TTC Hosts Presentation on Montréal’s Smart Card Experience (Updated)

On the evening of Thursday, September 18, there was a presentation by Montréal’s AMT on the implementation of their Smart Card system.

See the announcement flyer for more details.

Updated:  The presentations gave a lot of information about the Montréal OPUS project, and I will outline the high points here.

Joël Gauthier, President and CEO of the Agence métropolitaine de transport was the main speaker.  He began by talking about the transit renaissance in Montréal.  Ridership has grown consistently since 1995, and the introduction of new fare systems supports the growth and attractiveness of public transit in general.  Capital programs are also underway to expand transit services including a new commuter rail line and an LRT line.  System ridership in 2008 is up 8% over 2007.

The Montréal region contains 83 municipalities (plus an additional 8 within the AMT’s service territory) and 14 transit operators serving a population of 3.6 million.  There are 2,550 buses, 5 commuter rail lines (52 stations) and 4 subway lines (68 stations).

An important thread in M. Gauthier’s talk was a focus on consumers.  The transit system needs a good relationship with its customers through service quality and through offerings such as OPUS that simplify the travel experience.  Smart Cards are part of an overall solution, not a cure-all.  Indeed, the OPUS project includes the construction of twelve customer centres around the Montréal area that will provide general support for the public in addition to OPUS itself.

The old fare structure in Montréal was fragmented among the 14 separate agencies each with its own fares, media and discount structures.  Riders would have to purchase single fares (tickets, tokens, passes) for each system they used, much as we see today in the GTA. 

Fare rationalization was introduced in 1996, five years before the OPUS project even started, to simplify fares for riders.  The metropolitan area is divided into 8 zones although most riders lie within a few of them.  A pass covering multiple zones is 15-25% cheaper than the combined cost of passes in the old, local systems.

Riders within the downtown zone are split about 50-50 between single ticket and monthly pass users, while those who cross zones are split 90-10 in favour of passes because of the discount.  The fares apply to all services including commuter rail.

Although revenue under the new scheme is lower, this is subsidized by funds from the provincial gas and vehicle license taxes.  Note that this is an organizational and governance issue, not a technology issue.  The desire to lower cross-zone fares is a noble goal, but it has a cost.  Smart Cards allow for flexibility of implementation of new fare schemes and for more accurate tracking of usage on each system, but they don’t magically create new revenue.  The expected savings from reduced fare fraud are seen as an offset to the system’s capital and operating costs, not as funding for fare rationalization which was already in place for a decade.

The OPUS project was designed to use a single fare card for multiple systems.  This includes not just the Montréal region, but also Québec city and other parts of the province in the future.  Up to four fare “products” can be loaded onto a card.  A product is defined as the fare or payment scheme for one system.  This could be the local tariff for one or more systems in the Montréal region, or a regional combined fare, or some other transit-related function such as parking charges. 

Local transit fare structures were kept “as is” within the constraint that extremely complex ones had to be rationalised.  This process uncovered some previously unknown “arrangements” where the official and unofficial practices varied.

Although OPUS is now rolling out through various user groups (employees, students, etc.), the project started in 2001.  Much work went into the technology and supplier selection, and the project was complicated by the need to integrate fareboxes from a separate vendor in the Smart Card project.    Joël Gauthier emphasised that transit systems need to be careful with technology integration and to take a strong roll in mediating competing vendor claims when problems arise.

By 2007, both the technology and the management practices were in place to allow the system to be installed.  I suspect this lengthy gestation was in part due to the complexity of working with many separate transit agencies each of which was fearful of losing revenue and uneasy about giving up control of their fare system.

There are three formats of Smart Card.

  1. A regular fare card (“OPUS”) that does not have photo identification, but can optionally have this added.
  2. A reduced fare card that must have photo identification.
  3. Single use cards (“Solo”) mainly for casual system users.  This card is paper based and is disposable.

The OPUS cards are contactless Smart Cards although they do contain a chip whose contacts are visible on the card.  In normal use, the card needs only to be waved generally at a reader on the vehicle or in a station and an actual “tap” is not strictly necessary.  Riders do not have to “tap out” from the system because there is no fare-by-distance calculation.  They only need to have a fare type on their card valid for the zone they are in when they enter a vehicle or station, and still valid in the event a roving fare inspector checks the card.

For statistical trip-recording purposes, data about the cards is anonymised so that it can be digested without the ability to link specific trips and times to specific cards.  Trip end points are determined analytically, likely based on the typical behaviour that trip “N” probably ends not far from where trip “N+1” begins.  This won’t be 100% accurate, but likely close enough for service planning purposes.  The AMT is working with universities to fine tune the algorithm for converting trip data into reliable planning data. 

A major concern is with privacy because the card may be associated with a specific person.  Under agreement with the Québec privacy commission, any data used for analytical purpose has user identification stripped out.  Access by law enforcement agencies is permitted only by court order.

