMU Manukau via Eastern Line services with increased frequency to 6 trains per hour peak, and 3 trains per hour in the interpeak and off-peak, with weekends at 2 trains per hour. Diesel shuttle services will run an hourly service between Pukekohe and Papakura on Saturdays and Sundays and connect with arriving/departing EMUs at Papakura. Papakura / Pukekohe diesel services will all operate via the Southern Line (via Newmarket) rather than operating an alternating via Southern Line and via Eastern Line. This will improve the customer legibility of the Eastern Line (Manukau) and Southern Line (Papakura / Pukekohe) service patterns and improve resilience and robustness of the timetable.

So effectively will see this service pattern implemented although the off peak/weekend services will need to be increased at or before the new network is launched next year. Disappointingly there is no mention of any service improvements for the Western Line which has seen basically no change for a number of years now.

service-pattern-post-electrification

On the new network, AT say they received over 900 feedback forms for the Hibiscus Coast consultation and nearly 400 on Warkworth. This is in addition to over 1200 people spoken to at consultation events. AT are now working through these. They also say the consultation for all of West Auckland is due to launch on 21 October and is something I’ll be keep a very close eye on seeing as I live in the west.

AT say work is continuing on a series of bus priority measures, which involve both quick wins as well as longer term programmes. There are 16 quick wins and 10 corridors for investigation. Hopefully this means lots more bus lanes around the region soon helping to make buses more efficient, reliable and therefore attractive to the public.

AT are currently testing displaying comparative bus travel times for the Northern Busway and motorway on the motorway signs. This sounds like a fantastic idea and another way to encourage people to give PT a go. The only problem I foresee is that it will lead to even more calls for big and really expensive park n ride facilities.

Also on the real-time front AT will be displaying real-time train departures on ANZ Bank digital displays in both the Customs/Queen and Victoria/Queen branches from early next month. This idea is one that will hopefully be increasingly rolled out to locations near the rail network.

Details about closures to the rail network over Christmas are included in the report. They mention the works needed to build the new Otahuhu Interchange but there’s no mention of why the Western Line will be shut for 2.5 weeks. The network will be shut for the following times

  • Sunday 23 November: diesel trains required to operate on the Manukau via Eastern Line all day replacing EMUs.
  • Saturday 29 November: diesel trains required to operate on the Manukau via Eastern Line all day replacing EMUs.
  • Saturday 6 December: bus replacements south of Penrose and Sylvia Park replacing trains.
  • Saturday 20 and Sunday 21 December: bus replacements south of Penrose and Sylvia Park replacing trains.
  • Thursday 25 December to Sunday 4 January: full network shutdown with bus replacements on all lines.
  • Monday 5 to Sunday 11 January: Western Line only closed between Waitakere and Newmarket with bus replacements. All other lines open.

And saving perhaps the most interesting part till last. AT say they have completed a redesign of bus livery that will be rolled out as part of new contracts with operators. They say they’ve used the EMU livery as the starting point for their designs and the intention is to deliver a consistent look across the modes. This is something we’ve needed for a long time so it’s great that it will be finally happening and will really help in highlighting that we have single integrated PT system rather than the multi coloured mess we have now. On the designs themselves they do feel like evolutions of what we have now on some services which is probably a good thing. I like that they’ve cut back from the massive AT sign that currently exists on the NEX to one that doesn’t obscure the view out the rear windows. It also appears they are planning some large wayfinding signs on the side of the buses which should hopefully help customers.

2014 - October - Bus Livery

It is also the first time I’ve heard about NEX2 and all I can assume is it’s another service pattern on the Busway. Also with AT going for a multi-modal look I wonder if they’ll do anything about the look of the ferries.

Lastly linked to the bus livery AT is looking at improving wayfinding signs. Below is an example of this.

2014 - October - Wayfinding

They say improving wayfinding is an AT led all of council project which presumably means the same types of design will also pop up in other places such as parks.

