Greater Greater Washington

Fare hikes probable to cover part of Metro's $120 million gap

Metro is looking at a $120 million shortfall for the fiscal year starting next July. At the finance committee meeting on Thursday, Metro provided some ideas for raising about half of that money through fares.


Photo by afagen on Flickr.

In addition to traditional fare increases, Metro has also developed some innovative proposals. These new ideas take into account the recently approved fare policy principles.

Adjusting bus fares

The first idea would be to adjust Smartrip bus fares according to general inflation for the past two years, and increase cash bus fares to make them even dollars. The new Smartrip bus fare would be $1.60, and the new regular, express and airport fares would be $2, $4 and $6. This proposal would raise about $9.2 million and might reduce ridership by 1.2 million riders per year, about 1% of total trips. This is the only proposal for adjusting bus fares.

Raising rail fares

There were two fairly standard increases proposed for Metrorail fares. The first is a fairly familiar increase where peak fares increase by the rate of inflation, which would be about 10 cents for the base fare and increases in the distance-based fares. The new maximum fare for peak of the peak with a paper farecard would be $6, up from $5.45 today.

As part of this option, Metro is proposing increasing off-peak fares by about 50%, setting them to 75% of the equivalent peak fare instead of the current three-tier system. This option would raise about $57 million and might reduce ridership by about 3 million trips per year, about 1.3%.

Another option for adjusting rail fares would be to increase only the off-peak fares. In this option, the off-peak fare would increase to 90% of the peak rail fare, and the peak fares would be kept the same.

Some board members expressed some concern that by reducing the difference in fares, customers would no longer be driven by price to avoid the busiest peak times. One board member pointed out that the revenue increases might be reduced by the cost increase of increased congestion during peak times.

Another drawback with this option is that it eliminates the long-standing Metro policy of selling less crowded off-peak service at a discount in an effort to spur ridership and promote transit use even when the roads are not as crowded. This option would raise about $48 million and might reduce ridership by 1.6 million trips per year.

Parking fees

Metro addressed parking fees by proposing an across-the-board $0.25 increase, as well as demand-based adjustments to reserved parking permit fees. For lots that have low usage, Metro would reduce the reserved permit fee. For high usage lots, Metro would be allowed to increase the number of reserved permits from about 15% of spaces to about 30% of spaces. Part of this option would be to reduce the fee for bicycle lockers to $120 based on low demand for lockers. This option estimates $3.4 million in revenue and 100,000 lost riders.

Two-zone farecard system

The last option is the most interesting, and is the largest change from existing policy. The peak of the peak fare would be eliminated, though it's not clear whether this means a 20 cent reduction in peak of peak fares, or a 20 cent increase in peak fares.


Possible core zone. Image from WMATA.

For paper farecards, the existing time-based and three-tier distance based fare would be replaced with a simplified and expensive two zone system, where riders would pay $3 for trips within a central zone and all other trips would be $6. It's not clear whether trips completely outside the zone would also be $6, which would be strange for some short trips like East Falls Church to Clarendon.

Board Members Jeff McKay of Fairfax County and Mary Hynes of Arlington voiced some apprehension about this plan, pointing out that many visitors to the area stay in hotels just outside of the central zone boundary, and especially that Arlington would likely oppose a plan where almost all Arlington riders would pay $6 with a paper farecard for trips that are about $2 today.

The fare ideas kick off a process that will see an official proposal by the General Manager in January. The next step will be the board's decision to send fare increase proposals to public hearings in the Spring. Final approval of a fare increase would probably come in late June.

Michael Perkins blogs about Metro operations and fares, performance parking, and any other government and economics information he finds on the Web. He lives with his wife and two children in Arlington, Virginia. 

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This is the 2nd or 3rd year in a row with a major budget shortfall, I understand the economy is bad but metro will not survive an extended period of this. There needs to be other internal options on the table at this point.

by Matt R on Dec 2, 2011 10:47 am • linkreport

I know that this has been covered before but what's the reason behind metro's consistent budget shortfalls? When was the last time they weren't in the red?

by HogWash on Dec 2, 2011 10:51 am • linkreport

With regard to the last proposal I think something like the following would be better, however my costs are GUESSES.