OPUS cards can be reloaded at stores, at the customer service centres, subway stations or online.

The total implementation cost was $148-million of which $98-million was for the system itself and an additional $50.5-million went to replace the antique fareboxes previously on the system.  An estimated $20-million in reduced fare fraud offsets these costs, although this will depend on good enforcement.

System implementation is still in progress as the ATM works through various user groups building out to a full rollout next year.  They found some issues were essential to this project:

  • Riders must trust that the “virtual” fare media represented by the card will work properly, that individual fares (if that is the medium they purchase) on the card won’t be lost or inappropriately charged.  Riders must understand how to buy fares and how to validate the cards in the network.
  • Complexities in individual fare structures for the different operators had to be adjusted and balanced with the capabilities of the new system.  Common fare practices had to be adopted across the region to minimize variation in the type of fare scheme supported by the card.
  • Staff had to understand how the new system worked, and the knowledge of operating staff was critical to design and implementation.
  • A regional perspective was essential to planning and design.  The system had to work for everyone.
  • An operator-independent authority was created to manage the system.  This avoids rivalry and concerns among the various operators about the ownership of system data and the management of fare revenue.

Joël Gauthier made emphatic mention of the need for technology future-proofing.  Already, systems elsewhere in the world have moved to the use of cell phones as the identifying device for payment systems, and the system-specific card such as OPUS may be obsolete in less than a decade.  However, the infrastructure of station and onboard equipment will handle that coming technology change avoiding huge retrofit costs and conversion problems.  This will also permit the OPUS infrastructure to interact with devices from other partners for co-marketing transit with other services.

Gauthier concluded with an emphasis on customer benefits, on building a good relationship between the transit system and its riders.  He sees this as a central part of developing transit ridership at a time when economic and environmental concerns are bringing former auto commuters into transit’s marketplace.

I was very impressed with the presentation and with the Q&A that followed.  No doubt the system has its teething problems, some of which were discussed, but the AMT appears to be well on its way to a successful completion of the rollout in 2009.  Joël Gauthier’s enthusiasm for and knowledge of his system gave us a refreshing, entertaining and informative view of our sister-city’s transit progress.

Readers please note:  The first 11 comments below were entered when this was an announcement for the session, and I have left them with this new post for continuity.

29 thoughts on “TTC Hosts Presentation on Montréal’s Smart Card Experience (Updated)

  1. Well I’m 75% sure the TTC is getting in fully in the Presto Card implementation. I think all stations by 2015 will get them. Please correct me if I am wrong.

    Steve: The problem with a TTC implementation is the cost. The current estimate is $365-million for capital costs plus at least $10-million added to the annual operating budget. A related complication lies with proposals to move to a fare-by-distance system that could actually penalize riders who now get a flat fare for long commutes withing the 416. The proposed subway extensions north of Steeles Avenue would be in the TTC fare zone, but by the time they open, the one-token ride to downtown from York Region may not exist.

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  2. Hi Steve,

    As I understand it, Trains de Banlieu operating within Urban Montreal (Zone I – 3) are treated as an extension of the metro (with valid transfers both ways).

    What would be the ramifications (relative benefits and drawbacks) of initiating a comparable fare integration scheme between the TTC and GO within the 416?

    Thanks

    Steve: A related point here is the proposed improvement on GO lines in the Metrolinx RTP. With frequent all-day GO rail service, the idea of keeping this network completely separate from the local services (notably the TTC), ceases to be valid. It’s ironic how much kvetching we hear about the Steeles Avenue fare boundary with the TTC when there is a much higher barrier to system integration between the commuter rail and local transit system in Toronto.

    Out in the 905, GO subsidizes an integrated fare with the local transit systems as this, in effect, avoids the need to provide more parking and encourages use of the rail network. Within the 416, that’s the last thing GO wants, and they have no interest in lowering the combined TTC/GO fare, let alone reducing their fares to TTC levels, even with some sort of zone system.

    Making GO part of the overall network will have costs both in added subsidy to GO and in demand on its routes. An important question is whether there is sufficient capacity available to handle both the regional commuting demand and the local traffic that could shift to GO within the 416. This issue affects both the rail corridors and the main terminus at Union Station.

    The fare model implemented as part of any regional smart card may affect not only GO use, but also use on the TTC. If a zone system (or anything else that made long trips more expensive than short ones) comes into play, then some trips entirely contained on the TTC may become more expensive than they are today. Indeed, regional fare integration may not eliminate the “Steeles Avenue effect” for long trips while providing cheaper trips for people like me who make a lot of short hops in the core area.

    Not to be forgotten are the GO bus routes which now operate with interurban coaches rather than city transit buses. Is this an appropriate vehicle type if service on these routes is integrated with the regional network? Should there be a separate bus fleet providing premium quality services as part of the “local” transit systems?

