A Review of Fare Structures

This article has four parts:

  • An introduction and overview of the history of fares in Toronto, particularly on the TTC.
  • A short discussion of technology especially as it relates to Presto.
  • A review of various schemes for building a tariff and charging fares.
  • An overview of the fare systems in several major cities.

The TTC’s fare structure review is now underway. See: 5-Year Fare Policy and 10-Year Fare Collection Outlook. Recently, I wrote about their rider survey: A Curious Study of Fare Options. Other proposals float to the surface from time to time including those from the Toronto Region Board of Trade and Metrolinx. Both of these would shift Toronto to some form of zones or fare-by-distance in a bid to “integrate” the city transit system tariff with those of surrounding regions.

Lurking in the background is Metrolinx, an organization not exactly noted for sensitivity to local concerns. After beginning some years ago with work on a “transformational” change that would have robbed riders within Toronto to fund lower 905/416 cross-border fares, Metrolinx backed off. However, they are now back at “transformational” planning which could impose a fare-by-distance scheme on the entire GTA.

In particular, we do not know whether this will be a truly collaborative design and reflect the input of local transit agencies, or will be imposed by fiat from Queen’s Park making any work the TTC and others do now irrelevant.

This article will not propose a new scheme. That would imply I somehow have access to stone tablets with the One True Word on the subject, and that I am already wedded to one scheme in spite of the plethora of ways one might calculate and charge fares. There are many variables and issues such as the level of subsidy available, the scope of a unified system, and the goals transit is supposed to achieve.

We cannot simply propose a new scheme without debating these underlying issues, and anyone who avoids the policy debate is leaving out the most important, foundational part of a study.

This article is intended to tell some of Toronto’s history, and to look at the many options for constructing a new tariff.

Fares are a sensitive topic, and the details bring out more of the “dark side” about how each type of riders would be affected, and what the implementation and operating costs and procedures would entail. A common problem is that proponents of new schemes inevitably present their “solution” in sunnier terms than detailed review might justify.

The fundamental question of any fare system must answer is this: what are we trying to achieve? Transit has many goals, but actually paying for itself is not the only one. There are economic issues (social equity, mobility), development issues (transit enabling and/or requiring density of jobs and housing), and environmental issues (trip diversion from autos, reduction of road-building). Some of these have a quantifiable value, others have soft benefits and costs such as avoided personal expenditures and the value of commuting time.

There is no one “right” way to charge fares without also being very clear about which of these goals are important, and how the tariff will address them. Benefits and penalties are inherent in any fare scheme, and these should be recognized, not papered over to “sell” any model.

Some goals will produce conflicting results. For example, if we wanted to shift people out of cars, there would be good, inexpensive transit reaching into the commuter shed well beyond downtown. This could involve free parking, reduced fares on (or subsidies to) local transit for “last mile” links, and a lower fare-per-km than a strict fare-by-distance model might otherwise bring. All of this would confer benefits on (usually) affluent commuters in the name of an environmental good, while placing a relatively higher cost on transit for shorter trips. Such conflicts are inevitable and they require openly and honestly balancing the goals of the fare system.

A vital question separate from how one builds the tariff is what proportion of system revenue should come from fares, and what from the public purse? This is directly related to service quality because the amount of revenue, wherever it might come from, affects the level of service that can be provided. If transit agencies are fighting for every dollar, then any move that might affect their revenue stream will be resisted. Conversely, riders will not take kindly to fare increases if they do not also see better service.

The complexity of the tariff in any city has a lot to do with the maturity of the technology used and the political decisions about how much riders will pay. Every city’s fare structure has a long history affected by geography, political organization, technology and business climate. “Our way” of doing things makes sense, or at least is an accepted practice, in each location, the result of decades of evolving trade-offs.

The Evolution of Toronto’s Fare Structure

In Toronto the two primary fare structures are flat fares and zones as a rough version of fare-by-distance.

Flat fares are charged for local travel in the City itself (aka the “416”), and in the regions around Toronto (primarily the “905”). There are free transfer arrangements within each region, but not across the 416/905 boundary. That is the motivation for a lot of talk about “unfair” transit fares. (There are no remaining zone fares in the 905’s transit network.)