A ride of 6 stops or less: $2
A ride of 6-12 stops: $4
A ride of 12 or more stops: $6
The originating, terminating, and all stations in between shall be counted.

by dano on Dec 2, 2011 10:53 am • linkreport

Re. raising off-peak fares: "is that it eliminates the long-standing Metro policy of selling less crowded off-peak service at a discount in an effort to spur ridership and promote transit use even when the roads are not as crowded."

If the fares are discounted, then by definition they are selling them below cost. They should be increased.

"Some board members expressed some concern that by reducing the difference in fares, customers would no longer be driven by price to avoid the busiest peak times."

That is funny. The crowd itself will discourage riders that have a choice to travel during off-peak times.

by goldfish on Dec 2, 2011 10:59 am • linkreport

If Metro is looking at making the off-peak trips cost 90% of rush hour trips, they might as well just make them 100% (the same price), and simplify the entire fare system.

I agree that the price difference is about selling unused capacity (and also shifting crowding to less-crowded times), but if they go up to 90%, the difference is minuscule anyway. Might as well drop the time difference.

by Matt Johnson on Dec 2, 2011 11:02 am • linkreport

@mattr, hogwash: another article I haven't finished describes why it's always in the red.

by Michael Perkins on Dec 2, 2011 11:03 am • linkreport

Huge increases in off-peak fares makes no sense. It's already hard for metro to compete with car transpo during times when parking is easy/cheap and traffic is flowing smoothly. This will only make it more so.

Metro is most cost and time competitive with alternative transpo options during rush hour. That's where they have the most room to increase prices without decreasing ridership.

by Falls Church on Dec 2, 2011 11:04 am • linkreport

i live in alexandria (by the van dorn station) and commute into DC every day by express bus and metro. at this rate, it's going to be cheaper for me to drive and park in dc than it will be to take public transportation. that's ridiculous. given that it takes me sometimes over an hour to get to my office on public transport and only 20 minutes to drive in, why would i choose public transportation if it becomes more expensive than driving?

by stag on Dec 2, 2011 11:06 am • linkreport

@HogWash

It doesn't explain all of the increase, but transit agency costs mostly consist of labor costs, and labor costs are increasing rapidly with health care costs as a large portion of that. Metro also has to pay for pension fund shortfalls due to the recession, etc.

by MLD on Dec 2, 2011 11:07 am • linkreport

Falls church: compete with car transpo during times when parking is easy/cheap and traffic is flowing smoothly

You are thinking like a businessman, which usually is good, but does not work in this instance. During off-peak, Metro is losing money with no prospect of getting it back (unlike the smart business move, the loss leader). Competition is for the private sector; this is a government service that is subsidized by tax dollars.

Raise the fares so that off-peak equals those of the peak.

by goldfish on Dec 2, 2011 11:11 am • linkreport

The WAPO had printed this the other day about the reasons behind the needed increase:

"The preliminary operating budget for fiscal year 2013, which starts July 1, estimates that revenue will drop $3 million to $809 million and expenses will rise $121 million to $1.5 billion"

Half the increase is due to a 9% raise metro had to give all its employees. The rest is retirement/healthcare etc.

Basically, metro (despite it being their go to excuse) is not suffering from a lack of ridership or fall of it, they are suffering because they have an incredibly bloated, expensive union to satisfy.

by freely on Dec 2, 2011 11:16 am • linkreport

"Competition is for the private sector; this is a government service that is subsidized by tax dollars"

and if raising off peak prices means fewer riders, and less revenue, without decreasing costs, that means MORE subsidy is needed. Its hard to see how thats beneficial for the tax payer or anyone else.

Just because something is a govt service does not mean it can't use pricing strategies similar in some ways to those used in the private sector.

