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?

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 million—about 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).

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?