Greater Greater Washington

WMATA budget deep dive, part 4: A better fare increase?

WMATA's $87.9 million fare increase would drive away an estimated 15.1 million trips over the year. Is there a way to raise similar amounts of revenue but reduce ridership loss?


Photo by slack13.

Some riders are more price-sensitive than others. According to WMATA, Metrorail fare increases in the peak period generate a smaller percentage of passenger loss than off peak or weekend fare increases.

Peak riders can often afford more and are less inclined to switch to driving; plus, the system is already very crowded at peak times, which is when there's no extra capacity. Setting fares higher at peak and lower off-peak could also help encourage more riders to schedule trips outside of rush hour that would relieve crowding and may ultimately lead to lowering operating costs.

One new component of the Metrorail peak fare increase is a "peak of the peak" fare surcharge of 10¢ across the board. This surcharge would apply during the busiest 1½-hour period in the morning and evening peak periods.

This proposal adds between 2% and 6% to the cost of a rail trip, depending on distance traveled, in addition to the general 15% increase in rail fares. It generates about $5 million in net revenue, but only projects to lose about 400,000 riders per year.

"Peak of the peak" fares have generated interest among transit advocates for three reasons:

  • Many federal employees (over 40% of peak period riders) do not use their full monthly transit allotment and this would be a way to get a greater federal subsidy for WMATA without a financial impact on many peak period riders.
  • The premium charge would encourage those riders able to do so to move onto the "shoulders" of the peak period. This could potentially save WMATA operating costs by spreading the ridership more evenly across the peak period.
  • It increases revenue to a cash-starved system with minimal ridership loss.
A group of advocates from Greater Greater Washington and MetroRiders.Org have asked WMATA to evaluate a larger "peak of the peak" than 10¢, up to as much as 50¢.

Another short-term revenue enhancement would be to introduce a differential between paper farecards and SmarTrip cards on the rail similar to the cash fare/smart trip differential on Metrobus. A $0.10 differential would raise about $2.5 million in FY 11, according to WMATA. Returns in future years diminish as casual users of the system adapt. Some transit advocates (including the GGW/MRO group) have argued for this approach because it targets "tourists" to some extent, and encourages greater SmarTrip use over time.

Despite the massive size of the fare increase and ridership losses, it is possible to make small changes and mitigate substantial portions of the ridership loss.

Here's one example:

  • Increase "peak of the peak" fare surcharge from $0.10 to $0.15
  • Institute a $0.10 surcharge for paper farecards
  • Reduce off-peak rail fare increase from $0.20 to $0.15
  • Reduce base SmarTrip bus fare increase from $0.20 to $0.15 and reduce pass prices accordingly
  • Eliminate proposal to reduce "rail to bus" and "bus to bus" transfers from 3 hours to 2 hours
The effect of these changes creates revenue of $82.2 million as opposed to the original proposal's $87.9 millionabout a 8% decrease. On the other hand, the changes save approximately 38% of the total projected ridership losses from the fare increases (about 5.8 million riders).


Alternate fare option. Compare to the chart here.
Changes from WMATA's proposal are in yellow. Revenue and ridership in millions.

Unfortunately, it is not so easy to saving the other 9.3 million riders lost. Instead, it would likely take substantial contributions from the jurisdictions that make up WMATA, an infusion of federal funds or some other large source of funds. Those are the only ways to offset the bulk of these proposed fare increases and bring them back down to the $35 million range originally planned two years ago.

Next: Is the fare increase fair to riders?

Craig Simpson is currently working as a representative for Progressive Maryland. He has in the past worked for Amalgamated Transit Union Local 689 and the Metropolitan Washington Council, AFL-CIO. He has a degree in Labor Studies from the National Labor College. 

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How does spreading demand more evenly through the peak period reduce operating costs? Is it a wear and tear issue on the trains?

Incidentally, I'm really enjoying this series of posts. Good stuff!

by jcm on Feb 25, 2010 1:54 pm • linkreport

Two things!

1.)Spreading them out would reduce operating costs a few ways. It would reduce wear and tear on trains (especially doors being held), but it would also increase the timeliness of trains (reducing the need for overtime by conductors/train operators), allow less trains to be run at the extremely peak period, and allow for less investments in increasing peak capacity at a station like MetroCenter that is full to the brim.

