This week, the TTC announced that it has record ridership for the past twelve months of 470.8-million. This continues an upward trend from last year, and indicates that TTC demand may be insulated from the effects of the economic downturn. Possibly a shift from auto to transit riding is offsetting any reduction in employment or recreational traffic.
The Chief General Manager’s Report for the first quarter of 2009 notes that although ridership continues to grow, revenue is below budget. Why? More Metropasses were sold than expected in January-March, and this trend is continuing into the second quarter. The TTC had budgeted on a higher average fare-per-ride, and the more who travel with passes, the lower this average falls.
Rumours of budget related service cuts started to surface a few weeks ago, and one change effective June 21 is explicitly listed as being due to budget. (I will report on that in a separate post on June service changes.) This is an odd state of affairs considering that there is a buffer for service growth on the TTC”s budget, and there has been no report to the Commission of pending service cuts (or of deferred service improvements).
Moreover, in a separate report, the TTC plans to launch an ad campaign seeking organizations to be part of a Metropass Affinity Program where pass holders would receive discounts to products or events. The intention is, wait for it, to sell more Metropasses by making them even more attractive.
The TTC has a long-standing love-hate relationship with the Metropass going right back to its origins 29 years ago. Each pass is seen, by some, as a loss of revenue, a loss of individual fares that might otherwise be collected. Of course, a pass is also an incentive for users to ride the system and get all those “free” extra trips, exactly the sort of mindset an auto driver operates in every day.
Those 260,000 monthly pass holders are now responsible for over half of the adult trips on the TTC. Budgets and fare policies must recognize that there is a demand for flat rate purchase of transit services, and that this market will grow both through pricing incentives and improved service. Cutbacks because too many people buy passes are a laughable, but unfortunately predictable response to what should be a transit success story.
Steve Munro 
Perhaps I shouldn’t say this out loud, but: the zero marginal cost per ride with the Metropass is very important to me, to such an extent even that I would probably prefer a substantial monthly price increase rather than the end of the all-you-can-eat option. I know it’s not rational, but the fixed monthly transportation cost (I have a rarely-used AutoShare membership and almost never use taxis) is a big budgeting relief because I can plan around it rather than trying to manage my use of tokens.
Another strange effect of the MDP is that I sometimes catch myself feeling like a benefactor of the TTC who makes a substantial monthly ‘donation’ to support it. As you noted, this couldn’t be further from the truth, given that I usually get more than my money’s worth in terms of rides per month.
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I’m having a really tough time out here understanding how the monthly cost of a Metropass is putting that much of a touch on TTC fare revenues. I used a baseline of 40 one-way trips per month to calculate the discount offered by monthly passes in Toronto, Calgary, and Montreal, and from that standpoint the $109 the TTC demands for a Metropass represents a total monthly fare discount of one dollar, or just over nine-tenths of one percent. (By way of comparison, the Calgary Transit monthly pass discount is 17 percent, while Montreal’s STM monthly pass discount is a whopping 38 percent.) Of *course* the locals are going to pry every trip they can out of the Metropass if they don’t see any real value in it as a strictly work-a-day fare medium.
It seems to make more sense to re-price the TTC’s ten-at-a-time tokens from $22.50 to $25.00, docking the cash fare discount from 18 percent to nine percent, if they’re that hard up at the farebox.
Steve: The Toronto pass has always been priced high because TTC studies shows that a “typical” heavy user of the system (the original market for the pass back in 1980) took 52 trips a month. That was the original break-even, revenue-neutral pricing for the pass. This ratio has gone up and down, and now with the combined effect of the Metropass Discount Program ($100/month for a pass if you sign up for a whole year) plus the tax rebate, the effective ratio for most people is now around 40 rides.
When the TTC projects its revenue, they assume that of X-million rides, there will be a certain breakdown between different types of fares, and they project their revenue accordingly. If they get the balance wrong, it puts them over or under budget. The TTC has always been in love with the cash fare because it brings in so much revenue even though it is often the fare used by those least able to afford it. Indeed, previous attempts to push the cash fare higher relative to tokens met some resistance from staff because they fearred too many cash fare users would switch to the cheaper tokens.
The problem is the unit of measurement. If you rate a transit system only by its budget, and then only by how it manages on its fare revenue, you miss the point that the system exists to provide transportation services. The more riders it carries, the more successful it is.
Variations at the level of a few million dollars are under one percent of the total budget, and the TTC should be allowed to even these out on an year-to-year basis. However, municipal accounting rules force them to exactly balance the books every year. There should be a provision for a variance within a defined band, but there isn’t.
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I agree with Greg completely. I ride the TTC completely differently when I have a metropass than when I don’t. I would of course grumble as required if they raised the price but would almost certainly keep buying Metropasses for the convenience of the one more “free” trip that I can take or the stop-over that I am so accustomed to from living in Calgary with timed-transfers.
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For a system concerned about revenue, isn’t it odd the TTC has the lowest cash fare in most of the GTA? TTC $2.75, Mississauga $3, Oakville $3, YRT $3.25, Brampton $3, Durham $2.85. And wouldn’t coin counting fare boxes have paid for themselves long ago, never mind providing useful ridership stats?
