The TTC’s November Commission meeting has been moved up from the planned November 25th date to the 17th, and an item sure to be on the agenda will be a fare increase for 2010.
There are two questions:
- How big an increase will the TTC need?
- How evenly will the increase be applied to different fare types?
As I already reported, TTC management has been up to its usual tricks of blaming heavy use of Metropasses for its financial woes. For months, they have been preparing us (and priming Commissioners) to tell us how we are losing too much money on passes, and their value, relative to tokens, must go up.
We have heard this song for years, but through a period when lowering pass pricing was an integral part of the Ridership Growth Strategy, it was ignored. Now, the TTC wants more money, and Metropass holders are convenient, dedicated transit users who can be counted on to cough up almost any increase.
What would, what should a fare increase look like?
The TTC’s 2009 projected operating results look like this:
- Total expenses: $1.3-billion
- Fare revenue: $836-million
- Other revenue (advertising, etc): $49-million
- Subsidy: $416-million (of which only $394-million is committed by the City)
Leaving aside where the missing $22-million will come from, the City has directed that all agencies should reduce their net funding requirements by 5% for 2010. On a base of roughly $400-million, that’s $20-million for the TTC. However, we also know from pervious reports that the TTC expects its funding needs to rise by $80-million in 2010, and that brings us to a total of $100-million required in new revenue.
Advertising and parking are unlikely to contribute anything, and advertising may even decline continuing a trend from 2009 where the budgetted $16-million is turning into a protected $13.7-million. One has to wonder why we put up with all that advertising on the TTC for only 1% of the total revenue, but that’s a subject for another day.
On a straight percentage basis, if the entire $100-million is coming from fares, then the TTC needs to collect 12% more farebox revenue in 2010. However, an increase of this size may deter some riding, and a larger jump, something like 15%, will be needed to achieve the target. Even this assumes that recent experience, in which riders stayed with the TTC provided that service remained good (and “good” is open to some interpretation here), will hold up to a 15% jump.
What would this mean for fares, assuming everything went up more-or-less lock-step.
- Tokens are now $2.25, and they would have to rise to $2.60.
- Cash fares, now $2.75, would have to rise to $3.15, more likely to $3.25.
- Metropasses, now $109 ($100 on subscription) would go to $125 (or $115) before allowing for the income tax credit.
We won’t know what is actually proposed until, at best, the agenda for November 17th’s meeting goes online probably about November 12th. However, the report itself may be held down as a supplementary item, and we won’t see it until the evening before the meeting. Some talkative Commissioners may, however, start discussing the options in advance to gain debating advantage. It wouldn’t be the first time.
If the carping about Metropass “losses” continues, we can expect to see them go up by something like 20% while the token and cash fares are spared the same fate. This could give us fares like this:
- Tokens up to $2.50
- Cash fare up to $3.00
- Metropass to $130, or $120 on subscription.
This would move the fare multiple for passes up from 48.4 to 52 (from 44.4 to 48 on subscription). The Federal income tax credit for transit passes is currently at 15%, and this reduces the effective multiple to about 38 using 2009 pricing for pass subscribers. However, if the base price of the pass goes up, the multiple would also rise (to roughly 41 in the example here).
There will be huge temptation to limit the token increase to a quarter (if nothing else, it makes a nice sound bite) and stick the pass holders with a bigger jump. Passholders make up a large chunk of TTC ridership, and for 2006, the last year in which the TTC published a detailed ridership analysis, adult passholders accounted for 38.5% of all rides on a moving annual average basis. They accounted for almost half of the adult riding, and have without doubt overtaken all other adult fares as the primary source of riding from 2007 onward. (By contrast, in 1996, pass holders accounted for less than one third of adult riding.)
In brief, pushing the Metropass price multiple up will affect over half of all adult rides taken today on the TTC, and a large increase in pass pricing risks affecting the TTC’s single largest market.
A fare increase is essential to preserve service quality, but the TTC should leave the relationship between different fares as it is today. If not, they risk screams of outrage from pass holders whose fares will take a big jump for which they will see little or nothing by way of improved service.
If my scenario here is alarmist, if I am painting a huge jump in pass pricing that is not actually on the table, I invite anyone from the TTC to make a public statement disavowing such a plan.
(In the interest of full disclosure, I am a Metropass subscriber, and will continue to be one because I use the TTC a great deal. I am one of those on whom they “lose money”, although many of my trips have little marginal cost to the TTC. If I were forced back to tokens, it would make the initial cost of jumping in a cab that much cheaper.)