Budget

Metro outlines fare policy principles

by Michael Perkins   •   January 12, 2010 10:32 am

On Thursday, the WMATA Board's finance committee will hear a presentation on general fare policy. While Metro's staff doesn't make any specific recommendations, the presentation is a great summary of the current state of "a-fares" (groan).

Rail ridership (green) compared to budget (red). Image from WMATA.

Metro's ridership is declining or staying the same compared to the same period before, and compared to budget. In addition, Metro shows that ridership for very short trips on Metrorail (less than 1 mile) are growing rapidly on weekdays, up 20% over the same period last year. In fact, low mileage trips (below 6 miles) are up, while longer trips (over 17 miles) are down.

Metro believes these longer trips are more susceptible to the economic situation. While a 20% increase is impressive for very short trips, it's hard to tell whether this is an increase from a very low baseline without having some absolute numbers.

Metro also presents the split of ridership between peak and non-peak time periods. The morning and evening peak periods account for 68% of Metrorail trips, while after midnight to 2 am and late night peak (2 am to 3 am) account for less than 0.3% and 0.1% of the ridership, respectively.

Compared to average monthly ridership of 18 million, this represents only 2,250 people per hour for late night peak (there are 8 service hours after 2 am per month) and 3,375 people per hour for midnight to 2 am service (there are 16 hours of this service per month).

It's interesting to note that the average cost of a Metrobus ride is higher than the average Metrorail ride. They're subsidized at two different levels. On average, bus passengers pay $0.83 when you take into account passes and free transfers, while the average rail rider pays $2.27. Part of this is a difference in fare policy, and part of this is that the region needs to subsidize a bus system in order to bring customers to its rail system.

Metrorail fare elasticities were much lower than I expected, within the range of reason, and had the same pattern of variability as expected. Peak riders are very insensitive to small price changes, with an elasticity of about 12% (That is, for a 10% fare increase, you would expect about 1.2% of riders to not take a trip).

The most sensitive riders were weekend riders experiencing greater than 20% fare changes, but even then the elasticity was less than 30%. I recently had a debate with a commenter who argued that cutting fares would boost ridership. In the opinion of Metro's fare model, cutting fares would increase ridership, but would drain revenues even faster.

The only change to Metro's recommended fare policy principles compared to the current stated principles: Adding "Achieve parity between passes and the cash fare". I infer from this that Metro is likely to push for an increase in the price of the bus pass, currently offered at only 8.8 times a single-ride fare. They will also likely push for an increase in the unlimited rail fast pass, which offers a discount even to regular commuters that ride no additional trips.

The policy based on current prices would be to push the bus pass to around $12.50, and the unlimited rail pass to $45.00 per week. Recently, I recommended flexible pass pricing which would allow riders to choose how much their pass was worth and pay Metro accordingly.

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.