    I have always argued that GO fares and service should be better integrated with local services, but the implementation has more complex factors than just finding money to up the subsidies.

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  3. Remember that the TTC and GO have the highest farebox-recovery ratios in the country. If the government of Ontario was willing to pay up, then we could look at integrated fares, but without that money, such a thing is just a dream.

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  4. It sounds as if Metrolinx may have to engage GTA transit agencies in revisiting the by-law/legislation that designates who can provide local services within a jurisdiction.

    Currently I can ride from Long Branch to Exhibition on GO, all within 416, but cannot travel on MT or Viva between two points inside Toronto. How did GO merit an exception?

    Steve: This is an intriguing question. The City of Toronto Act gives the City powers to determine who can carry passengers within the city, and it also provides for carriage between areas inside and outside of the city. It is conceivable that Council has passed an exemption for GO Transit.

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  5. Without some kind of TTC / GO fare integration, there is no chance of GO train routes playing any significant role in the medium-haul and long-haul trips within 416. We should mind that when discussing the use of enhanced GO service to relieve the downtown subways, or the use of North Toronto sub for a crosstown rail service.

    Too few passengers will be ready to pay the double fare (in the range of 5 or 6 dollars per trip), or live at a walking distance of one GO station and head for a destination near another station.

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  6. I can’t wait for the smart card.

    On a related point, many of the token machines have seemingly vanished. I seem to always need to buy these at the booth. Since TTC booth attendants generally range from surly to downright rude, so anything I can do to avoid contact with these people get’s my vote.

    In Canada, railways are federally regulated. I believe that’s why GO can operate service within the city.

    Steve: GO is not a “railway” in the legal sense, I believe, and in any event they also operate bus services which can be used for within-416 trips. There has to be a loophole somewhere.

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  7. Railways that operate entirely within a single province are (usually) not federally regulated. I doubt that the railway regulatory framework explains why GO gets the exception on carrying passengers between points within the 416, though.

    Regarding Smart Cards, I’d love to see the TTC or Metrolynx get a presentation from Boston’s MBTA about their Charlie Card! What a boondoggle (http://www.openmediaboston.org/node/288). Smart Cards open up entirely new possibilities for fare fraud that make phoney bus tickets a trivial problem by comparison.

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  8. On the issue of GO being able to carry passengers within the 416, perhaps the loophole is similar to what is in the Canada Post Act. Technically, only Canada Post has the right to deliver mail and packages within Canada, but others may do so provided they charge several times the price the post office does.

    I never thought of this comparison before I read the several comments in this discussion. At the same time, while I hear a number of people complaining that it costs the same to take a short ride on the TTC as someone coming from the outer edges of the 416, few complain that the cost is the same to send a letter cross town as it does to send it across the country. Maybe that shows how we’ve become less dependant on the postal service as we’ve become more dependant on public transit.

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  9. How come no one talks about the GO/TTC Twin pass? That was something that was simple and made transit even better.

    Steve: Yes, it lasted until GO stopped paying the TTC a subsidy to provide it.

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  10. How many of the existing GO stations within Toronto existed and were used prior to becoming GO stations? I know that many of the stations were served by CN or CP long before GO was created, and people could probably take a passenger train from Union to any of those stations, some would have been at the limits of TTC service at the time. Perhaps this is a holdover from that time, and when GO was set up, it was grandfathered to continue operating “local” service within the Metropolitan Toronto boundaries.

    Steve: Few of the GO stations within the 416 correspond to pre-existing CN/CP stations. As for being “at the limits of TTC service”, I would hardly call Parkdale or West Toronto or even Mimico remote from the transit system.

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  11. I suspect, but don’t know that GO’s right to carry passengers within 416 originates in it’s enabling legislation, way before Queen’s Park passed the (new) City of Toronto Act.

    The Provincial legislation would give GO its mandate directly, without needing any permission from the City of Toronto to pick up and drop off passengers.

    p.s. Great summary of last night Steve. Well done!

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  12. There were several problems in Boston, not all related to the Charlie card. It should also be noted that London and Belgium also had (the same?) security issues, because the cards that they were using were actually very weak from a security point of view.

    http://en.wikipedia.org/wiki/Oyster_card#Security_issues
    http://en.wikipedia.org/wiki/Mifare#Security

    They were used for years, but when someone actually bothered researching them, they were cracked with only a modicum of effort. The manufacturer relied on the fact that their implementation was secret for things to work, but once things were reverse engineered the house of cards came down:

    http://www.schneier.com/blog/archives/2008/08/hacking_mifare.html

    There are now much more secure versions available from the manufacturer:

    http://en.wikipedia.org/wiki/Mifare#MIFARE_ProX.2C_SmartMX

    The MIT students identify four key problems with Boston’s system: the value is stored on the card and not in a secure database, the data on the card can be easily read and overwritten, there is no cryptographic signature algorithm to prevent forgeries, and there is no centralized card verification system.

