One great irony of annual reports is that they are usually glossy packages meant to say “look how good we are”, but they are like coffee table books where more people look at the pictures, and few read the fine print.
Buried in the Metrolinx Annual Report for 2015-16 are the details of the revenues, costs and subsidies applicable to parts of Metrolinx’ operations. There are specific figures for the UPX and Presto divisions, but not for GO Transit or the administrative/planning side of Metrolinx.
In a previous article, I reviewed the subsidies paid for UPX, and now I will turn to the Presto fare card.
Figuring out just how well Presto is used takes a bit of work because the information appears irregularly in reports to the Metrolinx Board. Here are the relevant excerpts.
PRESTO card taps per month:
February 2016: 16.2 million
March 2016: 17.5 million
April 2016: 17.5 million
**Taps refers to the total number of boardings by month for balance transactions, Period Pass transactions, and Transfers.
PRESTO card taps per month:
November 2015: 17.3 million, up from 15.6 million in November 2014
December 2015: 14.7 million, up from 13.6 million in December 2014
* Decrease in monthly taps for December may be attributed to holilday season
PRESTO card taps per month:
August 2015: 14.0 million
September 2015: 16.6 million
October 2015: 17.4 million
No usage stats reported.
As of June 1, 2015:
More than 417 million taps and $1.3 billion in fare payments to date including period pass taps.
More than 287 million taps* and $1.1 billion in fare payments to date.
*Excludes period pass taps
More than 266 million taps* and $1,032 million in fare payments to date.
*Excludes period pass taps
In the delta from March to June 2015, the tap count changes by 140 million, but the caveat about exclusion of period pass taps disappears. This gives some indication of the proportion of taps that serve pass holders as opposed to single fares.
It is clear that the monthly tap count sits somewhere in the 17.5 million range.
From the Annual Report, we know the revenue (fees from client agencies plus card sales) as well as the cost of the Presto system.
Fee and Sales Revenue $ 9.454 million Expenses $71.2 million Net Cost $61.746 million Taps/month 17.5 million Taps/year 210.0 million Gross Cost/Tap $0.339 Net Cost/Tap $0.294
The report is silent about whether there is any inter-divisional payment by GO Transit to cover the cost of Presto transactions in a manner similar to the fees charged to other systems using this fare card. GO Transit’s fare revenue was $464 million, and a 2% charge would amount to $9.3 million, roughly equal to the total fees collected by Presto.
As a matter of comparison, the TTC estimates its fare collection costs at 5% of revenues, and that is the basis for the agreement on Presto fees that the TTC will pay. With an average fare of just over $2, the cost per ride of fare collection is about $0.10. Given that the average ride would involve two taps (on average, riders transfer once in their journey), the cost of fares “per tap” would be about $0.05 on the existing TTC system.
The way the numbers are presented prevents a clear understanding of Presto’s cost or the degree to which it is subsidized either by GO fare revenue or by general subsidy payments from Queen’s Park. A basic question all transit systems using Presto must ask is for a clear understanding of the relationship between the fees they are charged for fare handling and the actual cost of Presto operations.
Steve Munro 
Presto currently charges OCTranspo 2% with annual revenue of $1.5M. Starting in October it will charge OCTranspo 10%.
Ottawa will agree to pay this for Presto only because the province would take away gas tax funding if Ottawa doesn’t use Presto. Make no mistake, the province is giving with one hand and taking away with another to feed its Presto boondoggle.
At some point the munies will revolt, preferably together, and dare the province to end gas tax funding to Ontario’s major cities.
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Is Presto a private company or is it a government body? Who gets the revenue from Presto?
Steve: Presto is a division of Metrolinx, although much of its services are provided under contract by a private company, Accenture.
The revenue goes to Metrolinx.
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10% to deal with the mechanics of fare collection seems terribly high. Do you, Steve, have any figures for what the TTC says it pays for the ‘old fashioned’ system they use now and/or what other transit systems spend on fare collection. (I realise that once Presto is the only fare option they will have more data to play with and that they could use this to improve service but the TTC has never shown much interest in analysing the data they do have so I suspect that when they have more they will not use it.)
Steve: The TTC has always claimed that fare collection costs are 5% of revenue and on that basis this is the level of fees they will pay to Presto. I have never seen a detailed calculation of this number, but it may include things like the station collectors who instead of becoming redundant will be redeployed as customer service agents. This creates a budget problem for the City because Presto will not, as originally expected, have no net cost to the system, and the demand for more subsidy is an inevitable result.
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Is there any indication that there will be economies of scale once TTC is fully on board?
Steve: In theory, the vastly greater number of transactions should dilute the fixed back end costs, but that back end must grow substantially to handle the volumes, not to mention future transition to server-side rather than card-side accounting for true open payments.
At some point there should be a reckoning with respect to under performing transit services.
– Presto
– UPX
– Sheppard
– Scarborough
– Spadina Extension
I would expect that the Crosstown will be revenue neutral once you factor in savings from removing buses from service.
Steve: Don’t be too sure. Those tunnels and stations have a lot of maintenance costs, especially in the out years.
As a country we need to be looking for projects that save us money, or are good value for the price that is being paid, not making things worse.
Sadly it is increasing buses in well served areas that would likely have the least impact on per rider subsidies and also increase usage by the greatest margin, but instead we blow our money on a few extra riders from the suburbs.
If we added a line item on our property taxes for “subsidizing low usage transit lines” maybe people would stop asking for ridiculous expansions.
Steve: Projects do not always “save” money, especially depending on how you do the accounting. If we were just starting to build the Yonge subway today, the cost would be enormous. but also we would not have the level of development downtown that has been possible since 1954. Indeed, the development pattern might have been quite different with more jobs in the suburbs and a lot more roadways to handle all of the cars. Would it have been a better or worse city? Hard to say, but whatever it has become, that has a value.
