At its meeting of February 10, 2022, the TTC board will consider a report on the future transit fare structure in Toronto.

In May 2022, TTC management will present a final recommendation for the Board’s endorsement, but this month’s update takes us a considerable way along the road to a new structure transit fares. For the past two years, TTC staff have consulted with interested members of the public while following an overall policy framework approved by the Board.

The evaluation found, to no surprise, that no fare scheme can achieve all of these goals, and in particular “financial sustainability” (for which read “no increase in subsidy”) and any change to make fares more attractive will work at cross-purposes. The idea that somehow new riders can be attracted in sufficient numbers to offset costs is a convenient fiction spouted by those whose real agenda is to cap spending, not to improve transit.

Many fare schemes were considered, and many were discarded for various reasons.

Those that survived to the final round of evaluation were:

• Free fares
• Full cost recovery
• Fare capping
• Aligning concession fares
• Removal of the cross-boundary YRT-TTC extra fare
• Peak/Off-peak pricing
• Group Travel Discount
• Reduce the TTC children-ride-free age limit to 5 from 12
• Set the Senior concession fare to 20% of the Adult fare
• Remove the Senior concession

Notable by its absence in this list is any form of fare-by-distance or fare zones. These options were dropped because of the inequity they would pose for riders whose trips tend to be long, but whose incomes are not high (residents of the outer part of Toronto).

It is no secret to readers of this blog that I have always supported the flat fare concept not just for its value to long-haul riders, but for its simplicity. Schemes that purport to make riders pay proportionately for their riding tend to increase the complexity and cost without a comparable or better return in making transit attractive. Indeed, the higher fares this would bring drive away the very trips, long journeys, that we do not want shifting to autos while giving a bonus to riders who make shorter hops typically “downtown”.

The fare policy report recommends that the TTC:

1. Continue to support the TTC’s existing fare structure, which includes the flat fare, free two-hour transfer across all modes and the Fair Pass and age-based discounts as the hallmarks of the TTC’s fare policy;

2. Endorse in principle the opportunities related to fare capping and aligning concessions across Fair Pass, Seniors and Youth as detailed in the Comments section of this report to inform the final fare policy recommendations that will be presented to the Board for approval in May 2022; and

3. Direct staff to forward a copy of this report to the Ministry of Transportation to restart discussions on reintroducing the Discount Double Fare (DDF), the TTC-GO Transit co-fare to offset Line 3 closures.

Source: Advancing the 5-Year Fare Policy, pp 1-2

No Zones

For a very long time, Metrolinx attempted to push a zone or distance-based system onto local transit in part to buttress its own fare scheme. Whether Metrolinx will attempt to force its will onto Toronto and others, as they did with the Presto fare card, remains to be seen.

The problem in moving to a flat fare has always been the question of “lost” revenue compared to the status quo. Toronto went through this 50 years ago when a separate “Zone 2” changed to a single cross-city fare at a time when the suburbs, and with them the transit network, were growing fast. That separate zone was an historic remnant of the old City of Toronto boundary and non-TTC services beyond.

However, suburban pols were happy to demand a “fairer” fare for their constituents, but were unwilling to fund the TTC in future decades at a level that would both drive service growth and subsidize the longer trips.

The Cost of Options

An important part of the current proposal is that there are estimated ridership and cost/revenue effects for most of the options. This is far superior to past fare discussions that were met with “we can’t afford it”, but with no underlying estimate, effectively pre-empting the political debate. That approach might suit politicians who don’t want options on the table at all, but it serves transit riders poorly.

The proposed change has another advantage compared to the all-or-nothing removal of the suburban zone fare – the possible fare capping schemes lend themselves to incremental adjustment as funding and political will warm to further fare discounts.

The chart below shows the estimated effect of the options.

A fascinating aspect of this chart is the relatively small range of ridership and revenue effects. Revenue spans about $90 million while ridership spans less than 20 million annually. These are at or under 7 percent against the pre-pandemic base values. How much political capital and upheaval is a fare structure change worth? Conversely, if a new feature in the tariff attracts riders at minimal cost, why not implement it?