    New York’s Metrocard is probably a good example of how well things can be done. There is no security on the actual card, but fraud is kept down because each card has a unique serial number on it. If a particular card is being used in many places at the same time, the central computer knows it was cloned, and tells all turn stiles (and vehicles) to not allow that particular card to be used. The value is kept on the card (and deducted), so if you use it on a bus, the vehicle doesn’t have to contact the central server, but everyday there are sanity checks to make sure that fraud isn’t occurring regularly.

    New York is moving to contactless cards as well, and how well this works depends on implementation. If the central server system is preserved, they’ll probably continue to have good fraud prevention, but if the value is stored/changed on the card, with no central tracking, then cloning could become a problem. If you don’t do any central checking, then you can probably clone the cards faster than the “fakeproof” British passports were copied:

    http://www.timesonline.co.uk/tol/news/uk/crime/article4467106.ece

    Also, while people use the term “smart card” in a generic fashion, there are quite a few implementation details that are important. The US military uses “smart cards” for their computer login system, and you can be sure that things are fairly safe:

    http://en.wikipedia.org/wiki/Common_Access_Card

    Smart cards are also used a lot in satellite television, and given the right equipment and motivation, these have been reverse engineered as well (7.6 MB):

    http://www.cl.cam.ac.uk/~rja14/Papers/SE-14.pdf

    I think a smart card system would be a good investment for the GTA. I think that having one central entity running the entire system, with all the transit authorities tying into it (perhaps as a co-op system for joint ownership) may work. Each authority could then charge whatever they want, and the central entity would deduct the appropriate amount and reconcile with the members on a regular basis (minus an overhead fee for expenses).

    Steve: I wrote up the Charlie Card experience in the comment stream for No Pearl in the Oyster? and the technical paper from Defcon is still available on the MIT website.

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  13. I heard, a long time ago, that GO was permitted to carry passengers within Metro Toronto as long as the fare was higher than TTC charged for the equivalent journey.

    The last time I was in London, England, their pass was accepted on all public transport in the specified zones (Underground, DLR, buses and railway). I was never sure about that as no one ever checked my pass on the railways, but when we went to Windsor by train we were told to get a ticket from “Boundary Zone 6”.

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  14. When I last inquired (March 2005) GO’s average fare was $5.00 versus $1.72 for TTC at that time (TTC’s average fare was down to $1.68 in 2007).

    This “business-class” service GO fare is a far greater barrier to fare integration and means GO really isn’t an economical alternative to overcrowded N-S TTC YUS subway lines when it alone requires almost a tripling of the TTC-only average fare.

    If anything GO, growing at 8% vs TTC’s -1% decline (to July 5th) can’t keep up with demand and would-be GO riders are reluctantly taking YRT or driving to TTC subway stations to go downtown, as the peak GO southbound trains are at capacity.

    A trip on GO alone from Thornhill (Langstaff) to Union Station is $4.45 (10 ticket price), cheaper than the TTC/YRT two-ticket cost, $4.55!! ($2.25 + $2.30 TTC/YRT @ 10-ticket price).

    GO riders aren’t complaining about fares, so I don’t see the Province lowering GO fares with a higher subsidy, when it’s already cheaper than taking YRT/TTC combined in this example.

    The province is more likely to provide capital and operating funds to expand GO service, not lower their fares & R/C ratio. GO operates with a much higher R/C cost recovery ratio ~88% (73% at TTC and 39% at YRT) which is helping to partially fund the GO expansion making more Provincial funding available for local transit subsidy. (Interesting sidebar, GO subsidy with 88% R/C, 50M rides, $5.00 avg fare is approximately $0.60/ride, almost identical to TTC ($0.61/ride).

    That said, AMT offers a 15–25% two-zone fare discount eg. Laval-Montreal, which if applied to a TTC adult Metropass ($109) and YRT monthly pass ($85) = $194 combined, less-25% discount = $145.50, a $48.50 discount. I’m sure it would spur GTA transit travel vs. the current two-fare 100% 905/416 fare premium across Steeles et al.

    While a $48.50 provincial subsidy for GTA travel sounds expensive, with a tap-on smart card it would only have to be paid on the net transfer difference, eg. if the TTC to YRT transfers match the YRT to TTC transfers it’s a wash for the systems’ revenue with the benefit solely accruing to the riders with a free two-system transfer, spurring GTA transit and hopefully getting Toronto transit modal split or market share up from 23% now to 33% with the RTP, and from 7% now to 15-25% in YRT.

    It’s essentially a time-based transfer system, which all the GTA transit properties have, save the TTC. It would make the programming and maintenace cost of the Presto card far cheaper if the TTC were to also adopt a time-based transfer within Toronto.

