About a month ago, I reported on the Metrolinx Fare Integration Study. At the time of that article, the backgrounders to the Board Meeting presentation had not gone online. They went up a short while later, and now I’m getting around to discussing them.

There are three papers:

• Approaches to Fares Around the World
• Transit Fares in the GTHA Today — An Overview
• GTHA Fare Structure Evaluation – Consultant’s draft analysis discussed by Technical Advisory Committee (September 2015)

These make interesting reading if only to give a sense of what this study has been up to, and the direction it seems to be headed. As I wrote before, Metrolinx has shown a preference for distance-based fares because that is what they know. They are a long-distance carrier compared with any of the “local” transit systems in the GTHA, and developed in an environment where paying more for longer trips was a logical way to do things. (The question of how fairly those “distance based” fares are calculated is a separate matter.)

Existing Fare Structures

At the Board Meeting, one member asked whether there was a table of how fares were charged today throughout the GTHA. The response from Leslie Woo, Chief Planning Officer, was along the lines of “we can get that for you”, even though clearly a backgrounder on this already existed. This information is a basic starting point for any discussion, but it was not included in the Board presentation.

With the exception of York Region’s 2-zone structure, these agencies all have a flat fare, and even for York Region, the fare is “flat” for a large number of its riders. Not included in the table is a breakdown of various pass structures and concession fares, but again these are “flat fare” media where usage does not affect price.

As for GO Transit, the report states:

GO Transit fares are set by the Metrolinx Board of Directors. They are structured in zones, which may contain one or more rail stations or segments of bus routes. Fares are set based on the distance travelled between the zones with provision for trips that require a transfer between GO services. [p 3]

Well, no, they’re not. First off, the Board approves fares that have been set by staff, and the tariff is sufficiently complex that no Board member is ever going to look through it in detail and say “hello, why is the fare from A to B so out of scale with C to D”. Moreover, the basis of GO fares is often cited a a compound value of a flat base fare plus a distance based component. The problem with this is that any attempt to run a basic regression analysis on GO fares fails because such a formula does not, in fact, exist. It would be an interesting exercise for GO to publish a target formula to which it hopes to arrive after many years of adjustments, if only to see (a) what their “ideal” system looks like and (b) how far away we are from it.

Transfers between services are the bane of all travel and not just because of fares. Within the GTHA, as a general rule transfer between outside-Toronto local systems is free, transfer to/from TTC routes requires a separate fare, and transfer to/from GO Transit involves a co-fare. The table has many cells, but the pattern is simple.

The report then delves into the problem of “seamless” travel, or more particularly, the absence of this character in the current arrangement.

• Cross-boundary trips between the TTC and other local systems are deterred by the double fare.
• TTC+GO trips are discouraged by the double fare with GO, or more accurately by the absence of a co-fare.
• The cost of GO for trips inside a municipality (notably Toronto) is high enough on its own to discourage travel.
• Expansion of cross-boundary services, notably the Spadina subway extension, will further complicate fares for multi-agency travel (much as the expansion of the TTC subway into former “zone 2” did over 40 years ago).

It is worth noting that the problems related to GO and the TTC are not all of the TTC’s making, but arise from both GO’s focus on longer trips and from Queen’s Park’s unwillingness to subsidize TTC travel through a co-fare payment.

Concession fares, passes and pricing vary from agency to agency and make “the customer experience confusing and unwelcoming” according to the report. However, those concessions are funded by local subsidies and reflect the political attitudes and ridership levels of each municipality. It is easy to “give away” rides on a concession basis especially where routes are operating policy headways with capacity to spare.

A troubling aspect of this backgrounder is that it gives no information on the history of GTHA fare systems and why they take the format (and level) they do from one agency to another.

Looking Around the World

This is less of a report than a quick overview of selected parts of the world: Toronto and the GTHA, Montréal, London (UK), Amsterdam, Hamburg, Cologne/Bonn/Düsseldorf, and Melbourne.

It includes basic information about each system, although in all cases we are dealing with a mix of “local” and “regional” travel where better clarity is needed. For example, a network may have zones, but these may apply only to longer distance “commuter” type travel (as on GO) while the bulk of “local” transit travel takes place for a flat fare. Some of the zone structure maps are dauntingly complex, but this masks what may be a simple structure achieved through consolidation of zones for the purpose of typical trips within sections of the network. (By analogy, GO Transit has a complex zone structure including higher cost rail zones and lower cost bus zones, but this map appears nowhere that a hapless traveler might encounter. It is ironic that the GO map is not included in this report.)