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Why doesn’t the TTC increase the price of fares, but at the same time allow for time based transfer system wide? That is one reason for the MetroPass, the ability to jump on and off, without the depositing of another fare.
Steve: The TTC (at the political level) has been holding down fare increases so that the proportion of revenue from the farebox can move back to its “historical” level of about 68%. That said, the real problem here is an accounting one — fretting over about one third of one percent of the budget — rather than being honest about the buffer that exists in the budget for service increases later in 2009. The real question is whether we will be able to afford (and have enough vehicles) to keep up with riding growth.
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Would current Metropass users take an average 52 trips a month if there were no Metropass? I expect they would take many fewer, so the cost of the Metropass to the TTC is probably overestimated.
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> Would current Metropass users take an average 52 trips a month if there were no Metropass? I expect they would take many fewer, so the cost of the Metropass to the TTC is probably overestimated.
Especially since much of the “discretionary” travel is off-peak and thus has negligible marginal cost for the TTC.
Steve: Yes, some at the TTC look only at the total revenue, and “lost fares” without considering the cost of providing the service consumed. Meanwhile, we happily carry people across the 416 for a fixed fare. As readers here know, I agree with this state of affairs, but am annoyed that the TTC never cites the “lost revenue” they might otherwise get from a zone fare system or equivalent.
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To target this historical 68% figure seems odd. Historically, riders couldn’t get a the federal tax credit – which is in essence a pass-through subsidy. If half the adult riders are using the Metropass, and if a good percent of them are filing for the tax credit, this gives the TTC a good 5-6% or so. If I remember, 2007 cost recovery ratio was about 74% – which would mean the TTC is already at or around the 68%.
With the tax credit on one hand, and the fact that adult tickets are being (or have been) phased out, it’s hardly surprising more people are using the passes.
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Ridership is up, which is great, but this is after parts of the RGS being implemented – shouldn’t we have *expected* the increased attractiveness of transit to pull in more ridership, and for that attractiveness to encourage existing riders to make larger commitments – passes rather than tokens. Imagine what kind of ridership bump we should have seen with a better economy with the same service increases.
As for cost-control and budgets, I note that the shutting down of buses at stations was distinctly shortlived, at least at Coxwell Station.
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I started buying metropasses when the tax credit kicked in, because the credit made it worthwhile for a daily commuter like me, who doesn’t ride much aside from commuting, to buy a pass. Relative to buying tokens, I probably underuse my metropass in an average month, so both I and the TTC are money ahead. I thought that was the whole point of the tax credit.
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I wonder if the TTC can save some money by printing fewer paper transfers for most surface routes as there are more riders using the Metropass, thus eliminating the need for a transfer. Will it make a difference or should the TTC continue printing the same number of transfers just in case ridership continues to grow?
Steve: I hate to admit my distant working past, but over 40 years ago, I worked at the TTC, and one thing that was done quite regularly then was to adjust the size of the transfer order based on actual usage. There is no reason to think that the orders are not changed up and down today just as they were in the 60s. The cost of transfers as a percentage of the TTC’s total budget is small, about $1-million a year, or under .1%. This will be a small saving to offset against the operating cost of any replacement system.
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Without trying to make it sound as if you are getting a great deal with the Metropass, I’d just like to point out that a monthly RapidKL bus and train pass is available for the low low price of RM135.
Frankly, I think that the Metropass is a great deal and TTC should work on getting sponsorship which would benefit Metropass users – and allow some private corporations to absorb some of the costs.
Cheers, Moaz
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Sorry for going a little off topic, but I have a tangential question I’d really to like to read your take on.
What are your thoughts on the idea of instituting a city-wide mandatory u-pass program (i.e. universal transit billed as utility)?
Steve: I don’t like a mandatory anything because we spend far more time debating the philosophy of dictatorship vs democracy than we do on the real problem. The TTC should offer passes to university-age students. Period. Those who want them buy them. Those who don’t, don’t. This is no different than a situation where an employer chooses to bulk buy passes at a discount and offer them to staff who want them. 100% buy in is not required.
The question then becomes the level at which they are priced. At an absolute minimum, the same discount should be available to a university for its students as is already available to an employer through the VIP Pass program.
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Just to clarify for anyone who isn’t involved with a University at this point, we do get the VIP discount now – the mandatory U-Pass option would have been a discount over and above that.
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What is the status of the U-Pass program? Is it going to be implemented? Or did the universities’ students vote against them in the referendums?
Steve: It’s on hold until the TTC can figure out a way to make it attractive enough for universities, etc., to sign on. The requirement for 100% sign-up is not attractive to the suburban campuses.
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There never was a vote at any of the downtown campuses on the U-Pass. I don’t know the details at U of T St. George or York, but at Ryerson we were essentially told that there would be no referendum held unless U of T Scarborough voted for it (our students union is very strange sometimes)…
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We never had a U-Pass vote at York either… I think it somehow died after being rejected by UT Scarborough.
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