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.
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.
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%.
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.
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 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:
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?
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:
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.
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:
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
By 2018 with the new network implemented and all electric trains rolled out this is what we should have.
And by 2025 with the CRL and even more bus improvements this is where the city will be.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
The savings are further broken down depending on the size of the vehicle being driven.
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.
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.
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.
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.
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.
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.
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.
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.