2.) I am really uncomfortable with how the numbers above talk about ridership in the way they do. These increases will not reduce ridership by 5.1m. There will be 5.1m less RIDES (trips) a year. This is actually an enormous difference. While one could still get into a death spiral, the numbers are much different. If someone commuted to work the standard 250 days a year, losing that 1 rider would account for a loss of 250 rides, if WMATA lost 5.1m riders, that would actually be a loss of 1.3B rides (trips), and that's more than half of all rides in NYC. The Metro only accounts for 133 million trips across 6.1 million unique riders. The biggest problem, and I don't know if Metro accounts in their estimates for this or not, is that the rides eliminated first are actually the shortest ones. The ones that can be converted to walking/cycling trips, before someone gets fed up and says, "I'm driving" instead. The cost of parking hasn't somehow suddenly dropped to less than the cost of the Metro ride. The problem here is that those short trips are very profitable for WMATA. They require almost no operational effort while bringing in a big chunk of change. They were also pretty discretionary in the first place, although this is where I think WMATA has it wrong. If you walk on the platform at a station to take a discretionary, short trip and find that the next train is not coming for a long time, or that the train is completely full, it should be free to walk right out of the station. This could actually promote the short trips in the face of increasing fares. Right now it's a crap shoot at these time periods.

by Matt on Feb 25, 2010 2:10 pm • linkreport

Sorry, I do not agree with peak-of-the-peak pricing. It may not impact federal workers at all, but it would certainly impact the legions of non-profit workers that make up part of the *majority* of non-federal workers to ride the train at this time. I would much rather see fare increases on off-peak times. I would also much rather pay for fare increases on off-peak times than reduced service. It's not the FARE that causes people not to ride during off-peak times -- it's the insane amount of time you potentially have to wait for a train (doubled if you have to make a transfer).

by Liz on Feb 25, 2010 2:11 pm • linkreport

@Liz,

While you might rather see fares at off peak times go up, the ridership then is much more discretionary, and these people are much quicker to leave the system. My parking example holds here too, parking's not getting any cheaper, but it's usually free on weekends. That doesn't help. In any event, Metro is betting you'd sooner wake up and leave the house 10 minutes earlier or later than you do now to get into work than pay the difference, or you're just willing to pay. You're correct that this isn't perfect for everyone. Some people HAVE to be at work at 9AM sharp no matter what. You'd also be correct that these are the people who are unilaterally being discriminated against by such pricing, but the truth is that this group of people, in general, is much better off than the people who have flexibility in when they ride.

by Matt on Feb 25, 2010 2:20 pm • linkreport

My quixotic Metrorail surcharge idea would be to add an extra $0.10 or so for trips that terminate at Gallery Place and originate at Metro Center to Vienna on the Orange Line and Metro Center to Franconia on the Blue Line. These trips use the short, one stop yet easily walkable Metro Center to Gallery Place red line trip, and contribute quite significantly to crowding of red line trains. The surcharge would give an incentive to cover this distance on foot.

by thm on Feb 25, 2010 2:27 pm • linkreport

Disagree with the bus fares not going to $1.50. This is a cash fare and should be a round number for ease of payment.

Furthermore, there has been no smartrip bus fare increase in six years, and the last fare increase was a nickel compared to 15 cents or more on rail. Time to catch up.

Since both bus and rail are increasing, to avoid the double-whammy for rail-bus passengers, increase the transfer discount to $0.75? That would neutralize the bus fare increase for people that are already paying the rail fare increase.

See history of fare increases here: http://wmata.com/about_metro/docs/FareHistory.pdf

by Michael Perkins on Feb 25, 2010 2:38 pm • linkreport

@thm

This is actually an excellent idea. The same could be done somewhere like Farragut as well. I guess the big question would then be, how close is too close? Should green/yellow trips the other way count? Should green/yellow trips ending at J. Square count? I actually tend to agree depending on how much space needs to be made at MCenter and GPlace.

by Matt on Feb 25, 2010 2:40 pm • linkreport

I mentioned this on the previous thread but it looks like it's more relevant here. I think the ridership loses for the reduction in transfer seem quite overstated. In particular, the bus to bus transfer reduction is supposed to reduce ridership (or as Matt would say trips) by 3.4 Million, which is the second greatest impact on this table, only slightly behind the 3.5 million of the .25 bus boarding fare increase. Are these 3.4 million paying trips (as opposed to 3.4 million trips because people took advantage of the transfer)?

by Steven Yates on Feb 25, 2010 2:49 pm • linkreport

Sigh. I hate fare increases.

GGW has convinced me that a "peak of the peak" is necessary. On the Red and Orange lines there are just too many people taking the metro. I feel bad about nonprofit workers but come to work an hour later or leave later. Still cheaper than parking.