Heck, if its wrong to price by time of day, is it right to price by length of trip? Why price at all - why not just give it away for free. There are two reasons to price a govt service A. to help finance it B. To assure optimal usage (because it DOES have incremental costs)

Both of those rationales can also justify differential pricing by time of day

by AWalkerInTheCity on Dec 2, 2011 11:31 am • linkreport

@MPerkins, thanks because I'm rather confused.

@MLD, got it. I just read the WAPO article freely mentioned.

@freely, the article states, "Metro is also expected to have higher expenses as its labor costs rise $22 million, due in part to a 9 percent retroactive wage increase that it was court-ordered to give its employees."

If the shortfall is 120mil, how is 22million half of that amount? Also, although the 9% increase is technically correct, it's also misleading. The 9% is total amount of the original negotiations to give 3% increases which would have covered the last 3 years. So I'm not sure how the "bloated union" is the problem here.

by HogWash on Dec 2, 2011 11:34 am • linkreport

Hogwash,

As I said, and you confirmed half the increase is due to increased labor costs (including all their ancillary costs (retirement/healthcare etc)

And as has been proven both factually and numerically proven, the cost of Metro's union employees far exceed any local private sector example and / or reasonable costs.

Feel free to search GGW for previos discussions on the matter if you need to see the hard numbers.

And it must be nice to get a court ordered 3% raise per year during a period of recessive wages and enormous unemployment.

by freely on Dec 2, 2011 11:45 am • linkreport

and if raising off peak prices means fewer riders, and less revenue, without decreasing costs... that is a very big if because it assumes that the drop in riders more than offsets the increase in fares -- true only if fare increase is too large. However, that large of a fare increase is not under consideration. If the peak fares sell during peak, they will sell during off-peak.

by goldfish on Dec 2, 2011 11:47 am • linkreport

why should there be a pension shortfall? Stocks and other investments are doing OK. Not like 2008 when there was a sudden 40% dip.

Fascinating calculation by WMATA on the inflation rate. $1.50 in 2009 dollars is now $1.60? According to the CPI, at best it is $1.52.

by charlie on Dec 2, 2011 11:52 am • linkreport

Off peak fares: I'm completely opposed to the off-peak fare increases. With the near-constant track maintenance, it just makes very little sense to charge those users more. The only people you hurt are those who have no choice but to travel on Metro off-hours.

Peak fares: Just eliminate the peak-of-the-peak fares and bring them all up. Go back to the still-complicated (but simpler) peak/off peak schedule.

Paper fares: I think a three-zone system would make sense and help alleviate Arlington's concerns. One zone: $2, Two zones: $4, Three zones: $6. It would be very helpful for tourists and other casual users to just look at a map without having to count the number of stops or worry about peak or off-peak. The value of simplicity is worth the increase in cost.

Bus fares: Cash bus fares are de facto $2 right now. I've seen very few people get on a bus with the correct change. Most of the time people just give up the $2 and sit down or argue with the driver about how the farebox should make change.

Related note: I had a tourist family ask me about the timing of peak fares, and I didn't know the answer. If you enter the Metro system at 2:50pm (off peak) and exit the system after 3:00pm (peak) are you charged peak or off-peak?

by Adam L on Dec 2, 2011 12:00 pm • linkreport

@adam l: fares are based on when you enter the system.

by Michael Perkins on Dec 2, 2011 12:09 pm • linkreport

@goldfish

You are thinking like a businessman, which usually is good, but does not work in this instance. During off-peak, Metro is losing money with no prospect of getting it back (unlike the smart business move, the loss leader). Competition is for the private sector; this is a government service that is subsidized by tax dollars.

Raise the fares so that off-peak equals those of the peak.

These two ideas do not make sense together. If the service is going to cost you no matter what, you should try to reduce that cost as much as possible. Therefore, in a strict business sense you should set off-peak fares at a level that maximizes revenues. That doesn't mean set them as high as possible, there is obviously a point at which higher fares means enough fewer riders that revenue goes down. I don't think off-peak fares are at that point yet though.