    This would require a new subsidy agreement with the Province, as the impact on TTC trips and revenue is unknown (save St. Clair test). Surely it is better to spend scarce provincial dollars on expanding transit use, than on Accenture IT programming and maintenance of a smartcard with a complex one-way TTC trip algorithm. On its own, that won’t increase cross GTA transit usage as long as a 100% fare penalty exists for zone travel, excluding the possibility of a free time-based GTA transfer between systems.

    Bob, who lived 18 years in Markham/Thorhnill, now Toronto.

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  15. To follow up on an earlier comment from David, you actually cannot use the Oyster card on all railway services in greater London; I believe you only can from those rail stations with the tap-in gates, and there remain many in the city region without them (mostly they exist in relation to the new ‘Overground’ rail services recently taken over by Transport for London). The real innovation in London was the fare integration made prior to Oyster cards: the ability to buy a zoned day/week/month pass which is integrated amongst all different modes including the railways within the zone. Oyster is generally popular, but it also built on a well devised integrated pass.

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  16. Bob Brent wrote, “A trip on GO alone from Thornhill (Langstaff) to Union Station is $4.45 (10 ticket price), cheaper than the TTC/YRT two-ticket cost, $4.55!! ($2.25 + $2.30 TTC/YRT @ 10-ticket price).”

    To make this point stronger, the TTC/YRT cost is $4.65 because 10 YRT tickets cost $24.00.

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  17. Smart cards open up a whole new possibility of fare structures, how about charging by distance, forget time or trip based transfers, just charge by the KM. So I get on the route 903 bus, travel 5km then change to the 706 bus and travel 18km, the TTC charges say 8¢ per km, so total trip is 23km or $1.84, now suppose the 903 is a YRT bus, and crosses into TTC territory at the 3km mark, so I pay 11¢ to YRT for 3km and 8¢ (TTC rate but to YRT) for 2km and the rest of my trip to the TTC at 8¢ for a total of $1.93.

    Yes, people on very long trips would pay more then people on short trips, but then they are using more service as well. Transfer issues would be non-existent, because you simply pay for the total km travelled, rather then a fixed rate that travels on multiple vehicles.

    What they could do, is offer distance based discounts, so after so many km, you pay a lower rate, so poorer people, who tend to be longer distance riders, get these discounts.

    Implementing such would be easy, all the machine does is record the position at the start of your trip and the end of your trip, swipe to get on and off, buses and streetcars could have readers at all doors, In fact they could move to monthly billing, where they send you a bill once a month for all usage. So you can pay as you go, by filling your card or for a small monthly billing fee, the card people send you a bill once a month, with the option of multiple cards on the same account. Now when someone sees a number like 1500km on the TTC for $120, a week after going 1500km in the car for $243 in gas (on holidays), you start seriously wondering if you should TTC to the hardware store for one of those red and black for sale signs for the car……

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  18. Henry,

    Thanks for the YRT $2.40 2008 fare correction. I got the fares from YorkRegion.com as I couldn’t readily find the official YRT fares website page via Google late yesterday evening, and inadvertently, copied the old 2007 fare rather than the new 2008 fare listed below it.

    Another “leaning to customer” practice of YRT… you can use your 2007 YRT tickets (I still have one left) in 2008 without a supplemental charge… YRT’s on-board rider news flyer advises to relax and enjoy the ride, on your old ticket… remarkable compared to the TTC’s extremely rigid rider-unfriendly fare increase practises.

    Steve: With the demise of adult tickets, this will be a non-issue for the TTC as well, at least for that fare category.

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  19. Wogster,

    You’re right, smartcards unleash a torrent of fare possibilities; however, they’re not without their unintended consequences.

    The reason Steve & I advocate for a time-based transfer fare between systems is that it encourages transit usage by making the fare system simple, universal and easily understood to encourage transit usage; with the added benefit of needing a less complex, expensive to program and maintain set of fare algorithms. AMT strongly recommended a simple, consumer friendly fare strategy to the TTC (for travel across the GTA).

    A time-based transfer also gives ticket/token users the same enhanced value now only available to weekend TTC Day Pass, transferable weekly or monthly pass users (unlimited travel for group or single user). It is the practice in all GTA transit properties (including free between system transfers) save the TTC (ex-St. Clair test).

    The unintended consequence of your infinitely variable fare-by-kilometre is people don’t necessarily know the cost of their trip in advance, leading to less transit usage than with a flat fare for unlimited travel that day, weekly and monthly passes currently offer. It could be addressed with a fare cap, but that effectively is the current fare situation.