That said, Fare Capping is close to the origin of the chart (the 0/0 mark) because this analysis assumes that caps would be priced the same as existing passes. There are no projections of the effect of “turning the dials” on the model to determine the effect of lowering, say, the monthly fare cap (equivalent to making the monthly pass cheaper relative to single fares).

What Fell Off The Table?

Free fares would forego over $1 billion in annual revenue, and would only add about 75 million new trips annually to the TTC and YRT combined. There would be an associated cost to provide more service on routes where the growth was strong. This is a huge cost, and it benefits all riders whether they need the subsidy or not.

Full cost recovery would save primarily the City, but also its provincial funding partner, about $800 million in subsidies, but would drive away more than 60 million rides. It would have a particularly severe effect on Wheel-Trans services whose cost per trip is very much higher than the fare paid.

Both of these projections turn on a basic issue: ridership is driven primarily by service and convenience, not by fares. If the subway, bus or streetcar does not take someone where they want to go, preferably conveniently, then a free ride will not change their mind. Conversely, there is a high incremental cost for many riders to shift away from transit to another mode such as autos, and this will keep most riders on transit even if the price goes up.

The TTC observes:

This analysis indicates that we have reached our “peak” transit mode share in the City and other external factors (e.g. highway tolls) would need to be considered to see any further increases.

Source: Advancing the 5-Year Fare Policy, pp 8-9

In effect, a major change in the overall share requires a major change in the context for transit in competition with other modes. Even road pricing will not change behaviour if transit does not present a reasonable alternative. Some schemes (including subway extensions) result in incremental changes for a small part of the network, but do not change transit’s mode share on a system-wide basis very much at all. Moreover, if the primary benefit goes to existing riders as with the Vaughan extension, there is little overall mode shift.

The City’s Net Zero 2040 scheme makes bold assumptions about a shift to walking and cycling. Yes, there are trips and travellers who will cycle, and more would do so with better facilities. However, the travellers we want to shift drive cars, or yearn to drive a car if only they could afford it. Transit must be able to attract and hold these trips. Just making transit cheaper will not achieve that goal.

Other discarded options include:

• Service based: differential fares depending on the mode used. Our transit system is designed around a single tier fare, except for GO Transit, and the network encourages people to transfer onto higher capacity and faster routes (e.g. the subway). This avoids the need for parallel “poor rider” services for those who do not want to pay more to ride rapid transit. It is ironic that we might consider charging more for the subway, an “express” service, just at the point we are trying to eliminate fare barriers between the largely subway-free 905 and the 416.
• Zone based: varying fares depending on how many zones one travels through. This would increase the cost of long trips, an inequitable outcome for those who cannot afford to live close to their destinations, and it would add the complexity of “tapping off” to measure trip length. Yes, there are systems where this is implemented, but they have a long history of this type of fare collection, unlike Toronto where the change in rider behaviour would be substantial.
• Distance and time-based: The arguments here are similar to those against zones in that longer trips would cost more, and tap-off would be needed to identify how far, or how long one travelled.

Cross-Border Fares

The removal of cross-border fares is an example of how proposals can be sidelined for lack of modest funding. The TTC states:

The findings from the technical analysis and public consultations suggest that removing the double fare at the TTC and YRT boundaries will have a positive impact on customers; therefore, it scored well against most of the fare policy goals. However, removing double fares between agencies scored poorly against the financial sustainability policy goal because of the significant subsidy that would be required to implement. Due to this funding gap, we have removed this option from the 5-Year Fare Policy, but continue conversations with the Province on achieving regional fare integration.

Source: Advancing the 5-Year Fare Policy, p 8

If we are to believe the chart above, the annual cost would be roughly $15 million, and the ridership effect would be modest compared to the overall network. The obvious follow-on question asks why much cheaper fares would attract so few new trips, and the answer must lie in cross-border service and convenience.

Any examination of regional fare policy must also consider the degree to which demand is constrained by the service offered both across the borders and within each municipality. The cost of better service could well be higher than the cost of eliminating the fare zone boundary.

The Role of GO Transit

In the short term, GO Transit service will not change very much, especially as that system was hard-hit by the drop in commuting to downtown. If better service depends on recovery of that market as a base, hoped-for frequent all-day, two way service could be a long way off.