You also have to keep in mind the dual mandate of transit in cities like DC. The first mandate is pure people movement (transporting a maximum number of people given a subsidy of $X), because moving people on transit is more efficient than having everyone drive single occupancy vehicles. The second mandate is mobility for those who cannot provide their own (because of poverty, disability, etc.) These two goals are often in opposition especially when it comes to pricing the service.

by MLD on Dec 2, 2011 12:09 pm • linkreport

@MP

Good to know. I very rarely pay attention to the actual fares and didn't want to give them the wrong answer. The signage isn't exactly and clear and, surprise, there was no station manager in the booth for them to ask.

by Adam L on Dec 2, 2011 12:13 pm • linkreport

@goldfish
If the peak fares sell during peak, they will sell during off-peak.

Why on earth would you think this? Any explanation as to why the high fares that people pay because they have to get to work, auto traffic is terrible, and trains run at high frequency would also work when none of those factors is present?

by MLD on Dec 2, 2011 12:14 pm • linkreport

@Adam L: Starting time is all that ever matters (in my understanding). If you runnnn through the faregates at 7:29am you're not Peak of the Peak and likewise if you mosey through at 7:01pm you're off peak.

by David F-H on Dec 2, 2011 12:15 pm • linkreport

@David F-H

The trip planner agrees with you.

by MLD on Dec 2, 2011 12:19 pm • linkreport

Regarding the two zone system, why is Georgia Ave. Metro (or Ft. Totten Metro for that matter) considered outside of the central core? GA Ave. station is ~1 mile from Columbia Heights Metro, and well within the city limits.

by Scott on Dec 2, 2011 12:44 pm • linkreport

@MLD -- When a car-owning person is faced with this choice, cost is only one of the many things that such a person weighs when considering using Metro. Parking; traffic; how much you are carrying; handling small children; whether it makes sense for all your destinations; etc. Against that is the fixed cost of owning a car: "...its costing me $300/month in insurance and taxes, I might as well use it..." You may boil it all down to "time and convenience." Since the per mile cost is almost the same as driving and cheaper than a taxi, other needs come into play.

I contend that how most people decide on how to get somewhere when it is not rush-hour: basically, time and convenience. The impact of the fare is small.

by goldfish on Dec 2, 2011 12:46 pm • linkreport

"and if raising off peak prices means fewer riders, and less revenue, without decreasing costs... that is a very big if because it assumes that the drop in riders more than offsets the increase in fares -- true only if fare increase is too large. However, that large of a fare increase is not under consideration. If the peak fares sell during peak, they will sell during off-peak."

thats an empiral question, and is exactly the same issue a private business would face. It has nothing to do with some special aspect of govt service needing to not think like a business.

Note that whats at issue is the price elasticity of demand, not necessarily the size of the fare increase. A small increase wont lose as many riders, but at the same time wont bring in as much additional revenue from the riders who stay.

If anything, a public service should be MORE inclined than a business to keep off peak fares down. Since they have reasons other than revenue to want more riders (to encourage more to benefit from the fixed cost service, to reduce pollution, etc)

by AWalkerInTheCity on Dec 2, 2011 12:52 pm • linkreport

If they were to move to the $6 metro fare to the outer stations, it would be $2 cheaper (during the limited time of day it's available) to take the MARC train from Union Station to Greenbelt at $4 one way during peak of peak. The total trip time, including metro transfers, is within 2-3 minutes the same, assuming no metro delays or missed connections.

Maybe the MARC (and possibly VRE) system can capitalize on this and market their services as cheap competition to metro in some of the DC metro area.

by Scott on Dec 2, 2011 12:54 pm • linkreport

"When a car-owning person is faced with this choice, cost is only one of the many things that such a person weighs when considering using Metro. Parking; traffic; how much you are carrying; handling small children; whether it makes sense for all your destinations; etc. Against that is the fixed cost of owning a car: "...its costing me $300/month in insurance and taxes, I might as well use it..." You may boil it all down to "time and convenience." Since the per mile cost is almost the same as driving and cheaper than a taxi, other needs come into play.
I contend that how most people decide on how to get somewhere when it is not rush-hour: basically, time and convenience. The impact of the fare is small."

fare is only one factor along with time and convenience - but thats ALSO true at peak. That the fare is only one factor does not mean ridership is price inelastic.

by AWalkerInTheCity on Dec 2, 2011 12:55 pm • linkreport

"Against that is the fixed cost of owning a car: "...its costing me $300/month in insurance and taxes, I might as well use it..."