There are fundamental problems with this report:

• There is no indication that this represents all of the fare structures and collection methods one might find world wide with notable gaps in Asia and the Americas beyond eastern Canada.
• The prevalence of zones is overemphasized, and the existence of underlying flat fares, passes, etc., is left to the careful reader.
• The history of fare evolution in each network is missing especially including any funding strategies from governments that could have smoothed the implementation of fare integration on a region-wide scale.

It is pointless to say “look at London” without understanding how its transit networks and fare structure evolved over past centuries, if only as guidance regarding the hurdles a move to a similar system might face in the GTHA.

This is very much a Google-based tour, and not much of a one at that. One would hope our transit policy is based on something a tad more extensive in breadth and depth of analysis.

GTHA Fare Structure Evaluation

This report is a triumph of bad graphic design over content. Someone at the consultant, Steer Davies Gleave, was obviously very fond of a chart showing all of the possible permutations of fare systems.

This shows up in various permutations throughout the report. The basic problem is that at the end of the day, almost all of the fare systems examined have no relevance to the GTHA situation, certainly not as “one system to rule them all”.

All of this is fed into a Business Case Evaluation (something we have seen from SDG in another form for many studies of individual rapid transit projects).

The caveat about “revenue neutral scenario” is the fatal flaw at the heart of this study and of much work done on a new fare structure. If we presume that the total fare revenue is unchanged, then some fares must go up while others go down to achieve whatever the goal might be of the new setup. There is no guarantee that revenues for individual agencies will remain the same, and this would trigger subsidy changes by each municipality and even (gasp, horrors) by Queen’s Park who, I am sure, would be happy for any new fare structure to reduce their costs.

At the September Metrolinx Board Meeting, Chair Robert Prichard observed that the goal of a revenue neutral structure may not be workable, and that future work should include looking at other scenarios. Quite bluntly, the study should have included this from day one. It is easy to float balloons about something where there is no cost impact, but this avoids major decisions about transit financing and about the effect any new structure would have on transit riders. Nobody wants to publish a report saying “most transit fares will go up by 25%”.

As we see in the bottom note, this process “should not be used as estimates or projections”. Well, folks, why exactly are you conducting this study anyhow if not to determine what a new system would look like, how it would affect ridership, and how the financial effects would percolate through the riders, agencies and governments affected? From a rider’s perspective, the broad conclusions are summarized in the following charts.

Scenario 1 is a flat fare for the entire network, including GO Transit. It is self-evident that such a scheme would shift costs from long haul trips to the relatively short local ones. The latter are more numerous, but even so they must absorb the cost now borne by long haul fares. It is worth noting that even some “long” (defined here as 20km or more) trips would see higher fares.

Scenario 3 is zone-based, and its effects vary broadly depending on the nature of a trip. Moreover, there must be some assumption about zone size in this model to produce a range of lower fares for local travel, probably by the division of a large area such as Toronto into zones where short trips would be cheaper than today.

Scenario 4 is distance-based and it self-evidently aids short trips but hurts long ones taken within one municipality. Shorter cross-boundary trips get a break, although not as much as one might expect, while longer ones cost more because the distance factor overwhelms the elimination of the zone boundary.

Scenario 5-Flat is a flat fare for local travel and zoned fares on regional trips (e.g. GO). This shows almost no change for the simple reason that this is the system now in use. A Hybrid variant shows savings for many at the expense of longer trips within one municipality.

A common problem with all of these projections is that they are not quantified: how many rides does each group (the four coloured bars in each scenario) represent? Do the large changes affect a few users on the periphery of the network, or the half-billion TTC riders who represent the overwhelming majority of GTHA transit travel?

Ridership is understandably affected as well, although it is intriguing to see a positive effect from scenarios 3 and 4 on short-distance trips within one municipality. This would almost certainly be the effect of GO’s fare structure being forced into the same grid as the local transit system and GO becoming much more an integral part of local service.

There is a more extensive discussion of the scenarios starting on page 38.

Next the report turns to the question of the value of a trip in the context of a “business case” with the underlying premise that “value” can be measured by service type or by length of trip. This is an oversimplification because it treats different legs of a journey separately. The fastest, cheapest journey on a rail corridor is useless if riders cannot reach it. A rail station in the middle of industrial lands cannot provide direct service either as an origin (residential) or high density destination (jobs, school, etc) and the feeder/distributor services are an integral part of the whole. It is amusing that a study on “fare integration” persists in viewing the transit network as individual pieces.

Fares based on time are dismissed right off-the-top because they will be inconsistent, and indeed would penalize riders using the slowest services and routes with many transfers. “Time based fares” have not been discussed in that context in Toronto, and to most people beyond the blinkered world of this study, they mean “time based transfers”. This whole idea is hived off to a separate topic “transfer policy” which includes issues such as co-fares and discounts for travel via multiple service providers. This creates a situation where possible flexibility in what is meant by a “flat fare” is shoved aside.