Toronto is the only municipality served by GO for which there is no co-fare reducing the cost of transferring between the provincial and local service. The “Double-Discount Fare” ended because it was implemented with a time limited subsidy by the province, and has not been revived.

At a time when Ontario is spending billions on system expansion for both GO and local rapid transit, that fare policy says a lot about their real commitment to transit. They are committed to construction projects and land values, with actual riders being in distant third place.

The TTC argues that reviving the the DDF would both aid in regional fare integration, and could provide an alternative service for Scarborough RT riders who will lose their rapid transit line in mid 2023. That latter claim should be taken with a grain of salt because it depends on frequent service all day on the GO lines in Scarborough, mainly the north-south route to Stouffville and beyond, and good feeder service from the TTC to Milliken (Steeles) and Agincourt (Sheppard) GO Stations. This would primarily benefit SRT riders coming from north of the 401.

The Shift from Monthly Passes to Two Hour Fares

Since the introduction of the two hour fare, the attractiveness of monthly passes has fallen because a rider’s calculation of the break even point has shifted. What used to be two or more single fares can now be achieved within a two hour journey for one fare, and the monthly cost of pay-as-you-go has dropped versus holding a prepaid pass. This effect is shown in the chart below where the proportion of trips taken by a “pass” dropped by almost half from 2015 to the end of prepandemic times.

The TTC board had asked management to report on the effect of dropping the monthly pass to $100 (it is now $156, discounted to $143 on an annual subscription). The estimated annual cost of this change (including pro-rata shifts in other pass types) is $107 million due to the price change, and a further $68 million from single fare payers migrating to passes. This could only be offset by 71 million new single fare rides, a big jump in demand that shows no sign of happening. There is also the question of whether this would be the best place to spend $175 million as opposed to, say, running better service, or targeting reduced fares for those who really need this support.

Realignment of Discount Fares

Discounted fares are now available to five classes of rider:

• Seniors
• Youth (formerly “Students”)
• Children
• Post-Secondary Students
• Low-Income riders meeting certain criteria for

The current price for a Senior or Youth monthly pass is $128.15, and the single fare is $2.25 if paid by Presto card. Children under 12 ride free. Holders of a “Fair Pass” discount pay $2.10. See the full TTC fare table for all of the details.

The TTC proposes to consolidate these discounts by moving most of them all to the lower Fair Pass level. (The report is silent on Post-Secondary passes.) This would cost about $7 million per year in foregone revenue. Fair Pass pricing would be offered to all ages through a consolidated tariff, but by contrast youth and seniors would still receive no marginal benefit from the Fair Pass program.

This could also complicate future changes to the Fair Pass by locking it to an overall discount rate. There are already complaints that the Fair Pass is too expensive, and that a deeper discount should be available to those of limited means. The incremental cost would be greater if this extended to all seniors and youth through a consolidated, single-tier discount.

If Fair Pass discounts are extended beyond “adult” riders to other age groups because more potential riders would have to be vetted for their eligibility.

The TTC considered the reduction or elimination of discounted fares notably for seniors, and a lower cutoff age for free rides by children. Both of these were rejected.

Of the fare options analyzed, reducing free Child fares for those under five, or reducing or eliminating the existing Seniors’ concessions are the only options that increase revenue, aside from a full cost recovery fare. We have heard from customers that the current age-based concessions are considered a success and need to be maintained when identifying areas for improvement in the fare structure. Given that Child fares and Senior concessions are an integral element of fare equity/accessibility, we have removed these options from further consideration.

Source: Advancing the 5-Year Fare Policy, p 9

This is a rather woolly way to argue for these discounts. Not all seniors are poor and all children do not come from low-income families. However, the cost of providing these discounts to everyone must be balanced against the complexity of identifying who should or should not receive a lower fare. Unless there is a pressing reason to target the “well off”, however we might define this, it is better and simpler to leave the discount open to all on the basis of age.

(Full disclosure: I am a senior who can afford to pay full adult fare. However, if you want to get more money from me and my cohorts, do it through the tax system, possibly funding better transit, rather than turning the TTC into a social benefits administration agency.)

Peak/Off Peak Fares

Time-of-day fares have been advanced as a way to relieve capacity problems on the TTC, and co-incidentally as a way for riders to save money.