Fixed costs of car ownership should not be counted as reasons to use transit, but at the same time they are not reasons to use the car. Since they are fixed after all. To assume its a benefit to use it just because its already paid for is as irrational as counting the fixed costs as if they were variable.

by AWalkerInTheCity on Dec 2, 2011 12:57 pm • linkreport

@Freely, no what you said is that "half the increase is due to a 9% increase." I countered that what you wrote isn't true, which isn't. It is, however, fair to say the increase is due to labor costs.

I did go back and quick read the 2010 series on Metro's labor costs and wasn't able to determine "why" as you suggest, metro's costs are more than any other. I did read that metro employees now have to pay more for healthcare and that new employees won't get retiree health benefits as well as some other datasets that Craig Simpson gave that weren't really disputed. *not that I read every single comment*

3 cheers for GGW archives!

by HogWash on Dec 2, 2011 1:11 pm • linkreport

Woohoo! I can't wait to pay more for more 25 minute commutes that take 40+ for no reason!

by Nick@OrangeLine on Dec 2, 2011 1:13 pm • linkreport

The Post article stated most employees don't pay anything towards their pension costs and the pension costs are huge. We've gotta change that ASAP.

by H Street Landlord on Dec 2, 2011 1:18 pm • linkreport

@Scott: And this is why zone systems are hard to propose, especially when the number of zones is small. Small number of zones -> steep zone boundaries -> intense arguments about where those boundaries lie.

@goldfish: consider the case of 2-3 people deciding to go to a baseball game. Option 1: drive and pay about $20 to park. Option 2: pay round trip fare for each person. Current fares for off-peak are about $2.00 each way, give or take, so for 3 people, that's $12 which is still an OK deal compared to driving and parking. Maybe the $8 difference is enough to keep you on transit, maybe it's not.

If you make the off-peak fares the same as the peak fares, now that group is looking at somewhere between $3-4 each way per person, which makes transit about $18-24. Now driving makes more sense even if it's a little bit of a pain.

by Michael Perkins on Dec 2, 2011 1:21 pm • linkreport

So first the amount towards transportation that I can have taken out before taxes goes down, and now Metro is going to RAISE their rates?
Quite the 1-2 punch they have there...

by Sad commuter on Dec 2, 2011 1:29 pm • linkreport

@Michael Perkins: The close-in lots are $35 or $40; for the $20 lot, the Navy Yard station is much closer. Metro wins, unless the Metro stop is too far from the origin of the trip, in which case Metro wasn't really an option.

by goldfish on Dec 2, 2011 1:44 pm • linkreport

As Michael Perkins has frequently pointed out in his Smart Pass presentations, Metro really needs to keep its off-peak fares discounted significantly, even if it means selling this excess capacity at a loss, because this helps boost customer loyalty, which is absolutely essential and, once it is lost, it is extremely difficult to gain back.

As it is, all of the weekend track work alone is enough to shift many people from Metro into their cars. I cannot even count the number of times I've suggested taking Metro on a weekend, only to be shot down because of the prospect of track maintenance delays. The last thing Metro needs is further disincentive for people to ride during off-peak times.

As an example, there has been track work on the Red Line just about every weekend during 2011, so service that usually runs every 6 minutes on Saturdays or 8 minutes on Sundays instead only runs every 30 minutes. And we're not talking a few weekends here and there - we're talking every weekend. Why would anyone who has any other option pay 90% of peak fares for that kind of service?

Once people get used to taking all of their off-peak trips by other modes, when and why would they decide to take Metro again? This is all a very slippery slope toward the downward spiral we so often mention here.