The costs and trade-offs of free public transport in Auckland

One perennial discussion in transport circles is whether we shouldn’t just do away with public transport fares completely and make the whole network free of charge. Why not fully subsidise the network as a public service using public monies as we do with most education, healthcare and other social benefits? I wish to use this post to explore the idea. A word of caution though, I am a dilettante when it comes to economics so by all means feel free to enter into debate!

Obscure but relevant Sci Fi/economic theory reference. Bonus points for the first to work it out.

So, why would we want free fares anyway? Promoters of free public transport suggest various benefits, which from what I can see generally boil down to three main concepts. I think it is worth picking these apart a little.

Freedom for all?
First of all there is the idea that making PT free would make it universally and freely accessible, a benefit to individual mobility that can be enjoyed by everyone regardless of their financial situation. This is what we might call the social equity argument.

Universal public transport access is a worthy goal, however I am not convinced that free fares is the way to go about it. My main retort is that the number of people that can’t afford public transport in Auckland is actually quite small, and giving everyone a literal free ride along with the small needy minority is probably not the best answer. There are presumably much more effective ways of targeting improved transport access for those that truly need it.

In this regard I’m drawn to the concept of the “middle 80%”. This suggests that we should strive for a public transport system targeted to the needs and means of most of the general public, but not waste resources on chasing the patronage of either the 10% of the wealthy elite nor the 10% of the most vulnerable poor. The argument is that you will expend increasingly excessive funds on rapidly diminishing returns trying to attract CEOs out of their Mercedes and onto public transport. Yet similarly trying to design a public transit system that works for the very least privileged is also a quixotic exercise in subsidy and economic inefficiency, one that can undo the whole enterprise. However if you aim for the majority between those two extremes you are targeting the bulge in the bell curve, rather than the little asymptotic tails.

Put simply, it would cost a lot to provide free fares for everyone and that would most likely come at the expense of good service (more on this below). In that regard it seems that targeted financial benefits are a better way to serve the transport needs of our very poor, rather than making it fully subsidised for 100% of users to meet the needs of 10%.

Increased patronage?
Secondly there is the subsequent argument that if you make public transport free it would be very well used, and therefore result in all the benefits of well-used public transport like reduced traffic, lower emissions, reduced fuel consumption, etc. Basically, this idea is you make it free and lots more people use it, which is a good thing for the city and society and worth the cost.

If you unpack the logic of this argument you can arrive at two statements worth testing. Effectively the argument suggests one of two things:

A) There are plenty of people who would use public transport, except the ticket price prevents them from doing so. In other words, price is the major reason more people don’t use public transport in Auckland. …or

B) Price may not be the major factor preventing people using it, but if you make it free people would be willing to overlook all the other reasons and use it anyway.

I think proposition A is clearly false and could be easily demonstrated so. Ask folks why the don’t take public transport and cost is not a major response. Normally you hear things like “it’s takes too long”, “it doesn’t go where I want to go”, “it doesn’t run at the right time”, “you have to wait ages and the bus is always late anyway”. For that middle 80% of the population the cost of the ticket is far down the list, and it is practical things like timing, connectivity and reliability that keep people away.

So proposition B, if we make it free will people see it as good value despite the other problems and be willing to foresake their time and convenience to save a buck? Again I think not, well maybe for the poorest sectors of our society but not for the general public. If the bus can’t get you to your workplace, then a free bus that still doesn’t get you to work isn’t going to make you switch. Likewise an unreliable service that makes you late for your appointments isn’t going to get more timely if it’s free, nor are you going to use the free ferry that still doesn’t run on the weekends when you want to go out for a night on the town. You get the point I’m sure.

It seems free PT would probably just benefit existing users with a cash windfall. I’m not convinced there are particularly significant amounts of people who don’t use public transport now, but who would start using it if it were free.