Local fares include various schemes to make transit more attractive:

  • cheaper fares for riders who make many journeys (e.g. passes or their equivalent),
  • cheaper fares for specific classes of rider (seniors, students, children, low-income),
  • simplification of transfer rules to eliminate penalties associated with trip chaining (multiple short journeys).

Toronto’s fare structure evolved together with its history. The original single fare within what was then Toronto was a condition of the franchise granted to the Toronto Railway Company in 1891. As the city expanded and with the creation of the Toronto Transportation Commission in 1921, the single fare zone covered what we now think of as the “old City”. Service beyond was operated on a few radial lines with their own fares (such as the line to Lake Simcoe, later cut back to Richmond Hill), and by some suburban bus companies. Remember that most of what we now think of as the “inner suburbs” was then farmland and a collection of small towns.

With the creation of Metropolitan Toronto in 1954 (itself still a cluster of former towns and cities), the renamed Toronto Transit Commission’s service territory expanded to roughly its present boundary. Zone fares applied outside of the old City and fragments of the inner suburbs that were blended into the “Central Zone” to simplify the layout. Suburban zones 1-5 covered the territory beyond the old City, although there was not much of a network there in 1954.

Map courtesy of Transit Toronto

By the early 1970s, the suburban zones had been collapsed so that Zone 1 was the old City (formerly the Central Zone) and Zone 2 was everything else within Metropolitan Toronto. Zones 3 and beyond were for a few outside-Metro services such as buses to Richmond Hill, Woodbridge and Port Credit, remnants of the former radial railways. Special tickets provided a cheaper cross-boundary fare than two individual adult tickets (33 cents vs 40 cents in the example below), but there was still a premium for that crossing.

With the TTC needing greater subsidies to operate into a much-expanded suburban area, politicians and riders were annoyed that they contributed to the TTC through their taxes, but paid a higher fare when crossing the boundary with the old City. The situation was further complicated by the subway’s growth beyond Zone 1 with its 1968 extensions pushing that zone further out, provided one did not transfer to a bus route. The physical layout of several stations once in Zone 2 reflects provision for fare lines that no longer exist.

Zone 2 vanished on January 1, 1973 and ever since, travel across the entire City of Toronto has been based on a single, flat fare with free transfers. Monthly passes were introduced in 1980. The two-hour transfer, in effect a limited-time pass, replaced the complex rules for transfer validity in 2018. This brought Toronto into line with transfer rules in many 905-region agencies.

The intent was to encourage multi-hop trip chaining, but an unlooked-for side effect was a fare increase on those riders whose trips actually take more than two hours. I will return to this later in the article.

For more details, please see Transit Toronto’s A History of Fares on the TTC.

Map courtesy of Transit Toronto

GO Transit, operated since 1967 by the province of Ontario, always used a zone-based fare structure that is nominally distance based, but which has many idiosyncrasies that built up over years as their network evolved. Co-fares are provided between GO and local systems in the 905, but their purpose is to lure riders onto transit rather than driving to GO’s extremely large inventory of parking. There is a point where building more parking simply is not a viable way to build demand. Moreover, parking addresses only one type of rider – the classic suburb-to-downtown commuter with their own vehicle.

Over the years, GO’s fare structure, although nominally distance-based, has been gerrymandered for various, changing goals including:

  • cheaper trips for long-haul riders,
  • cheaper trips for short-haul riders,
  • cheaper trips for “frequent flyers”,
  • free parking,
  • reduction of the cost to riders of transfers between GO and local transit, and
  • reduction of the cost to the public purse of supporting co-fares for transfers.

It is self-evident that these changes cannot address the same goals.

There are built-in assumptions to any fare structure, and similar issues, albeit with different solutions, can be found in many cities:

  • Is the transit system and any zones or distance-based fare organized around trips to and from a core area?
  • What is the granularity of zones or of distance increments, and are they a holdover from the complexity of fare calculations in the era before GPS and smart cards?
  • How long is one “trip” in time or space? When should a new fare be charged?
  • Are transfers free, or provided as a surcharge, or simply not available between some or all routes and modes in a network?
  • What is the relative cost of single fares and various discount levels?
  • Who is entitled to how great a discount?
  • Is the regional (usually rail) network truly integrated in the local fare structure, or is it separate?
  • Do fare calculations require some form of “tap off” to establish trip length?
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