Those Too-Popular Metropasses (Update 2)

Update 2, 4:45 pm September 23:  The Chief General Manager’s Report for the period to the start of August 2009 is now online.  In this, we learn:

  • The change in average fare revenue is 2.32, not 3, cents per rider due both to higher pass sales and greater use of concession fares (children, students, seniors) (page 3).
  • Revenue loss due to ridership being below budget accounts for $3.4-million, while the lower average fare cointributes $7.6-million.  (Both of these are only for the seven months to the end of July.)
  • Yearend revenue shortfall from fares will lie between $15- and $19-million depending on ridership results through the fall.
  • Yearend revenue from advertising and other income (mainly interest) will be $3.6-million below budget.
  • Expenses are expected to be over budget due to the combined effect of:
    • Inglis building flood remediation ($1.4-million)
    • Higher service requirement from city construction ($2-million)
    • Higher overtime due to staff shortage (gapping), maintenance backlog and severe winter weather ($3.5-million)
    • Vehicle maintenance needs ($4-million)
    • Other changes ($0.3-million)
  • Savings on expenses include:
    • Lower energy rates and water consumption ($4.9-million)
    • Employee cost reductions ($2-million)
    • Planned service reductions ($1.9-million).  It is unclear whether these are reductions still to come, or if this is the saving versus budget of cuts imposed by availability problems with the bus fleet. 
  • The following actions will be taken to address the anticipated $17.4-million shortfall:
    • Some service improvements planned for fall 2009 will be deferred until mid-2010 (no list is given).
    • Overtime will be curtailed.  The effect on service availability is not addressed, but we do know that there were problems with fielding all service late in 2008 due to similar actions.
    • There will be a comprehensive review of hiring and training for operators.  This is intended to address a surge in retirements caused by demographics of the operator workforce.
    • All discretionary expenses in departments will be reviewed.
  • Page 6 mentions “the SRT Conversion and Expansion project”.  Although this is not explicitly mentioned in the Capital Budget report, we are about to see the TTC announce the conversion of the SRT to LRT technology.  This has long been rumoured, and finally has shown up in print.

Update 1, 12:35 pm September 23:  As I write this, Councillor and TTC Vice-Chair Mihevc is on CP24 talking about those too-cheap Metropasses.  Wake up Joe:  You’re being fed a load of baloney by your own staff to soften things up for a disproportionate fare increase.  They pulled the same stunt in 2007/2008.

I wonder how much has been spent subdising riders on St. Clair with the special timed-transfer arrangement that was instituted as an offset to the construction impact, and how much all that extra bus service cost thanks to the cock-ups in construction planning and co-ordination?

If Toronto must debate a fare increase, then let’s look at everything in the TTC’s budget and fare structure, not just TTC staff’s perennial whipping boy, the Metropass.

Original post follows:

Today’s Toronto Star reports that the TTC faces a $17-million shortfall in revenue thanks to increasing use of Metropasses.  More riders than predicted use passes, and this reduces the average fare per rider.

No big surprise:  people are using the TTC more, and as rides per month go up, the Metropass becomes more attractive.  Surprise!  The TTC underestimated this effect, and once again we hear about “losing money” on pass riders.

We “lose money” on every rider including those who use tokens instead of cash, who ride at reduced rates for children, students and seniors.  We “lose money” on riders who travel for a single fare across the breadth of the city.

This sort of spin comes out regularly in TTC financial reports, and the anti-Metropass bias has been clear for years.  Never mind that we get more people on the system, that we make it more attractive for regular users, that this addresses a larger goal of City planning.

Hoping to find more background on this article, I turned to the Budget Committee agenda for a recent meeting.  A long report deals with variations in the Operating Budgets for the City and its agencies.

  • Page 23:  The shortfall in revenue due to higher than budgeted use of passes and concession fares is $5.7-million to June 30.  The TTC report (see below) from which this is taken projects $9-million to year-end.
  • Page 23:  The shortfall in advertising revenue is $2.3-million for the year.
  • Page 38 (Appendix E):  Total expenditures are projected at $3.5-million over budget (see below).
  • Page 40 (Appendix F):  Total revenues are projected at $12.7-million under budget.