Operational benefits?
Thirdly, there is the idea that there are operational benefits to doing away with fare collection. Namely passengers can simply hop on and off any transit vehicle without stopping to pay or use a card, such that dwell times are minimised and staff time spent on revenue collection is done away with entirely. This would then result in either lower staff costs and cheaper operations, or better service delivery from the same staff and operating expenditure.

Personally I think this is the most concrete of the three arguments, but also the least significant. In Auckland we are now in a position where smart card ticketing and prepayment on the rail network have already minimised the impact of ticketing on operations to the point where getting rid of ticketing entirely would only have a small marginal effect. Furthermore, at particular problem points we still have some scope to improve without dropping fares, for example by fitting all our bus stations and city centre stops with HOP machines and making them card or prepay only. I believe the effect of no fares over a well used HOP system would be minimal, and not a good return on the large costs required to cover the farebox take.

What would it actually take to make It free?
Surprisingly this is a question that doesn’t get asked very often. How would you actually make PT free, what would it require and how much would it cost?

The first question is whether it is actually possible to prevent operators collecting fares. Under the previous contracting regime I would have said no, operators were entitled to run any route they like and charge whatever they wanted and it was illegal for local government to ‘interfere’ with their business. Under the new PTOM model I would say maybe, effectively it would mean every route would be a fully subsidised contract.. I think. Someone with better knowledge might care to comment.

For now let’s assume the contracting arrangements can be taken care of, so what of the cost? Here it is important to lay out a few known facts. Fares revenue in Auckland isn’t something that is published publicly. However by picking through NZTA reports we can estimate it amounts to roughly $150m a year, and we do know Auckland has a farebox recovery rate of a shade under 50%. Using those estimates this means the cost to run all the existing buses, trains and ferries amounts to about $300m each year, with something like $150m of that covered directly through passenger fares and the other $150m covered by ratepayer subsidy. Take away the fare revenue and we are left with a $300m operation cost with only $150m in revenue, in other words a $150m shortfall per annum.

With these fiscal facts in hand we can see there are only two fundamental options for making PT free in Auckland: either we drastically slash the network so it can be funded with half the current budget, or we need to find $150m extra per year to keep transit operations at the existing level.

Free PT option 1: Halve the network to meet existing subsidy levels
Looking at the first option, to go fare free we would need to halve the service delivery costs to keep funding at the existing level of subsidy from ratepayers. Halving the service delivery cost means halving the network effectively (in fact it’s a bit worse than that because you would lose some of the economy of scale of running a large PT network). That means half the frequency of service, half the operating hours, half the peak capacity, or rather some combination of the three. Halving the service budget would be a tricky exercise in prioritisation. My guess is you would see some peak capacity cut so that people would be literally left standing, with a larger cut in interpeak frequency and bigger cuts to evening and weekend. Your bus that only comes once an hour during the day would now be once every two hours, buses and trains that run late at night would have to end around 7pm, and you would probably have to stop most weekend service entirely.

That is the price of halving revenue: half the funding for service delivery means a massively less useful transit network. Say goodbye to any chance of a frequent, all-day every-day, connected network. With half the funding all you could achieve is a rudimentary ‘network of last resort’ as a basic public welfare service. Rather than increasing patronage, such a move would kill off all but the most captive of trips sending the system productivity into a death spiral.

So the ‘cut service to meet the budget’ option seems like a non starter. Needing to cut half of the service out of the network would never achieve any of the claimed benefits of free public transport. Instead of growing patronage we would lose much functionality and most customers.

Free PT option 2: Double subsidy to run existing network
This second option has a little more currency I think. To make fares free in Auckland without cutting service and halving the network, you would need to double the subsidy income to cover the shortfall. For this Auckland Council ratepayers or New Zealand taxpayers would need to step in with an extra $150m of operations budget per annum. In the scheme of the national transport expenditure that’s not an enormous sum. However to be perfectly clear, that’s an extra $150m each and every year just to keep things exactly the same. Twice the operating subsidy for no extra services, no extra buses or trains, no longer hours, no faster trips or easier rides.