Maybe once Metro is able to offer reliable off-peak service, then it could consider raising off-peak fares. In the meantime, though, this is a potentially disastrous idea.

by Roger on Dec 2, 2011 1:45 pm • linkreport

@Roger, there are two kinds of off-peak: when they are not doing maintenance and service is reliable, and when they are and service isn't reliable. Maybe they should charge the full peak fare for the former -- actually this makes sense because the trains are less crowded and therefore more "valuable" to the rider -- and discount the latter.

by goldfish on Dec 2, 2011 2:00 pm • linkreport

If the fares are discounted, then by definition they are selling them below cost. They should be increased.

Huh? That's not even remotely true, and represents a serious misunderstanding of economics.

Firstly, you can give discounts and still make a profit. Secondly, when we're talking about off-peak service, Metro are selling a service that has a very low variable cost. That is, if you're running a rush-hour service in the morning and another in the evening, it costs almost nothing to keep the trains running throughout the day, in between those times.

If more people ride the train during rush hour, Metro needs to buy more trains, hire more drivers, and make infrastructure upgrades to make that possible, since rush hour is defined as the maximum capacity that the system is expected to handle at any specific time.

If more people ride the train in the middle of the day, Metro only really needs to pay for some extra electricity. The trains are already there, the drivers are still on shift, and the infrastructure is only operating at a fraction of its capacity. Tickets sold during off-peak hours are just gravy, and it stands to reason that Metro could collect more revenue by discounting the tickets and attracting more customers, since they've got plenty of unused capacity that costs the same, no matter how many people use it.

Even if we eliminated all non-rush-hour service, those trains and drivers would sit around doing nothing, and costing the agency money. (It would also force people with unpredictable schedules to take other modes of transportation) It makes sense to capitalize on those idle resources, and collect as much revenue from them as possible. This can only be accomplished by keeping an off-peak Metro ride cost-competitive with other modes of transportation.

by andrew on Dec 2, 2011 2:01 pm • linkreport

Too bad METRO doesn't determine why the are operating at a loss and attack expenses first, i.e. absurd union contracts for example. All this does is subsidize sloth.

by Pelham1861 on Dec 2, 2011 2:36 pm • linkreport

Additional thoughts:

There was a story just a few weeks ago about how Metro (even while offering what many would consider to be generous salary and benefits) was having trouble finding Metrobus operators who can pass the CDL exam as well as certified mechanics to fill all the open positions. Metro was going cap-in-hand to veteran job fairs hoping to find people who are leaving the military with the necessary skill sets.

So while I would usually be the first to start hammering at employee wages and benefits, Metro seems to be having problems getting enough people as it is. Keeping people on longer shifts because they don't have enough people surely leads to increased overtime costs, and likely safety lapses and operator errors. Seems like a no-win situation.

by Adam L on Dec 2, 2011 3:01 pm • linkreport

@goldfish, that makes way too much sense for Metro to implement it.

by Roger on Dec 2, 2011 3:01 pm • linkreport

Can someone explain the rationale behind leaving The Petworth neighborhood out of the core zone? Silly! Such a system would have HUGE ramifications to economic development along this corridor.

by Robert Mandle on Dec 2, 2011 3:33 pm • linkreport

Did Metro go to the Newspaper school of budgeting?

Cut service (sections) raise prices. What can go wrong.

by JJJJJ on Dec 2, 2011 4:24 pm • linkreport

An important factor to consider in Metro pricing is to distinguish between marginal cost (additional cost of adding one more rider to the system) vs. average cost (total cost divided by total number of riders). Those are very different numbers because Metro operates with huge fixed costs. So, adding a rider during off-peak times costs Metro very little because the trains are already running, stations are open, etc. Adding an extra rider at peak times is expensive because we are already at max capacity, so the only way to add riders is to add more trains.