Despite the effect of the municipal strike, TTC expects its 2009 ridership to hit the budget target of 473-million (page 8).  The Star article reports that the average fare per rider is three cents lower than expected, but this works out to $14-million.

Sales of Metropasses were expected to fall once they could no longer be used to access TTC parking lots, but this didn’t happen.

Ridership was slightly above budget in April primarily due to higher than forecast Metropass sales. The higher than expected sales were driven by two factors. A small decline in Metropass sales had been forecast to accompany the elimination of free parking at commuter parking lots. Sales did not decline, rather than leaving the TTC, patrons found a different way of getting to the stations whether that was walking, taking the bus or getting dropped off. The other reason is the impact the threat of a strike in April 2008 had on sales last year. Although a small amount was included in the 2009 budget estimate to take this into account, it appears that the effect was under-estimated and there was a strong recapture of pass riders in April 2009. Ridership was essentially on budget during May.  [Chief General Manager’s Report from the August 26, 2009 Commission Meeting, page 2]

From this report, we also learn that parking revenue is expected to fall $0.4-million under budget and “other income” (mainly interest) will be $1.0-million short.

The expenditure overrun is the combined effect of several factors.

Year-end expenses are currently projected to be 0.3% ($3.5 million) over budget largely due to unbudgeted emergency flood and mould remediation and restoration work required in the Inglis Building ($1.4M); the requirement for more service resulting from City construction activities ($2M); additional overtime requirements due to higher than anticipated gapping, service maintenance backlog and operating in severe winter conditions ($3.1M); vehicle maintenance needs ($4M); and other changes ($1.5M). These increases have been significantly offset by lower hydro and natural gas rates and reduced water consumption ($4.7M); other employee cost reductions primarily due to improved attendance and safety performance resulting from various initiatives currently underway ($2M); and planned service reductions ($1.8M).  [CGM report linked above, page 4]

All in all, the TTC will be about $17-million off on a budget of $1.3-billion, about 1.3%.  No agency, certainly not the City, is able to exactly match budget numbers, and the City report shows large variations in many agencies.

The TTC spins its budget problem as the fault of Metropass sales, but this is only one part of many complex revenue and expense factors.  The TTC must stop blaming its most loyal customers for its financial difficulties.

21 thoughts on “Those Too-Popular Metropasses (Update 2)

  1. You “lose money” on your silly unions. They demand top wages for pathetic service. You “lose money” with their horrible bad tomato drivers that are obviously are completely miserable, even after they strike to demand even more money to do remedial work. You “lose money” with managers that have little experience in business and have little understanding of how to run an organization that needs to attract customers.

    It’s not a difficult thing to do. It’s done by all kinds of people across the City alone. Why can’t you?


  2. Many transit systems in the states would love this “problem” of pass users “flooding” the system and creating shortfalls in money. If I were to use tokens to get around the cost would be at least $200, including those layovers to a coffee shop to grab a quick java on my travels, or any of my routines and spur of the moment wants when I want them. The only reason why I take transit is the metropass, or the GTA weekly pass when I know the month requires me to head out to the anoying on transit York Region on a regular basis. I must be evil… 🙂


  3. This debate has gone on probably as long as the Metropass has existed (at least 20 years now). If the TTC really wanted to kill the Metropass off, they would have long done so. No matter how high they raise the price, as long as its cheaper than 50 tokens (4 five-day work weeks + trips shopping/movies/whatever else people do), people will buy it. Also, all the things the TTC has done to make Metropass use more attractive will only increase its sales (transferable pass, tax credit [okay, so that’s Harper’s work] and increased, more reliable service, which makes more people consider the TTC).

    Steve: Remember that in 2007/08, TTC staff trotted out exactly the same “problem” and — presto/chango — the Commission voted an increase in Metropass pricing. The pass has been around since May 1980, and staff never miss a chance to talk about how much money the system loses.


  4. We just got our child a student monthly pass. We now have the freedom of the whole city as a family. Its already inspired us to visit more places, and spend more money then we would have a year ago. Her knowledge of the city and its neighbourhoods has increased. I’m trying to figure out how this is a bad thing.