So maybe some government might step in with the money, but that wouldn’t really change much. A few people would get a break, students might bus around a bit more often, but on a whole the city would be paying twice as much for a network that is only as useful and accessible to most people as it already is today.

Alternative investment options: the double down?
This leads us to a subsequent question. If council or the beehive did step in with an extra $150m a year, every year, would free fares be the way to spend it? That’s a big stack of cash to pump the budget each year, more than the entire HOP card system cost for example. In other words the opportunity cost of free fares amounts to over a hundred and fifty million a year, what other opportunities do we have for that money?

We could, for example, go the other way: spend it to boost service delivery by 50% across the network. That sort of funding would allow us to extend the frequent network to just about every route in the region, and run that frequency an extra few hours a day. Consider what might happen if we could guarantee every bus route in Auckland ran at least every fifteen minutes, from 6am to 10pm, seven days a week.

Another option would be to take the core of the proposed Frequent Network routes and run them at a minimum of five minute headways all day instead of every fifteen minutes. This would be doubling down on where we know PT already works well. Surely that would be a lot more useful to more people that free-but-mediocre service?

There is another way to think of this too, turning extra revenue into capital expenditure. With an extra $150m a year we could build an extra billion and a half worth of busways and rail lines in the next ten years. Plus if you use that funding stream to service debt over twenty-five or thirty years, you could fund perhaps three or four billion worth of projects in the same time. Again, what would do more, what would create the better outcome for the people and the city?

Conclusion: fare-free public transport is an expensive answer to the wrong question
It appears to me that having fare free public transport in Auckland would not result in very good outcomes. Dropping fares would either require slashing the public transport network to half it’s current level, guaranteed to decimate patronage, or it would require an extra $150m a year in new subsidy just to keep running what we have today. If we did have an extra $150m each year to spend it would be far more effective to spend it on extra services or infrastructure instead.

Many of the supposed benefits of free fares aren’t actually attributable to the lack of price itself, rather most are related to assumptions of increased patronage, faster travel times, reduced traffic congestion, etc, resulting from zero fares. These assumptions are tenuous, and all these factors are things that that Auckland can and will achieve anyway through good planning and design.

The one exception to this is social equity issue. Free fares would indeed make public transport truly accessible to anyone and everyone regardless of their means (although what they have access to might not be particularly useful if the price of free access is much reduced service span and coverage). However, making public transport free for everyone to address an equity problem for a small fraction of the population is clearly not an efficient or effective means to that end.

Rather, those few that legitimately cannot afford to travel because of the ticket price should be served with targeted subsidies or other interventions. Pensioners are already covered with the GoldCard scheme, perhaps there are grounds for something similar for Community Service Card holders and their dependants, or for increased discounts for children and students of all levels. That could take many forms: pure discounts on the cash price, discounted annual passes, two for one deals, bonus credit after the first trip, child travels free with an adult, etc.

Personally I like the idea of fare structures that give extra value for the same price, the kind of thing where you travel twice in a day and all further trips are free, or a price cap, or bonus days when you use it X many times a month. Hopefully with the proposed integrated fares system we will see some of that.

One final note. I think it is clear that free fares is not a good move for Auckland in the foreseeable future. However, this isn’t to say that the existing prices or fare structures are necessarily perfect. Perhaps cheaper fares will result in more people travelling at more times of day, in particular cheaper off peak fares could fill up empty seats leading to more net revenue without more costs. Greater occupancy means better revenue per kilometre run overall, so some tweaking may be appropriate. I think AT could do with another small discount on HOP fares, if only for marketing purposes, but in the long run holding fares constant as patronage and efficiency increases would result in real prices becoming cheaper over time. That said, we are far away from the conditions where reducing fares to nothing would be either feasible or effective.