Since adding riders at off-peak is so cheap, it makes sense to charge a lot less at off-peak times so as to encourage off-peak ridership.

by Falls Church on Dec 2, 2011 4:41 pm • linkreport

Woodley Park, Stadium-Armory, and Rosslyn are all "central," but NY Ave isn't? That's crazy.

by andrew on Dec 2, 2011 4:52 pm • linkreport

From the discussion, it seemed like the determination of the zone went like this.

Include National Airport
Include Woodley Park
Include Arlington Cemetery
Include Union Station
Include Anacostia
Include (all stations that are no more than $3.00 peak of peak fare to all of the above).

by Michael Perkins on Dec 2, 2011 6:17 pm • linkreport

Metro Access is another reason why operating costs are so high. Look how many able bodied people walk through the mezzanine swing gate after flashing a metro Access pass. Too many people just don't pay to use the system. Also, when you factor in a ridiculous Civil Rights Division, diversity awareness training and community outreach programs to convince people not to jump off parking decks or in front of trains, it's easy to see why there's a shortfall.
K

by Kaleel on Dec 2, 2011 7:02 pm • linkreport

@Kaleel: Actually, "Non-personnel Expense" grew by only $9m this year, which is smaller than the normal increase for metro access (and includes a lot of other costs besides).

The free rides given are an incentive not to take a door-to-door ride using Metro Access, which cost $40 compared to very little using the regular rail or bus system. It would be penny wise and pound foolish to take away free rides and cause more people to request Metroaccess service if they could take the fixed route service.

by Michael Perkins on Dec 2, 2011 7:23 pm • linkreport

Metro seems to be self destructing with a downward spiral of price increases, constant delays and decreasing ridership.

by Nancy on Dec 2, 2011 10:27 pm • linkreport

@goldfish, you don't get it.

"If the fares are discounted, then by definition they are selling them below cost. They should be increased."

ALL fares are being sold below cost. That's why the system is losing money. It just so happens that peak hours are when a marvelous overlap of factors occurs: (a) costs are highest (b) people are willing to pay the most (c) the alternatives are least attractive. Given that overlap, not charging more is just leaving money on the table.

I don't like repeating this over and over again, so I'll just link to Jarrett Walker back when PotP was first proposed:
http://www.humantransit.org/2010/05/should-fares-be-higher-during-peak-hours.html

by Payton on Dec 3, 2011 2:12 am • linkreport

@Payton & Falls Church: Yes I do get the difference between marginal and average cost. But you are looking at it from the point of view of the agency; me, by how the riders decide whether to take Metro or not. The customers don't care about the agency cost structure, only if they are getting a fair deal.

I am advocating making the non-peak and peak fares equal and eliminating the PotP -- one single fare for the entire day that adjusts by distance. The off-peak will increase, and the peak may decrease or stay the same, depending on how the numbers work out.

Regarding the extra equipment and labor needed for the busiest times: there are ways to manage this, such as using shorter shifts and carrying out cleaning during the down times.

The PotP is a gimme on those that don't have a choice when to commute. It is unfair.

by goldfish on Dec 3, 2011 3:21 am • linkreport

@goldfish:

"But you are looking at it from the point of view of the agency; me, by how the riders decide whether to take Metro or not. The customers don't care about the agency cost structure, only if they are getting a fair deal."

I hate to sound like a jackass economist here, but I can't help but observe that you don't really understand how basic economic principles work.

If I can ask for a bit of clarification: to you, people don't think at all about whether the cost of purchasing a good or service is worth the benefits of that good or service; they only consider whether "they are getting a fair deal," right? Moreover, this conception of fairness (which is, again, the most important quality of a pricing structure) requires that a given good or service have the same price at all times, correct?

by Gray on Dec 3, 2011 8:38 pm • linkreport

"me, by how the riders decide whether to take Metro or not. The customers don't care about the agency cost structure, only if they are getting a fair deal."