    Make the metropasses more difficult to use and the city shrinks, gets less interesting and economic activity is lessened. The city would likely lose more then $14 million dollars in tax and licensing revenue. But then that would be revenue in somebody else’s budget area and not count.


  5. This year’s budgeted short fall of $17m may be partly blamed on the Metropass, but the elephant in the room is the looming $80m deficit for next year. I surely would like to see an analysis of what causes such a deficit.

    In a radio interview at noon, the vice-chair of TTC Joe Mihevc can’t tell the reporter what’s the price of Metropass. (Sigh! That’s the state of affairs being run in TTC.)

    Steve: The Operating Budget won’t be out until later this year, but I can make an educated guess. First off, the total budget is $1.3-billion. Every 1% increase in costs adds $13-million to this number. We already know that the TTC has to absorb a 3% increase in labour costs for existing staff, plus whatever growth comes from staff added for service improvements. Next there will be more service operated in 2010 than 2009 both to catch up with ridership growth and planned improvements in service quality on the bus network. To some extent, this will be offset by revenue growth from more riders.

    Some of the $17-million in 2009 is a one-time cost (e.g. the flood at 1900 Yonge) and we may have a milder winter (yet to be seen). Also, the hybrid bus maintenance problems should be solved. I don’t know yet how energy costs will look for 2010. The TTC says that they saved money relative to the 2009 budget this year, but where things will be next year is another matter.


  6. Wow, they hit their budget within 1.3% in this economy!

    If only David Miller and Adam Giambone were running the federal government … they’ve lost $55-billion! 🙂

    The hysteria about this, seems to imply that they are merely trying to warm us up for another fare hike. I guess they couldn’t really pull the Sheppard subway closing stunt again … so this time they’ll blame the Metropass.


  7. Although the TTC claims to have a very low “fare evasion” level below 5%, anyone who rides around the system and is familiar with the ever more quirky and archaic aspects of the fare and transfer system would have a strong argument to dispute the TTC’s own estimate of fare and transfer fraud, and subsequent loss of revenue. The irrational bias against automating the fare system, and stubbornly maintaining an inherently “unfair” fare system will only perpetuate the fare evasion and transfer fraud that is clearly widespread. I see it everywhere on the system.

    Pathetic political governance of the TTC as “exercised” by the councillors that parrot the misinformation fed to them by staff continues to result in a transit system that is now a laughing-stock in North America and in the world, a system that blindly clings to outmoded methods such as the toilet-paper transfer and the little metal token that no other large system still uses. The “lost” revenue must be staggering not only from paper tickets and tokens that are still being and will always be counterfeited but from a transfer policy rooted in the Nineteenth Century.


  8. One advantage of the MetroPass (including the Weekly Pass and Day Pass) is the stop over feature. The transfer one gets with the regular fare forbid stop overs, no getting off for a quick errand and back on (unless you’re at a transfer point, if you’re lucky).


  9. Can the Mighty Munro save us from a TTC fare increase in 2010?

    Steve: This is probably going to sound like complete heresy, but I’m not sure we need a fare freeze. In recent years, the fares have been held down to let the farebox recovery ratio drop back to “historical” levels of 68-70%. The budgeted recovery this year is 69.65%. Regardless of what we think the target level should be, there is a level somewhere. Once we reach that, then fares and subsidies should rise in parallel to meet additional requirements.

    From a city budget point of view, the problem with freezing fares is that the city portion of the budget must absorb all of the increase. However, since the city only pays 30% of the total, the increase as a percentage of the city share is huge compared to inflation and to the amount any other department is allowed to claim.

    The TTC says that it will need about $80-million more next year. If this is shared pro-rata between the city and TTC riders, then subsidies have to go up by about $24-million, and farebox revenue must go up by $56-million. (It’s a bit more complicated than that, but that’s the basic situation.) $56-million is a bit over 6% of this year’s farebox revenue, and that would mean bumping tokens from $2.25 to, say, $2.40, with everything else adjusting proportionately.

    The world is not going to end for 15 cents on the token fare. Such an increase is small enough that it would probably have no effect on riding.

    Meanwhile we could avoid service cuts that the TTC is already planning to deal with the budget shortfall in 2009.


