Los Angeles County Metropolitan Transportation Authority

Fare Policy & Restructuring Study

Citizens Advice Council February 27, 2013

Fare Policy & Restructuring Study

Peer Agency Review Fare Policy Goals Possible Types of Fare Structure Modifications
Zonal/Distance Based Service Based Time Based Payment Method Differential Changes to Intra-Agency Transfer Policy

Evaluate Scenarios & Develop Short List

Peer Agency Review

Metro ranks 3rd in annual systemwide ridership Metro ranks 5th in annual fare revenues

Peer Agency Review

Peer Agency Summary

Metros base fare ($1.50) lower than all peers rail fares, equal to lowest bus fares; most peers fares $2 or higher Metro has lowest average fare per ride ($0.69); peer average is $1.00 Metro has lowest fare recovery ratio (26%); peer average is 38% Metro only one of group that doesnt offer free/discounted transfers Other than premium Freeway Express & Silver Line fares, Metro has flat fare structure Consistent with national practice: relatively few agencies use distance- or time-based differentials Trend over past decade has been toward reducing extent of differentiation

Fare Policy Goals

Possible Types of Fare Structure Modifications

Goals Addressed by Possible Fare Structure Modifications

Possible Fare Structure Modification Establish a premium fare for rail services compared to bus/Rapid/BRT Establish different fares for different types of service (e.g., 3 levels) Establish floating zones (e.g., each zone would cover up to 5-6 stations) Increase rail fare (e.g., $2), valid for unlimited travel during specific time period (e.g., 1.5 hrs.); includes all types of transfers within Metro Increase rail fare (e.g., $2.50), valid for unlimited travel during specific time period (e.g., 1.5 hrs.); includes rail-bus transfers; lower bus fare (e.g., $1.50) allows only bus-bus transfers Establish premium for cash bus fare (e.g., TAP fare $1.50, cash fare $2.00) Introduce free (or reduced-price) bus-bus transfers (with use of TAP card) Introduce free (or reduced-price) rail-rail transfers Establish a premium fare for peak-period service (or off-peak discount) Establish special off-pk CBD fare on rail Eliminate peak period senior reduced fare
Fare Policy Goals 1 -- Maintain or increase ridership 2 -- Increase revenue/boarding 3 -- Maximize customer convenience/ease of use of transit system 4 -- Maximize simplicity of the fare structure 5 -- Ensure that fares are equitable by mode (local bus, BRT, rail) 6 -- Ensure that fares are equitable by distance 7 -- Ensure fares equitable re impact on different market segments (e.g., low income, disabled) 8 -- Minimize costs of fare collection 9 -- Facilitate transfers within Metro 10 -- Facilitate seamless regional travel (i.e., between Metro and munis) 11 -- Maximize use of excess service capacity

Goals Addressed

2 X X X

5 X X

10

11

X X X X X X X X X X X X

X X
X X

X X X

X
X

Zonal/Distance-Based Fares
Advantages Often considered more equitable than flat fare (pay more for longer trips) Potential for additional revenue (depending on actual fare levels and distribution of trips) Disadvantages Adds to complexity of transit use; requires tap-on/tap-off (with TAP card) on bus and light rail Complicates enforcement (on light rail) Complicates provision of passes: Offer separate set of passes for each zone/price point? Offer single set of high-priced passes? Fare increase for many riders, none for others U.S. transit industry trend Relatively few agencies (15%) use zones/distance-based pricing Trend has been to simplify (eliminate or reduce no. of zones)

Service-Based Differentials
Advantages Considered more equitable than flat fare (pay more for premium service levels) Additional revenue (assuming no reduction in local bus fare); easier to understand and administer than zones Disadvantages Adds somewhat to complexity of transit use, but less than zones Requires additional sets of passes Fare increase for some riders U.S. transit industry trend About a quarter of U.S. agencies use service-based pricing Most often express bus premiums, but higher rail fares in some cases

Time Based Differentials

Advantages Considered more equitable than flat fare (pay more for service that costs more to operate) May produce modest amount of additional revenue (assuming peak fare is raised, rather than off-peak fare reduced) May shift some riders from peak to less crowded off-peak Disadvantages Adds to complexity of transit use Complicates enforcement (on light rail and bus) May requires additional set of passes U.S. transit industry trend Very few agencies (4% bus, 8% rail) use peak/off-peak differentials Some agencies have tried it, and eliminated it

Payment Method Differential

Advantages Will produce modest amount of additional revenue (assuming cash fare is raised, rather than TAP fare being reduced) Will promote TAP use and thus reduce cash -- on bus Disadvantages May generate complaints that charging higher fare with cash is unfair to lower-income riders U.S. transit industry trend Has been instituted by several agencies, in conjunction with introduction of electronic payments

Changes to Intra-Agency Transfer Policy

Free/reduced-price transfers (bus-bus or rail-rail), only with use of TAP card Advantages: improve rider convenience, more equitable than existing no-transfer policy (given low-price transfers with the munis), promote TAP use/reduce cash on buses Disadvantage: loss of revenue Short-term unlimited riding (i.e., anywhere in system within 1.5 or 2 hours) Advantages: improve rider convenience, may generate revenue (if fare increased), more equitable than existing notransfer policy (given low-price transfers with the munis), easier to administer than traditional transfers Disadvantage: loss of revenue (if fare not increased)

Evaluate Scenarios and Develop Recommendations

Establish evaluation criteria based on highly rated goals: Increase revenue per boarding Maximize convenience & simplicity Facilitate transfers within Metro Develop evaluation guidelines Quantitative criteria impact on ridership and revenue, from Fare Model Qualitative criteria other criteria, based on fare policy goals Evaluate alternative fare scenarios Develop short list that addresses Metros needs and goals