I think the point about shorter trips being more discretionary and more subject to pricing is very valid. As I've said before, there are plenty of times when Metro is empty -- and a way to get more revenue there is to lower fares.

by charlie on Feb 25, 2010 3:00 pm • linkreport

@charlie, I've tried to argue your point that cutting fares off-peak can raise revenues. I've provided sources and evidence that it isn't true.

Your turn. Show some evidence of a transit agency that cut fares and increased revenues (not ridership - that will almost certainly be true), and why their case is similar to ours.

by Michael Perkins on Feb 25, 2010 3:11 pm • linkreport

I once got off at Gallery Place and asked the Metro employee in the booth which exit to take to get out on H St. It happened that it was the one he was sitting next to. However, he sent me to another exit, requiring me to walk quite a way to get to where I needed to be.

So, if you want to encourage ppl to walk those short trips, you need to get employees who can actually do basic things like actually know where they are sitting.

by SJE on Feb 25, 2010 3:15 pm • linkreport

Is it fair? I pay 36% federal taxes, taxes to MD, to Montgomery County, sales taxes and interest on my student loans could be counted as taxes since they are held by the Dept. of Ed.

I'm a federal employee so I make less then my private sector attorney counterparts. The local jurisdictions don't zone for enough affordable housing for federal workers so I'm forced to live in the burbs and ride Metro.

Sure the feds are paying for 80-90% of my Metro trips each month but should more of my income go the least functional public agency keeping me in lower middle class wage slavery?

Not really. The three jurisdictions and the federal government, my employer/slavemaster should shoulder more of that burden. I'm not the one that underfunded the system for the last twenty years.

by Redline SOS on Feb 25, 2010 3:24 pm • linkreport

I have found customer service from Metro Station employees absolutely atrocious. I have never received anything but total condescensing, attitude and the rudest of behaviors.

Fix that problem, and the sense of entitlement that many Metro employees seem to have, and the system will be greatly improved.

Who wants to pay more to get treated worse?

by LuvDusty on Feb 25, 2010 3:41 pm • linkreport

@Michael P. Your point is well taken but this is only an example of how relatively small changes can make a difference in ridership. You could leave the cash fare at $1.50 and only increase the Smartrip Fare from 1.25 to 1.35 and accomplish most of the same thing in terms of mitigating ridership losses.

by Kreeggo on Feb 25, 2010 4:01 pm • linkreport

@Michael

You're correct on the whole can't make money lowering fares. This is evident from Metro's own elasticity estimates. Let's take a look at the tape... http://www.vtpi.org/tdm/tdm11.htm#_Toc161022586 Those elasticities (.3) suggest that dropping fares would not increase overall revenue. Sorry guys!

@Redline SOS
While I feel for you, I don't believe you need to live in the suburbs. There are plenty of neighborhoods in the city that if you and all your friends chose to live in would be much better off and would not require you to pay any more. A bad neighborhood is only bad because you and other good people like you aren't in it for it to be safe. You are correct that being the first is altogether risky, but if no one is entertaining the possibility, you'll be stuck in the suburbs no matter what. Subsidizing housing in already great neighborhoods is not an efficient use of funds.

@ All the customer service types.
Transportation is a commodity. I'm sorry that this customer service is the issue for you, but it's all about price. If the Metro were free, they could be the biggest dicks in the world and way more people would ride. There would also be some people who would still pay to drive. The Metro isn't worth it to them at any price. This works the other direction as well, although as I said, the conversion is not, generally, to driving at peak periods. That's one of the reasons demand is so inelastic.

by Matt on Feb 25, 2010 4:02 pm • linkreport

@Kreeggo

At the expense of not making enough additional money.

by Matt on Feb 25, 2010 4:04 pm • linkreport

Peak-of-the-peak fares are insane if metro at the same time if throwing out the 8-car trains.

Metro's budget problems can not be fixed by cutting service and increasing fares. They can only be solved by significantly increasing the contributions from the jurisdictions to metro. And yes, I'll be happy to pay that tax.

by Jasper on Feb 25, 2010 4:05 pm • linkreport

@mperkins; at least we agree about the need for boosting revenue.

What you have cited in the past is that rail transit fares are inelastic. That is the consenus of transit consultants across the board. Since almost every transit system in the country is in the pattern of "raise fares, cut service" right now I'm not sure how useful is the advice those consultants are peddling.

Now I do agree with you that cutting fares during rush hour isn't going to do the trick. For one thing, on the two money making lines (red and orange) you can't fit any more people on board.