  10. TTC is losing money from poor service, bad management, over expenditures and greedy unions.

    Steve: Actually service has been improved although not as much as it should have been. Service management still needs work, but at least the TTC has reached the point that they acknowledge this. The over expenditures this year do not flow froom bad management, but from the usual small fluctuations any billion-dollar operation will have. You may call the unions greedy, but the TTC has a hard time recruiting enough qualified operators. By “qualified” I don’t just mean “knows how to turn the steering wheel”, but people who will have the proper attitude to public service and safety, and who are willing to put up with the hours and hassles.

    First they got rid of free parking.. I have started driving to work.. and I believe there are more who has followed the same route as I did. Now increase fare.. this is insane.

    Steve: Actually, the elimination of free parking had no effect on Metropass sales. That’s one origin of the “extra” pass sales — they expected to drive away some business and that didn’t happen. People parking at the Metropass lots represented about 1% of ridership. They will not be missed.

    Solution for the issue is: get rid of unions, a truck driver is getting 17 or 18 dollars an hour but a TTC driver is getting more than 25, why? keep salaries in check. use better ad system, generate money from ads. put small vendors on ttc stations.. throw a bid and make money from there. And the last but the best thing will be get rid of existing Financial Advisor and find a new one who can manage budget properly.

    Steve: Advertising is handled by a contract to a large agency. Because of the economic situation, there is less revenue this year than expected. Vendors in TTC stations? Well, some stations look more like bargain basement shops than transit stations already (see Union, Bloor, Eglinton and others). Space in stations is already leased by open bidding.

    As for managing the budget, coming in at only 1.3% off target is pretty good, and typical of TTC performance. The problem lies with “the sky is falling” talk from councillors that is repeated in the media. Any private company would book slight overages or deficits on this scale as routine. However, City Council has a bad habit of trying to scoop the overages when they occur, but refusing to fund the deficits.


  11. I think the transferrable Metropass is a big mistake. I see it abused when a rider gets on and then hands it back to someone who does not board the bus and the driver says nothing. The rule says they must be in possession of it during their entire ride. There is nothing to stop that second person from boarding the next bus and the two riders ending up together at their destination having had only one valid fare. Yet, they refuse to have a time expired transfer which is fair to all users because it will cost a big loss of revenue. This ignores the increased number of fares paid when a rider has the benefit of a 2 hour transfer. A big reason given for introducing the transferrable feature was to eliminate fare disputes over transfers. A safety factor. Well then go to a time expired transfer and eliminate many more fare disputes.


  12. Re the comments about operator pay: the truth is that across North America there is a shortage of bus drivers. I’m not sure off hand if the TTC has problems right now, but I can tell you that the TTC pays on par with other systems. There are quite simply NOT, repeat NOT, people willing to do this job for significantly less.

    For that matter I can tell you that I wouldn’t drive a bus (as a career anyway) for all the money in the world.

    As for the abuse of transferable Metropass, yes I’ve seen that as well. The real question though is how significant is it in real terms? My guess is that it’s not all that much worse than any other form of fare evasion. In any case it will become a lot riskier when we get PoP which hopefully won’t be too long, at least on the streetcars.


  13. Transferrable Metropasses could hardly be considered a problem. The bulk of metropass users are those who take the TTC at the height of its service, and that is during weekday daytime periods. People needing to get from home to work and vice versa are the primary users. The intent of the transferrable Metropass was never within those service hours, but afterwards, when service levels are not that high. We’re talking about evenings and weekends where the transferrable pass is most useful. And even then, the incidence of people “transferring” metropasses is not that high, the way I see it.

    The majority of people I know using a metropass use it for their everyday lives and they do not transfer it to other people. The only person who I know who actually does this is a woman who gives her metropass to her mother on weekends so her mother can attend social events. That is a very low incidence in transferrability. Of course, this may drive up ridership during those periods, but I maintain that it is not a significant increase for the TTC to increase actual service levels. Even if they do, it is more of the primary users of the metropass who need to do everyday tasks which justify the increase. I’ll point out the majority of service increases as of late has been during the peak periods, and some weekday daytime service.