    As an example, as a student I took my first subway ride on the first subway… in London, England and had to determine my entrance and exit stations to pay the appropriate fare-by-distance on entry. A few years later, on an exchange program, I was in Tokyo and first needed to go to the Tourist Board to get an English credit-card sized pocket subway guide, so I could use the Tokyo subway system. I had to match the wallet subway card to the in-station Japanese-only fare map, to determine my entrance and exit stations, so I could pay the correct fare on entrance. This is nowhere near as simple or trouble-free as buying an unlimited, flat-fare daily, weekly or monthly pass, especially if you change your travel plans enroute.

    Fare-by-distance is an excellent cost recovery strategy, apropos to GO where their service is primed to peak travel (presently; off-peak expansions are in the works). GO’s peak inbound AM trains and peak outbound PM trains (and some bus routes) run at capacity and GO’s operating costs are directly proportional to distance travelled (operator wages by the hour, and diesel fuel, maintenance and depreciation all consumed or calculated by the kilometer).

    For local transit, however, which operates transit with a fleet sized to peak demand, it means there is always capacity available in the off-peak, therefore variable (lower) pricing is needed fill the buses, streetcars and subways in this less desired travel time (like airline infinitely variable ticket prices set by seat availability). This is possible with a smartcard as you offer, but isn’t possible with fixed price one-ride tickets or tokens.

    It is practically realized, however, by the TTC by giving pass users (weekly, monthly Metropass, & Day Pass on weekends~for group rather than single travel) a trip price break that recognizes off-peak routes often have spare capacity. The TTC Adult Metropass trip multiple has been reduced from the historical 52 trip breakeven to a ~41 breakeven trip multiple via combined Group or MDP discounts and the federal tax credit to effectively price it lower. This offers riders better value, encouraging their trade-up and commitment to a monthly flat fare pass with unlimited travel and off-peak trips over fewer ticket/token purchases for 20 work/school return peak trips. (The same principle with daily and weekly passes).

    It’s been a hugely successful strategy in adding ~94M TTC rides since 1996 (372M>466M) as TTC Metropass monthly sales increased from ~100M/month to 260-270/month (at >60 trips/month on average). TTC ridership returned to 1988’s peak (463.5M), and modal split to 1996 levels (~23% vs. ~23.5%).

    The challenge with increasingly congested roads is to dramatically shift drivers to transit, and in policy and practise favour transit over cars to meaningfully reduce road congestion. This can only be achieved, in the massive, seismic order of magnitude needed with a simple, easy to understand fare system that offer riders better value than taking their car.

    Clearly, even more dramatic improvements in transit usage are required to meaningfully reduce car use. In addition to better service and better value fares, a smartcard with a simple, easy to understand flat fare for unlimited use with free time-based transfers between GTA cities/zones is a step in the right direction.

    Steve: I woul challenge one statement Bob makes here, that GO’s operating costs are directly proportional to the distance travelled. In fact, the further one goes on a route, the fewer people are on the train and the cost per passenger-km goes up. The cost per train-km or train-hour may stay fairly constant, but the cost per passenger-km is related to the load factor on the train. Leaving Union, this cost is very low because the trains are packed, but it goes up the further out the train runs. This is a common problem on any transit route because you will never have uniform demand in both directions over the entire length of the line.

    Fare by distance gives the illusion that we capture the marginal cost of each rider’s journey, but in fact the service level is dictated by the peak demand. We run a GO train all the way to Oshawa and back even though the space someone rides may only be used between Union and Scarborough outbound. One could argue that a flat fare more accurately reflects the cost of providing that seat. Moreover, the operating cost per passenger of peak service is potentially less than for off-peak because the service is well-used.

    Every fare system has its limitations, and we have to accept that they are all compromise ways to recover some proportion of total costs from the farebox. The question becomes one of finding the one that maximises the attractiveness and simplicity for riders and encourages people to use transit. That, after all, is our real goal.

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  20. Steve, as usual is correct about GO, I was thinking of GO trains on departure only, and Steve’s point is valid the further out GO travels, as passengers increasingly disembark.

    It does, however, remind me of another point Steve often makes, that I forgot to mention in favour of flat, unlimited fares: they promote on-off boardings on local transit, particularly off-peak, unlike on GO where it’s longer distance peak OD/DO round trips only.

    Local transit riders with a pass think nothing of taking a subway one stop or a streetcar/bus 500m for lunch, to shop or a haircut, a prohibitively expensive proposition when paying with tickets/tokens for each boarding. This is validated by the fact the TTC average fare of $1.68 (2007) is lower than both the Student/Senior ($1.85) and Adult ($2.25) single ticket fares.

    Often in the discussion of pan-GTA travel and smartcards this is forgotten: not all trips are long-distance, cross boundary. Multiple boardings make busy routes like Queen, King, Dufferin… and the TTC’s Transit CIty LRT plan viable by encouraging frequent on/off local transit usage… why take the car when it’s so expensive to drive and (a hassle to) park (and not just downtown anymore!)