WMATA is different in a number of ways:

1. Rail is ALMOST self-supporting.
2. Feds are paying something like 50% of rush hour fares
3. Because it is more of a commuter rail than urban subway, short trips during non-rush hour times are priced too high.

I'd look at what Arlington Transit did with their teen fares (60 cents).

Where we agree is raising fares and cutting service is going to put WMATA in a death spiral. We need some out-of-the-box thinking to save us, and with a boost in non-rush hour rail riders, WMATA could move to a break-even point with rail.

by charlie on Feb 25, 2010 4:09 pm • linkreport

No matter how much complicated math or soul-searching you do, whatever policy you come up with creates some winners and some losers. Cutting service to peak riders isn't inherently better than cutting service to off-peak riders. Favoring the group that is most price-sensitive isn't necessarily best.

by Greg on Feb 25, 2010 4:13 pm • linkreport

@Matt re: "All the customer service types.
Transportation is a commodity. I'm sorry that this customer service is the issue for you, but it's all about price."

Matt: it isn't all about the price, but the entire package, which includes price, service etc.

I'm not so worried about rudeness, but about competence.

If the guy sitting in the booth doesnt even know the name of the street outside, how is he going to direct people, such as in an emergency. How many crashes, and near misses, are the result of Metro employees' incompetence?
What about the fellow who was assualted at a Metro station, and the employees couldn't care less.

When the agency is looking for money, the evidence of incompetence, and the day to day experience of those who ride the bus and the trains, are going to have a lot of weight.

The other factor is that labor is the biggest expense for WMATA. If they are in the red, cut salaries or staff, like many private businesses did, before asking for more $.

by SJE on Feb 25, 2010 4:40 pm • linkreport

@charlie:
1. Rail is ALMOST self-supporting.

You would call a 61% fare recovery ratio "almost self-supporting"?

Off-peak fares aren't so high that lowering them is going to discourage people from driving and get them to take transit. The service just isn't good enough off-peak to do this. I can see the following factors playing into a person's decision between driving and METRO on the weekend:

1. Speed/hassle of travel
2. Convenience/cost of parking at destination
3. Drinking/reliance on designated driver
4. Cost of taking METRO

Basically METRO can only change 4, and to me that seems like those people for whom 1 and 2 make them not take METRO, the cost would have to be basically free in order for them to take it.

Those trips that you are saying are too high (short trips off-peak) aren't a competitive market between driving and Metro. The people making those trips either don't have cars or they live in the walkable city already and are taking transit everywhere instead of driving their car.

To add to this, do we have any information on Metro's top stations on the WEEKEND? We've seen the rush hour stuff before on this blog.

by MLD on Feb 25, 2010 4:41 pm • linkreport

How about streamlining the fares and passes first before we go about the increases in everything.

Right now we have

cash system
smartrip system
paper farecards
passes

1 the cash system is fine as it is now

2 smartrip could be modified to fix the holes left in it from when they stop issuing paper transfers

3 paper farecards fine as it is now

4 passes should be on the smartrip

5 bus fareboxes often dont work either it is accepting cash and not smartrip cards or the other way around thats a loss in revenue which they could have had and its there own fault because they have broken equipment.

They should fix problems 2, 4 & 5 and then they can go wild with the price increase ideas

@ Craig

"Peak riders can often afford more and are less inclined to switch to driving"

Not true do you know everyone who uses the rail some may not afford it and others may not have cars, why make generalized statements like that

Everybody does not have Whitecollar jobs.

by kk on Feb 25, 2010 4:47 pm • linkreport

@charlie ... "I feel bad about nonprofit workers but come to work an hour later or leave later."

I don't know what non-profit you work for, but at my offices (current and former) the doors open and close at particular times, and employees are expected to be at work on time and stay until the day is done. Not everyone can just decide to come and go on whatever schedule they like. In fact, I would venture to guess that *most* people can't.

by mccxxiii on Feb 25, 2010 5:03 pm • linkreport

Is it fair? I pay 36% federal taxes, taxes to MD, to Montgomery County, sales taxes and interest on my student loans could be counted as taxes since they are held by the Dept. of Ed.
I'm a federal employee so I make less then my private sector attorney counterparts. The local jurisdictions don't zone for enough affordable housing for federal workers so I'm forced to live in the burbs and ride Metro.

Sure the feds are paying for 80-90% of my Metro trips each month but should more of my income go the least functional public agency keeping me in lower middle class wage slavery?