    I’ll also point out that the Ridership Growth Strategy deserves some of the blame (not all) for this shortfall. I’m not talking about rush hour improvements, but service additions to routes outside their normal business hours. While some routes have seen some significant ridership response, the majority have not and remain quite empty. While at the Pharmacy and Huntingwood intersection on a Sunday, the 167 and 169 buses at that intersection were running both ways without passengers. I don’t know how many other routes are like this (I suspect 75% of routes given additional service beyond their normal running times), but wasting service like this can have an effect on the bottom line. A rollback of service improvements on routes where there is hardly any ridership would be of some use.

    The TTC should stop bitching about how the Metropass costs them money and should look at ridership from a different standpoint: they should consider the cost of each ride based on the Metropass instead of Cash fares alone. With that in mind, the TTC should not be concentrating on how to wring out more money from metropass users, but to find ways to get those occasional riders of the TTC to use the service more. As well, all public service entities, including the TTC, should consider running their services as a business instead of a service. This would force most of the public sector to be more efficient and accountable, and would likely decrease the incidence of foulups such as the recent TTC Maps fiasco.

    Perhaps the TTC should consider closing some parking lots now that the lots themselves are sparsely used. Okay, I am being sarcastic, but I have always maintained that the users of these parking lots are carpoolers, and not single-occupancy vehicles. By forcing them out of the lots, for every car no longer taking the TTC, the TTC has lost not just one metropass user, but possibly 3 or 4, and in some cases, 7 or 8. Considering that these people all do not go downtown, but to different destinations in Toronto, a carpool to the TTC lots in a car formerly containing 4 people has now split into 2 or 3 cars now clogging Toronto Streets. There is a term for this, it’s called “shooting yourself in the foot”.


  14. One other thing, the TTC may want to reconsider their magnetic strip technology on the passes and go with a chip reader instead (I think Presto! was supposed to be like this?) All TTC surface vehicles should have such a reader on their buses and all metropass users are required to pass their passes on the reader when they get on the vehicle. This may decrease incidence of passbacks on buses and streetcars. Besides, the magnetic swipe is so 1990s…..

    I’ll close this off by suggesting that the Metropass is a critical part of the TTC and by cancelling its use, the TTC may want to consider digging its own grave. The Metropass is also considered a form of freedom and independance for its users (almost the same way a car gives freedom and independance for its drivers). Surely, Steve Munro would probably be curling up into a fetal position and crying if the Metropass were cancelled… 😛

    Steve: No, I would be on the barricades demanding that the pass return! Whether I would also unleash the tumbrels and guillotine is another matter, tempting though it might be.


  15. Transferability is probably the reason I actually have a metropass … most months it doesn’t pay for itself otherwise, for me (even at the nominal after-tax $85 on an annual subscription).

    With about 2-3 trips out of town on business a month; and another 2-3 where I end up taking the car to the office for some reason or another … my usage isn’t enough. But my wife takes the pass those days, and often ends up using it. Between that, and her evening use after I get home, makes it go to be the no-brainer deal to actually get it. Which is also what then leads me to use it most days to get to work, rather than just jumping in the car.

    I’m not sure the TTC is losing though … without the pass, the transit usage wouldn’t be as high. And if it wasn’t transferable, I’d be just using tokens.


  16. I have been following this particular discussion with interest. I have finally gotten to the point where I feel that I should add my 2 cents worth.

    First of all, as a unionized TTC Operator, I would like to respond to a couple of comments:
    Rico says: (September 23, 2009 at 11:01 am) “You “lose money” on your silly unions. They demand top wages for pathetic service. You “lose money” with their horrible bad tomato drivers that are obviously are completely miserable, even after they strike to demand even more money to do remedial work.”
    Ajit Singh says: (September 24, 2009 at 9:36 am) “TTC is losing money from poor service, bad management, over expenditures and greedy unions. Solution for the issue is: get rid of unions, a truck driver is getting 17 or 18 dollars an hour but a TTC driver is getting more than 25, why? keep salaries in check.”