“Service type” is shorthand for “faster services, notably GO, should cost more” and is a mechanism for preserving the differential between GO fare levels and everything else, with the possible exception of the rapid transit network. Again this perpetuates the idea of a fragmented system and ignores the fact that speed of the GO trip segment is not the only component in a journey, nor is an alternative route necessarily available. If one translates the arguments in favour of GO pricing to the subway system, they quickly fall apart because the subway is truly integrated into the TTC’s service design and fare structure.

One might reasonably ask whether an improvement from peak hour, peak direction service to all day operation on a close headway (e.g. the RER network) constitutes an improved service type for which a higher fare should be charged. Do headways, and hence wait times, form part of this discussion? This illustrates the difficulties to which a simplistic description of factors affecting fares can lead.

Distance Based Fares

The study [p44] lists various pros and cons of distance-based vs flat fares and ties these to various scenarios under consideration.

Pros:

• Length based pricing may be used to support demand distribution policies
• Allows for flexible fares that can enable a variety of pricing strategies
• Zones/distance can be used to allow seamless pricing with limited use of transfers
• Impact on revenue can be managed with zone/distance pricing strategies
• Impact on ridership can be managed with zone/distance pricing strategies
• Zones/distance can be used to ensure length based equity
• Provides high quality travel data
• Supports future services, fare media, and common fare management

“Demand distribution policies” is not used anywhere else in this report but a few tables, and would appear to refer to “discouraging riding when/where we don’t want it”. That really is not a function of “length” but rather of “time of day” as in off-peak fares to encourage shoulder-peak travel.

“Length based equity” is a wonderful term because it presumes that trip length should produce an “equitable” cost. However, in many cases longer trips also involve considerably lower density of demand and the cost of providing a service may not rise linearly with distance. Conversely, what do we say to someone whose complaint is that they “cannot afford to live downtown”? The suburbs contain both rich (by choice, larger homes) and poor (by economic necessity, smaller homes). For one group, cheaper fares could be seen as a subsidy (waste), for the other, an essential part of enabling city-wide travel.

Quite bluntly, I do not give a damn about “high quality travel data” as this is used as an excuse to complicate fare policy with no quantification of the cost/benefit as seen by a rider. It does not take a new fare system and back end data crunching to tell us that buses are full.

Cons:

• Length based options require tap on/tap off, or fare evasion prevention, which increases costs
• May require new costs above and beyond current Presto implementation

Flat Fares

Pros:

• May be readily communicated
• Limited cost impacts (tap on/tap off not required)

Cons:

• Flat fares do not represent value of length
• Flat fares do not support demand distribution policies and may limit adaptation of services to changing needs
• Limited ability to manage revenue impacts.
• To maintain existing revenue, higher fares are needed which may impact ridership in short distance markets.
• Limited ability to manage ridership impacts – model estimates reduction in ridership and increased auto VKT
• No ability to ensure length based trip equity
• Provides limited data
• Does not allow flexibility for pricing future services

Quite obviously, if fares are “flat” for any trip, especially for those that are considerably beyond a typical “local” trip, there will be revenue issues for trips that now cross agency boundaries. An attempt to retain the same total revenue will obviously hurt short-haul riders while benefiting the long-hauls. The benefits will flow disproportionately to those making the longest trip.

This is a worst-case presentation of “flat fares” as it throws all travel, be it from Riverdale to downtown, or Hamilton to Oshawa, in one bucket. Moreover, all trip kilometres are considered equal regardless of service quality, crowding, headways and travel time.

The section concludes with some “lessons to carry forward” [p 46] including:

• New structures will require a change in messaging and management. Build upon existing distance fares (GO, YRT zones) to develop effective communication.
• Transfer policies may be used to approximate the benefits of flat fares while still ensuring fares reflect value.
• The advantage of flat fares is simplicity. Options should be developed to aim for a similar level of simplicity.
• Flat fares may be a useful sub-structure as part of a hybrid scenario.

It’s a tad rich to talk of building on existing distance fares when this only applies to two of the many agencies within the GTHA and a minority of today’s travel.

Transfer policies creep in here, and are an effective recognition that some aspects of flat fares might be needed. However, this gets into a complex problem of differentials in charging depending on how many segments a trip has and what type of service it uses. Also, we see mention of a “hybrid scenario” about which more later.

Service Based Fares

The next section [p 49] addresses fares by service type. This has an underlying presumption about what a better “type” of service might be.