Not really. The three jurisdictions and the federal government, my employer/slavemaster should shoulder more of that burden. I'm not the one that underfunded the system for the last twenty years.

by Redline SOS on Feb 25, 2010 3:24 pm

Lower middle-class wage slavery? Get a little perspective. I'm a federal government attorney (DOJ) too and we have it pretty damn good. Sure, we don't make the huge bucks we easily could in private practice (for about the same number of hours, at least, in my case), but plenty of people get by just fine on far less. Not only that, but we get to do some pretty great stuff.

I lived in DC (Dupont, Kalorama, Columbia Heights successively) on my federal salary for 4 years before moving out to the suburbs (inside-the-beltway Silver Spring) before my daughter was born.

by hugo on Feb 25, 2010 5:25 pm • linkreport

@Redline SOS, your life sounds terrible. Little chance of being laid off and your employer lets you post here at 3:24 on a Thursday afternoon.

Re:Metro, stopped riding after Chris Zimmerman said pension cuts were a "non-starter", really enjoy having my car, especially on a cold, windy day like today

by David on Feb 25, 2010 5:47 pm • linkreport

@Redline SOS There is no 36% federal tax bracket. There's a 35% bracket, and if you're in that then you are hardly a "lower middle class wage slave". In fact, the 35% tax bracket only hits the top 1% of earners in the country.

by jcm on Feb 25, 2010 5:48 pm • linkreport

Here is a question. Let's say a company, maybe Comcast, or a bank, or whatever, was willing to pay $30 million over 10 years for the naming rights of a major Metro station? Would you go for it? What if you could sell 10 major stations to 10 diffferent sponsors?

How about this, a company pays a signficant fee, in exchange for the right to operate TV screens in every train and station that do nothing but play their ads?

Crazy ideas? Maybe. But maybe crazy is just what we need right now.

by urbaner on Feb 25, 2010 6:33 pm • linkreport

The fundamental problem is the fastest rising cost - employee benefits - is not being addressed, and will be an issue every year until it is.

In just two years, employee benefits have risen 20% to $318 million, while salaries and wages have risen just 5%, and just 2% when you factor in reduced overtime. Benefits now account for exactly 1/3rd of all compensation, and 1/2 salaries and wages. Pension costs alone rise 24% in 2011, and that's with some gaming of the contribution level.

There is no point talking about gimmicky cuts until a plan to fix the pension, which would have to include 401(k)s for new hires, is in place.

by David on Feb 25, 2010 7:35 pm • linkreport

I absolutely agree with an extra charge for paper farecards, both since they're mainly casual users and since they're disposable. It might make more sense to charge for the paper up-front (e.g. $0.50 to buy a farecard) than to add a per-ride surcharge: it keeps you from creating two different fares, and it discourages waste. A per-ride surcharge hits whether you buy a farecard for each trip or buy a $20 farecard and use it for 2 weeks.

by Gavin Baker on Feb 25, 2010 7:42 pm • linkreport

I second kk in wondering how much money could be saved by putting passes on SmarTrip. That change would eliminate disposable passes as well as potential fraud from flashing an expired (or fake) pass when boarding.

by Gavin Baker on Feb 25, 2010 7:44 pm • linkreport

I echo Steven Y. in wondering if the projections for lost rides from a shorter transfer window aren't grossly overestimated. Recall that transfers were 2 hours until paper transfers were eliminated, not long ago. Did extending the transfer window really create 1.2 million trips in such a short period?

And I'm with Michael P.: there's no way a cash fare should be $1.45.

by Gavin Baker on Feb 25, 2010 7:49 pm • linkreport

I understand that $1.50 would be an easier cash charge to collect and help speed boarding, but I don't think that's what WMATA is proposing.

The WMATA proposed fare increase takes the bus smartrip base charge of $1.25 and raised it to $1.50. The current cash fare is $1.35. The proposal was silent on the cash charge and I assumed it would be $1.60--keeping the same 10 cent differential--did I miss something?

Changing the smartrip fare to $1.45 and changing the cash charge to $1.55 would have no practical effect in terms of ease of fare collection (the cash fare on both alternatives requires an odd combination of coins)

by Craig Simpson on Feb 25, 2010 8:34 pm • linkreport

@urbaner: Regarding naming rights, didn't the "State-Citizens Bank" experiment in Boston fail miserably in a better economic climate?

by Jason on Feb 26, 2010 9:56 am • linkreport

Rather than reduce the transfer period from 3 to 2 hours. Why not institute a 25 cent transfer charge on bus to bus transfers (currently free). By my estimate this could be worth about $7,000,000 annually.

by Interested on Feb 26, 2010 5:36 pm • linkreport

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