    I am insulted by the statement that I perform “remedial” work. Rico has obviously never operated any sort of large vehicle in Toronto’s traffic. There is a particular skill set involved in performing our job. Our wages are comparable to what is paid in every other transit system in Canada and the USA. Keep in mind that I truck driver is NOT carrying people on his vehicle. Truck drivers handle their vehicles to avoid objects outside of their vehicle. We operate to avoid objects outside of our vehicles, as well as ensuring that the people inside of our vehicles are not injured in any way. As well, we perform a customer service function with each and every passenger that boards our vehicle. Yes, there are “horrible bad tomato drivers that are obviously are completely miserable” out there, but in all honesty, they truly are in the extreme minority.

    It seems to me that the “easy finger of blame” is pointed at union contracts. If the “right wing” element had their way, there would be no unions, no contracts, and every employee in every industry would be earning minimum wage with no benefits. Our wages and benefits are fair for the work that we do. Keep in mind that the TTC seems to have a problem attracting and retaining enough qualified operators as it is. Most people do not want to work our hours or deal with the daily hassles that we routinely face. About a third of all applicants don’t complete training or quit within one year on the job. Trainees are found to be not able to handle driving a bus, or don’t have the competence to pass the required Ministry testing for a C class licence or Z (airbrake) endorsement. After passing training, quite a few new Operators determine that they don’t wish to work the shift work or find that they don’t enjoy dealing with the public.

    As for the issue of wages, an arbitrator’s decision recently determined that we underpaid for the work we were doing and awarded us a wage increase (after a SEVEN year process). And yet the TTC can’t attract enough qualified applicants to perform “remedial” work.

    Lastly, I would like to thank NCarlson (September 25, 2009 at 11:49 pm) for his support. I would also like to thank you Steve for your response to
    Ajit Singh: “You may call the unions greedy, but the TTC has a hard time recruiting enough qualified operators. By “qualified” I don’t just mean “knows how to turn the steering wheel”, but people who will have the proper attitude to public service and safety, and who are willing to put up with the hours and hassles.”

    Sorry about my comments turning into a bit of a “rant”, but I find that I cannot ignore comments such as these that come from the “uneducated” who seem to have no clue about what our job really entails.


  17. I agree re: abuse of metropasses. This should be dealt with through PoP enforcement in the main rather than withdrawing transferability. If I can’t transfer my metropass in months when I go on vacation, I will drop the MDP and go with tokens. This means I will only use the TTC to the minimum in those months, and in months like December and February where I am almost guaranteed not to “make back” what I pay for even with the tax credit.

    The win for the City generally by having more people with metropasses should be paid for by increases in the subsidy to reflect the difference in payment mix and the social benefits of modal shift.

    Tokens and cash do have monetary impacts, not least because of the budget item for floor reinforcement required in the token counting rooms, and the transportation of the cash/tokens to/from stations. Passes are pretty light.


  18. Once again, I will add my 2 cents worth (as an Operator).

    Ray Kennedy says: (September 24, 2009 at 8:12 pm) “I see it abused when a rider gets on and then hands it back to someone who does not board the bus and the driver says nothing. The rule says they must be in possession of it during their entire ride. There is nothing to stop that second person from boarding the next bus and the two riders ending up together at their destination having had only one valid fare.”

    This is actually enforced very strongly. This process is called “pass-back” and can (and quite often does) lead to the Metropass being confiscated.

    Ray Kennedy continues: “A big reason given for introducing the transferrable feature was to eliminate fare disputes over transfers. A safety factor.”

    Actually, the time-based transfer is used on only ONE route: 512 St.Clair. It was designed to lessen the impact of the ROW construction on the shopkeepers along the route. When the transfer is shown to an operator on a connecting route when boarding the vehicle, it is to be exchanged for a transfer from the connecting route.


  19. Using TTC staff logic with our ageing population they’ll have to raise the minimum age for seniors fares too!

    And how about those infants? Isn’t it about time they started paying-up?

    I just hope this isn’t an example of our best and brightest!


  20. Hi Gord,

    Thanks for speaking up. I’ve been riding transit routes all over the city for nearly 30 years, and can number on one hand the number of “bad” transit operators I’ve encountered. The vast majority of our TTC drivers are top-notch, and deserve every cent of their pay. It’s a much harder job than truck driving.


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