There are two basic problems here.

First, in pre-pandemic times, over half of all riding was already outside of the peak period. An off-peak discount would mean a revenue loss across a wide group of riders, or a peak period boost would be needed to offset this. Riders who already travel mainly outside of the peak would receive a discount with no offsetting benefit to the system. This type of scheme shows up on systems with a higher ratio of peak to off-peak travel than the TTC.

There is also a basic issue of service quality on the shoulders of peak periods and this can work against a decision to shift the time of a journey.

More critically, however, time-of-day fares assume that riders can choose when to travel. Many riders are constrained not just by job start and end times, but by other components of their work day such as child care or school drop offs which have their own schedules. They have less choice and control over their work hours, and face longer trips that are harder to shift out of the peak. These conditions affect riders from lower income areas disproportionately and time-based fares would probably raise, not lower, their travel cost.

Daily, Weekly or Monthly Caps

TTC management argue that fare capping provides the same benefit as a pass (a known upper limit on transit cost) without the need to commit up-front to buying a pass. Moreover, different capping periods could bring benefits to riders whose travel patterns vary through the month, even from day to day.

Caps could be implemented for various periods, and these might all interact. For example, a burst of heavy transit usage could trigger caps at a daily or weekly level even if other “light” weeks meant that a rider never hit a monthly cap. The caps would be automatic for all riders, not just those who “opted in” by prepaying for a pass.

As I noted above, the chart of costs and ridership effects shows only a small change for capping, but this reflects a monthly-only cap at the current fare multiple for passes. The situation would be quite different with a wider range of capping periods. This bears further investigation if only as background for a multi-year strategy of altering capping levels to bring down the effective cost per trip to riders.

Preferred Solution

TTC management’s preferred scheme is fare capping plus realigned discounts to reach a new “baseline” for future fares. They argue that:

• it retains a fare structure riders like (the flat fare plus two hour transfer);
• it removes the burden of an up-front payment for a pass or pre-planning whether a pass would be worthwhile;
• it extends a known limit to all riders’ monthly transit costs, not just for those holding passes;
• it permits various fare caps for different groups;
• it will be easy to understand and integrate across the GTHA.

There is some conflict in this list in that the whole idea of realigning discounts is to decrease the number of unique fare levels. However, a benefit claimed for the scheme is the option of varying capping levels for selected groups. The TTC should beware of a consolidation that might have to be undone in response to policy changes for some groups, such as the Fair Pass discount discussed above.

The regional question of fare integration goes beyond this proposal, and it will require agreement on common terms such as the eligibility for various discounts, capping levels and whether trips are counted globally or on each agency. More generally, a regional mechanism for administration and sharing of fare revenue and subsidies will be needed.

What’s Missing?

Any new fare system for the TTC must fit within a larger regional context. Other reports on the Board agenda include a status update on regional fare integration and a review of options for fare collection technology. I will turn to these in a separate article.

An important consideration in the discussion would be a review of the existing fare systems in other GTHA systems and the degree to which they might already be converging on common practices. It will be much simpler for the TTC to “integrate” with something that is already there than to require wholesale change across the region. Equally, the arguments pro or con a new Toronto fare structure might be buttressed by compatability with existing schemes elsewhere.

Fare integration between TTC and York Region Transit will take some work, not to mention whatever subsidy is needed to make up for the reduced cross-boundary fares.

That said, Toronto should not have its fare scheme skewed simply to suit regional interests such as in a now-abandoned (I hope) Metrolinx scheme that would have pillaged Toronto’s revenue base by raising fares on the subway network as a premium service akin to GO Transit.

Already, the municipal hands are out for Queen’s Park to ante up the funds. It’s an election year, and who knows what might fall from the tree. The danger is that the “ask” is too small and deals only with fare subsidies on a limited scale, not on the larger issue of provincial support for transit generally.

A shift to fare capping from monthly passes is a relatively straightforward one to make. Presto already supports this scheme, notably on GO Transit. What is missing is an analysis of what might happen if caps were implemented that give more generous discounts to frequent riders than the existing pass system. That is definitely a topic for the final report in May 2022.