We had a chance to build the foundation of a suburban transit network in the 1970s, but instead wasted our efforts on a failed attempt to prove that Ontario could invent a better transit technology.
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Speaking of Presto Taps, I was looking at the Presto device at the rear door of a TTC bus I was riding today and it occurred to me if everyone is expected to “tap on” and “tap off” every time they board a bus and then when they exit, can you imagine the delay this will cause especially with so many people leaving by the front door? I imagined great slowing of the service once it is all in place. Has the TTC thought this one out? Somehow I doubt it.
Steve: As plans stand today, no “tap off” is required when leaving a surface vehicle, only a “tap on”, including in what have been, until now, fare paid areas.
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Why is there a need for a second “tap on”? in fare paid areas?
Steve: This is needed because the TTC retains its transfer rules rather than using a time-based fare. For example, if you board a bus at Eglinton Station and then transfer to another bus at, say, Dufferin Street, the fare system has to “know” about that intermediate leg of the journey on the Eglinton West bus to determine that the Dufferin bus trip is not new, but rather a continuation.
This behaviour is also required if Toronto moves to a system in which subway fares are calculated separately.
It is no secret that I believe the TTC makes the adoption of fare cards needlessly complex with this sort of rule where passengers have to adapt to the limitations and peculiarities of the fare structure.
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So, tap on every vehicle on your trip even a bus in the fare paid area of a subway terminal. What about entering a subway terminal off a bus inside fare paid area? Do you need to tap on? The reader device at the bus rear door would be for all-door loading I presume? Supposedly, only card holders would be allowed to board at rear and perhaps mostly at terminals and heavy transfer points.
Does not seem like a winner.
Steve: That’s a big problem the TTC has not figured out, and one that they also raise in the context of differential subway fares. Sadly, the level of advocacy based on the cockups that Presto implementation will bring are completely missing. The TTC seems to be under orders not to rock the boat.
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Ross as much as I would like to see the cities revolt, I do not believe it will happen. Let’s not forget that Mayor Watson in Ottawa decided to renegotiate the gas tax agreement to link it to Presto when we in Ottawa were the only city in Ontario without such a clause. He literally snatched defeat out of the jaws of victory. Also let’s not forget that the City Auditor revealed that because of various clauses the actual amount paid by Ottawa to Metrolinx is far higher than 2%. Also thanks to Mayor Watson’s bad negotiating tactics the City Auditor confirmed that it is impossible not to lose money on this deal. So literally we cannot afford the gas tax money! To all of you in the GTHA please be vigilant. Although generally citizens only find out after the fact.
I fail to see why Presto is so important to Ottawa (we are not in the GTHA) and yet we are stuck with this. This is causing significant problems with the various student passes which uses the system that the STO uses. And that too will cause a problem eventually.
The Province of Québec chose a long time ago the STO to test and develop RFID fare system. From this they learned a few things and forgot many, the point is the OPUS system in every other QC transit system is the same (with different names) with the exception of the STO which retained the original (although upgraded system, but not quite compatible with OPUS). Eventually the STO will need to update its system and what happens to us on OC Transpo???
I bring this up to remind everyone of what you all know, that having a made-in-Ontario solution in search of a problem is yet again causing a problem. Ottawa is unique and need access to the STO system not to any of the GTHA systems. But so are the various systems in the GTHA, one size does not fit all.
While I believe that we should not go to electronic fare systems until it’s demonstrated that they will provide benefits over the current paper based system, at least use an industry standard system. So that any Ontario system could use their own vendor. The fact we have not leads me to believe that someone is greatly benefiting from Presto, just not us citizens and transit users.
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I have not paid a cent in years, so why should I care about any of this?
Steve: If you’re going to post trash like this from an eHealth Ontario IP address, you really don’t understand the premise of using a phony username, do you? For the benefit of any reader who wants to trace this further, you are at
76.75.135.13
Definitely a freeloader, among other things.
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I’m surprised (not really because we are talking about gov’t organizations here) that the TTC is paying Metrolinx 5%. In one sense it’s out of one pocket and into another, but why would there be no savings whatsoever in moving from a manual system to an electronic one?
Why they didn’t save millions by buying and modifying an off the shelf system rather than develop Presto from scratch I’ll never know. But to then find there are no savings, and probably increased costs for the hardware and software supports the new system will require is ridiculous.
Steve: The TTC was forced to adopt Presto, and it is clear from the high cost of that system’s operation that they expect the economy of scale of TTC to bring down the cost per transaction. We will see.
The 5% number was the TTC’s negotiating position — the new technology should cost no more to operate than the old. Note that Presto is responsible for maintaining the fare machines, not the TTC, and this cost comes out of their end of the deal.
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Since Presto readers are being installed rear doors of buses (in addition to at the front), I wonder what use will be made of those readers.
All-door boarding at stops?
Or tap on/tap off at fare-paid locations (or just tap off at regular stops)? (Last I heard, you are encouraged to tap on at a subway station, but it’s not mandatory. And no requirement to tap off.)
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It is rather typical of the insularity of the TTC that their web pages on PRESTO give one lots of information about buying a PRESTO card (or having one ‘edited’ for a discount fare) but ONLY mention that one can buy the cards at TTC locations. Of course, one can buy these cards in many places like GO, YRT etc. , It is a regional travel card NOT a TTC card.
What is worse is they say that:
They fail to note that you can do this at any GO Station and many people in Toronto (probably most!) are FAR closer to a GO Station than to Davisville.
Steve: I did mine at Union GO station, but use the card only for GO travel as the Metropass is not yet available on Presto.
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