    WIth any fare-by-distance scheme there will always be some fixed charge for overhead allocated for each trip and incorporated into the fare structure (based on forecasted annual operating expense divided by estimated total rides). It’s not purely a fare-by-distance fare that only captures the variable cost of the trip or boarding (think Toronto taxis that in addition to time and distance meter charges now cost $4 just to get into the cab~up from $3 before the summer fare increase due to soaring gas prices)

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  21. I was following along with Bob’s post and mostly agreeing until here:

    “The challenge with increasingly congested roads is to dramatically shift drivers to transit, and in policy and practise favour transit over cars to meaningfully reduce road congestion. This can only be achieved, in the massive, seismic order of magnitude needed with a simple, easy to understand fare system that offer riders better value than taking their car.”

    While I agree that a simple fare structure is desirable, it is hugely overreaching to claim that fare structure is the “only” thing standing in the way of large-scale transit adoption. On the contrary, the most prominent studies (that I’m aware of, anyway) suggest that average door-to-door travel time is the greatest determining factor, which is perfectly intuitive: the “average” driver is neither stupid enough to be confused by fares (especially for trips taken repeatedly, such as commuting or frequent errands), nor obtuse enough to value anything other than travel time (noting that the driver has already agreed to pay extra for speed, simply by taking his/her car). As further evidence that fare structure is not relevant to transit adoption, the TTC’s current fare structure could not be any simpler, yet most trips within the 416 are by car.

    If you’ve got evidence to contradict my claims I’d be very interested to hear it.

    Also, I’ve been to Tokyo. The system was confusing the first time I used it, but I found it very easy to use thereafter.

    Steve: And of course quality of service has a lot to do with making the trip as quick and stress-free. Another technology issue in the same league as Smart Cards is Next Bus signs. If I expect the bus to come every five minutes, I really don’t want to be told it is 15 minutes away. Wait time, especially when combined with uncertain connections, trumps fare considerations every time.

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  22. A comment in reply, one of the biggest obstacles to more transit use is time, but also zone based flat fares that cross zone boundries and have considerable cost attached to that boundary. Like that it costs $2.75 if your trip down Yonge Street starts at Yonge and Nippigon, but $5 or more if it starts at Highland Park Blvd. Even though you can practically see one stop from the other…..

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  23. Wogster: That’s why most well-planned zonal systems have overlap areas, stations that straddle the boundary between zones, so that short-distance travellers don’t end up paying long-distance fares.

    In London, for example, you can travel to Earl’s Court, Notting Hill Gate, Vauxhall, or Elephant & Castle from either zone 1 or zone 2, and pay only a single-zone fare; there are similar arrangements on some of the other boundaries. The Docklands Light Railway even straddles zones 2 and 3 between all five stations from Greenwich to Lewisham. (London buses and trams, incidentally, have flat fares that aren’t governed by the Underground’s zonal system.)

    Even York Region’s two-zone system has a bit of a ‘fare-change’ area, whose residents can travel into either the north or the south on a single-zone fare.

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  24. Andrew E… Wogster too…

    Andrew… the context of my remarks is missing. I was just focusing on fares due to the smartcard subject, knowing service would be greatly expanded next year.

    Steve & I sat through the TTC’s 2009 AOB (annual operating budget) presentation Thursday afternoon. The TTC is planning a huge increase in service in late 2008 and 2009 to dramatically improve both peak and off-peak service frequency (see Steve’s latest post on the AOB).

    So service levels will be there to hopefully expand 2009 transit riderhip, and frankly I usually defer to Steve on service matters, as he knows 99% more about TTC operations than I do and he makes the case more compellingly, concisely and clearly than I ever could. I just focused on fares.

    In classic marketing terms, we were taught that marketing is the 4P’s: product, price, place (distribution) and promotion. So clearly transit, as a product is multi-dimensional as you suggest.

    After 20 years in consumer marketing (General Foods, Ralston Purina, PepsiCo Foodservice International and Hunt Wesson) I came to understand that Marketing meant: “Giving customers what they want, better than the competition, at a profit”. In transit terms, this means “Giving riders transit that is better than the car… (for a given subsidy)”.

    Joël Gauthier, President of AMT said “Transit is like any consumer business, like Coke™ or Pepsi™” and added AMT in making fare and service policies was like the “Leaning Tower of Pizza… we lean towards the consumer” i.e. what they wanted. I couldn’t agree more, hardly surprising as a career consumer marketer. This is a challenge for Chair Adam Giambrone & CGM Gary Webster to create a similar customer service culture in the TTC (from it’s current low-cost operations culture).

    Steve jumps in: Actually, it was the tower of Pisa, but it came out as “Pizza”. An image of a barely stable stack of assorted za I will leave to the reader.

    Transit although funded by fares and government subsidy, is just like any retail or food service business with high time-specific, daily transactions they have to staff and prepare for in advance: WalMart, Zellers, McDonald’s, Pizza Pizza have to hustle and compete for their customers each and every day or their customers will go to any of 4 or 5 competitors who will!

