Sell By Distance or Sell By Volume? The Silver Lining of a Fare Increase

Effective on April Fool’s Day, TTC fares will go up again.  You all know my position:  if we have to choose between fare increases and service cuts, fares should take the hit.  Having said this, let’s look at the way the fare structure has subtly changed over the past two years.

For all practical purposes, the price of monthly and weekly passes is frozen because the proportional change in cost is much lower than that of tickets, tokens and the cash fare.  This brings us to a philosophical divide:

Should we reward people who ride the TTC a lot (counted by number of boardings) with cheaper fares because they buy passes, or should we reward people who travel short distances with cheaper fares based by distance or zones?

All transit systems reward frequent users with cheaper fares, and one can argue that passes make it possible to take many short trips without incurring the extra cost of a token for each one.  The flip side of this is that someone who rides a lot, but not enough to make a pass worthwhile, is hit by the fare increases while pass users are almost immune.

The fare multiple for passes (the number of single fares that a pass is worth) has been a central part of the debates about passes for the past 25 years since the Metropass was introduced in May 1980.  TTC staff have always argued that the pass should be priced high to avoid loss of revenue.  For many years the multiple was 52 fares, and this made the pass unattractive to people whose riding was about 20 round-trips to work per month.

The first break in this model came with the Metropass Discount Plan which gave a discount of about 8 percent to riders who subscribed to a year’s worth of passes.

Last year’s fare increase held the pass price steady with the effect that the multiple dropped to 49.5 for a regular pass, or 45.25 for the subscription program.

By 2006, the pass was transferrable so that two or more people can pool their transit costs provided that only one of them uses the pass at once.  The old model of 20 work trips a month doesn’t apply, and sales of passes have mushroomed.

Now, the token price will go up by a dime, but the pass price has only a dollar.  The multiples will be 47.5 for a regular pass, or 43.6 on subscription.  Combined with transferrability, the subscription pass is a strong competitor to become the primary way regular users purchase fares.

Similarly, the weekly pass (with no price change) will drop from a multiple of 15 to 14.3. 

This has huge implications for the way people think about using transit.

Meanwhile, Smart Cards are back in the news both in response to schemes for regional fare integration and as a way of charging based on the amount of transit people use regardless of the system they ride.  Today’s reports of counterfeit tickets and tokens add to the pressure for the TTC to convert.

We shall see.

Smart Cards are touted as a way to tighten up on fare evasion and painlessly increase revenue.  That may be true, but I can’t help feeling that lurking under all of this is a scheme to extract even more money from riders.  A stealth fare increase.

Meanwhile, there’s big money to be made with a Smart Card that is a general purpose stored cash card.  Technology vendors and banks are salivating at the prospect, and some of the pressure for Smart Cards comes from these quarters.

There’s a new problem in this technology:  thieves carry card reader/debit machines around in crowded transit stations  randomly making small deductions from all the cards they can find.  Special wallets with metallic covers to block such readers are now on sale, and my favourite is made out of duct tape.

For more about duct tape, go here.

Whatever the technology, the TTC must move away from single fares to passes to reward people for riding the rocket as often as possible.