Pros:

• Customer pays for improved speed and reliability
• Can readily support demand distribution policies
• Readily understandable
• Supports future services to have fares in line with service provided
• Allows for fares to be more strongly aligned with cost of providing service, allowing a variety of revenue capture tools
• Allows for fare system to be more strongly aligned/consistent with trip taken and value received, leading to equitable pricing

Cons:

• None

There are two big issues here. First is the question of the “service provided” which may not directly match to the cost of that service if modes are taken as a whole. A simple example is the relative cost of travel (per ride) on the well-used downtown subway network versus the Sheppard line. Similarly, parts of GO’s network are more expensive, per service consumed, than others. At some point averaging is necessary. Second is the question of where lines are drawn between different services. If the subway becomes a separate class of service with its own fare scheme (or even worse, a gradually expanding network of Metrolinx LRT lines), a system that was designed and is viewed by its riders as an integrated service would be balkanized. How happy will riders in Scarborough be to find that their brand new subway costs more to ride than the bus (or the RT) that it replaced?

Another important point is that the cost of service could well include a policy component: a minimum headway or standard hours of service. When GO expands a line from peak to all day service, there is no possible way this can be done at the same per-passenger cost of existing operations. Should all riders pay a premium to cover off this cost? Should riders on lightly-used bus routes pay more because a service policy dictates that the route will exist at a minimum quality to be credible?

Again, the matter of “equitable pricing” gets us into questions of just whose “equity” we are trying to promote. On a per rider basis, some bus routes are more expensive to operate than subway services, and yet riders would pay presumably a lower fare in recognition of not the cost of service, but its speed and (lack of) reliability.

If fares do not vary with service type, this raises several issues:

Pros:

• Readily understandable
• Allows for consistency based on length, but not service; limited equity

Cons:

• Customer does not pay for improved speed and reliability
• Limits flexibility for future services
• Does not support demand distribution policies and may limit adaptation of services to changing needs
• Limits ability to set fares based on service type – impacting revenue and recovery
• Raises average fare for local services, which will impact short distance markets. This would reduce average fare for regional services, which may increase ridership

The problem here, needless to say, is that this scenario would involve the collapse of the existing differential between regional GO services and local transit with a huge hit to GO revenues that could compromise the business case for system expansion. On a zero-sum basis, this would also transfer a large subsidy between the short haul and long haul riders.

These are “straw man” arguments set up to bolster the option Metrolinx prefers: fare by distance that preserves their scheme and revenues while saying to hell with the vast majority of riders who now enjoy flat fares. Present the alternatives in terms that simply don’t work, and of course the one you want, for all its warts, comes out ahead.

A Combination of Distance and Service Type

Now we come to a hybrid view of fare structures to determine whether there is a workable combination of both the distance based and service class fare structures. [p 53]

In this evaluation, zone structures fare better because they allow quasi-distance based fares without the fine-grained complexity of actually measuring trip length. A related problem is that the more finely-grained the zone system is, the more complex the fare structure. Moreover, there is the problem of having special “zones” for travel that passes through a premium service such as local bus to GO to TTC, or TTC bus to TTC subway.

Two caveats about distance-based fares in this context are noteworthy:

• Local services require uniform or near uniform stop spacing. Specialized route information is also a requirement for each route. These preconditions do not exist in the GTHA.
• Use on-vehicle fare collection, which makes tap-on/tap-off more costly and likely to impact operations.

The idea that stops should be uniformly spaced implies that this model does not actually count distance at all, but rather stops. This is a ludicrous way to charge fares, and it ignores the very real need for transit systems to have variable stop spacing. It also presumes that a rider should pay for the privilege of travelling over a meandering route with more stops.

This section ends with a number of observations that will not surprise anyone:

Yes, gentle reader, we have come through a long study that has diligently avoided talking about the actual dollar effects of a new fare structure on riders on on system revenues, only to find ourselves at a “hybrid structure” that would probably look rather like what we have today: flat fares on local services and distance based fares on regional ones.

We are right back at two basic questions:

• What is a “higher order service”, and
• How do we deal with 416/905 cross-border fares?

For the next stage of the study, the recommendations have a very different flavour, and keep more options alive. This suggests that despite the text above, Metrolinx and its consultants are not yet willing to accept this conclusion.

Concluding Thoughts

Metrolinx owes riders in the GTHA, and especially those in Toronto who will be by far the most affected by any new fare structure, a clear explanation of what is going on. I have no sympathy for an organization that substitutes meandering analysis for confrontation of the hard questions about fare structure and the inevitably related topic of subsidy distribution.

We still do not know what Metrolinx is actually considering, nor its effect on riders. The entire exercise has the impression of avoiding the difficult questions while messing about with endless theory just to arrive more or less where we are today. Options that might appear to be screened out are still on the table, and a new one (charging for transfers) has appeared without any previous discussion.

The “fare integration study” has wasted a great deal of time and does little to enhance Metrolinx’ reputation as a credible “regional planning” agency.