    If anything with local transit monopolies transit is not as fiercely competitive as many businesses are, leading at times to lazy thinking, overly reliant on fares and government subsidies at the expense of providing an exemplary customer experience and service that Mr. Gauthier strongly advocated for in his presentation.

    In late 1997 the TTC did its first ever Competitive Customer Research study. It showed Torontonians actually preferred (TTC) transit over the car for three specific trips: 1-downtown to work; 2-downtown for entertainment; and 3-downtown to shop with the kids.

    These trips by TTC were perceived as cheaper, faster and more convenient than by car. So a definition of “better” transit is some combination of cheaper (fares), faster (service) and more convenient (route network) than the car.

    The research showed the TTC, much to its surprise, that they could compete successfully with the car, and be actually be preferred to the car, but not for all trips, especially those that were multi-mode and involved one or more transfers.

    So where does this all fit into the current debate over smartcard fares?

    The TTC has historically argued against a GTA fare as all their research shows that “riders prefer better service to lower fares.” You have to parse this Clintonesque-like phrase to get its true meaning.

    It doesn’t mean you can charge anything you want for fares and people will ride transit, if only you give them great service. If it was true, why are virtually all the old full-service gas stations now self serve, competing across the street from each other with prices to 0.1 cent/litre?

    I never said ridership growth was solely dependent on fares, I think it was just inferred as I wrote only about GTA fares in a smartcard context and didn’t talk about service.

    Last September, for example, TTC Staff recommended an $11 increase to Adult Metropass, soaring past the $100 and $110 hurdles. The Commission rejected it, voting for a $9 increase instead.

    Through July 5th TTC year-to-date ride growth was -1% versus year ago, despite the launch of the first phase of its RIdership Growth Strategy in February 2008. GO, in sharp contrast is enjoying +8% growth. Hopefully the worst of the TTC fare increase effect is behind us with TTC expecting to grow +16M in 2009 over 2008’s 464M budget level (and 466M latest estimate).

    Having lived north of Steeles in Thornhill for 18 years, I lived the 416/905 100% fare barrier and would walk 10 minutes down to Steeles Avenue rather than get hosed by a double fare penalty to go two stops.

    Within Toronto proper, there is a strong correlation that fewer fare zones increase ridership (along with system expansion, more service, modest 5-cent/ride fare increases and pass sales). The converse is also true, more fare zones, service cuts and high fare increases and no Metropass marketing reduce ridership growth and in the extreme ridership (1990-1996).

    Wogster, If you want to read more, you can download a presentation I gave in March 2005 that looked at TTC ridership between 1940 and 2004: “Marketing Transit 101~TTC Case Study~Looking Back to See Forward~Lessons for the GTTA.” It’s a 10MB Powerpoint file at: http://www.spacing.ca/bob-brent/ It’s best viewed in View: Presenter Tools, so you can see my Speaker’s notes along with the slides.

    I’ve also reviewed TTC Adult, Senior, Student and Child fares back to the one fare zone creation in 1973… if you’re interested I can send you a pdf copy.

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  25. Hehehe…

    My Pizza Hut and Pizza Pizza experiences are showing… thanks for typo Steve…

    I was actually lucky enough to walk all the way up the stairs to the top of the Leaning Tower of Pisa while a student… before they closed it to all tourist traffic.

    Steve: But M. Gauthier did say the tower of “pizza” quite clearly on several occasions!

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  26. Comment to Bob, I would be interested to see the other report, you can email to wogsterca at yahoo dot ca I would like to discuss some of this further, but it gets away from the mandate here, so maybe off-line.

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  27. Bob Brent writes:

    ” in favour of flat, unlimited fares: they promote on-off boardings on local transit, particularly off-peak, unlike on GO where it’s longer distance peak OD/DO round trips only.”

    I would guess that off-peak, short-distance use is hugely greater on the TTC than in York or Durham regions. Maybe Missisauga has some short-distance use in a few corridors.

    A fare structure that works best for 416 may not work well for 905, because of the different nature of transit use.

    Any attempt to promote fare integration (which seems to be inexplicably conflated with smart cards, when the two can be quite separate items) needs to take this into account. (But I expect it won’t be handled very well.)

    Steve: Over half of all riding on the TTC occurs outside of the peak period and, yes, a fare structure that does not take this pattern into account will encounter much resistance in the 416.

    There is no reason for the absence of fare integration across the GTA today. As Montreal showed, this could be done without Smart Cards, but with the presence of net new subsidy from gas taxes and vehicle licensing.

    Toronto’s experience is that we make an administrative decision contingent on expensive technology and nothing happens. Smart Cards give us more flexibility in the fare schemes we offer to riders, but they are not a prerequisite to fare integration.

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