I decide whether to take metro or not by comparing cost and convenience to other modes, or to skipping the trip. My peak hour trips are mostly to work, which isnt really a choice, and going by auto means sitting in traffic, and paying through the nose for parking. On weekends its mostly for leisure - when the roads arent bad, parking isnt so bad, and i can choose alternate leisure activities. The price that would deter me from using metro is much higher on week days therefore. I dont worry about abstract ideas of fairness - of course I dont think theres anything unfair about metro using marginal cost pricing.

by AWalkerInTheCity on Dec 3, 2011 9:51 pm • linkreport

@Gray: but I can't help but observe that you don't really understand how basic economic principles work. -- A vain attempt at insult because you have not supported it with evidence. I am doing my best to ignore this and not flame you like we used to be do during the good ol' days of 'net 1.0...

People don't think at all about whether the cost of purchasing a good or service is worth the benefits of that good or service; they only consider whether "they are getting a fair deal," right?

Right. If Metro is to have better service, it needs to think more like its customers. Time & convenience are the primary considerations. Example: people notice that service is bad during weekends when they are doing maintenance, but they still charge them the full fare; it is not a "fair deal." This leads to legitimately critical posts on blogs which are read by many others, and their reputation suffers. Bottom line: they loose people who have the ability to choose their means transport, i.e., mainly the off-peak customers.

by goldfish on Dec 4, 2011 3:29 pm • linkreport

@goldfish:

"A vain attempt at insult because you have not supported it with evidence. I am doing my best to ignore this and not flame you like we used to be do during the good ol' days of 'net 1.0... "

Pointing out that people respond to price incentives amounts to a vain attempt at insult, eh? If you're denying that (holding all else equal), people buy less of a good* when its price goes up, I really don't know what to tell you.

Yes, people consider a range of non-monetary factors when deciding whether to ride Metro, but the one we're discussing is price. If you don't adjust service levels but raise prices, people will ride Metro less. Demand is more sensitive to price at off-peak times, for the reasons that others have already given here. Hence the argument, which many here have made, that equalizing peak and non-peak fares is not the smartest move.

Enlighten me. What part of this makes you want to flame me?

* (okay, so there may be Giffen goods, but nobody's arguing that Metro tickets are a Giffen good)

by Gray on Dec 4, 2011 4:22 pm • linkreport

@goldfish
Right. If Metro is to have better service, it needs to think more like its customers. Time & convenience are the primary considerations. Example: people notice that service is bad during weekends when they are doing maintenance, but they still charge them the full fare; it is not a "fair deal." This leads to legitimately critical posts on blogs which are read by many others, and their reputation suffers. Bottom line: they loose people who have the ability to choose their means transport, i.e., mainly the off-peak customers.

OK, so you argue that if Metro has worse service on the weekends (which they do, longer headways) and they still charge a high fare, people will get pissed and leave because they have other options off-peak. But before you were arguing that Metro should raise the off-peak fares to match the peak fares. If the first is true then the recommendation does not make sense, from either the agency perspective OR the customer perspective.

It only makes sense if you don't think price enters into the equation at all. The rest of us, and the research, think that's wrong.

by MLD on Dec 5, 2011 8:45 am • linkreport

@Gray: don't really understand how basic economic principles work is saying that I am ignorant. It would be insulting except that it isn't true. If I wrote that you don't understand the human need for justice, I think that you would take it to be insulting -- except that I did not write that. What you wrote were fighting words, make no mistake, and when you are face to face with someone I think you have enough common sense not to insult people like that.

Now your point that people respond to price points: obviously they do. But as I repeatedly wrote above, the price difference between peak and non-peak is small compared to the cost of driving and parking, and is not as important as time and convenience. If you want this discussion to move forward I hope that you will address this, as I have written it several times now.

Btw the headways are only a few minutes longer, are usually a small fraction of the total door-to-door time and therefore do not impact the time very much. They are comparable to circling the block looking for a place to park.

by goldfish on Dec 5, 2011 9:54 am • linkreport

Local govts need to increase funding to cover more than 50% of the budget...today they fund just 42%...metro is vital to the regional economy and elected officials need to realize that

Riders shouldn't get the bill for Metro's budgetary shortfall

by Ducey on Dec 8, 2011 9:21 pm • linkreport

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