Los Angeles County Metropolitan Transportation Authority

Fare Policy & Restructuring Study

Citizens Advice CouncilFebruary 27, 2013

Fare Policy & Restructuring Study

Peer Agency Review Fare Policy Goals Possible Types of Fare Structure

Modifications Zonal/Distance Based Service Based Time Based Payment Method Differential Changes to Intra-Agency Transfer Policy

Evaluate Scenarios & Develop Short List

Metro ranks 3rd in annual systemwide ridershipMetro ranks 5th in annual fare revenues

Peer Agency Review

Peer Agency Review

Peer Agency Summary

• Metro’s base fare ($1.50) lower than all peers’ rail fares, equal to lowest bus fares; most peers’ fares $2 or higher Metro has lowest average fare per ride ($0.69); peer average

is $1.00 Metro has lowest fare recovery ratio (26%); peer average is

38%

• Metro only one of group that doesn’t offer free/discounted transfers

• Other than premium Freeway Express & Silver Line fares, Metro has “flat fare” structure Consistent with national practice: relatively few agencies use

distance- or time-based differentials Trend over past decade has been toward reducing extent of

differentiation

Fare Policy Goals

Possible Types of Fare Structure Modifications

Goals Addressed by Possible Fare Structure Modifications

Fare Policy Goals

1 -- Maintain or increase ridership

2 -- Increase revenue/boarding

3 -- Maximize customer convenience/ease of use of transit system

4 -- Maximize simplicity of the fare structure

5 -- Ensure that fares are equitable by mode (local bus, BRT, rail)

6 -- Ensure that fares are equitable by distance

7 -- Ensure fares equitable re impact on different market segments (e.g., low income, disabled)

8 -- Minimize costs of fare collection

9 -- Facilitate transfers within Metro

10 -- Facilitate seamless regional travel (i.e., between Metro and munis)

11 -- Maximize use of excess service capacity

1 2 3 4 5 6 7 8 9 10 11

Establish a premium fare for rail services compared to bus/Rapid/BRT X X

Establish different fares for different types of service (e.g., 3 levels) X XEstablish “floating zones” (e.g., each zone would cover up to 5-6 stations) X X

Increase rail fare (e.g., $2), valid for unlimited travel during specific time period (e.g., 1.5 hrs.); includes all types of transfers within Metro X X X

Increase rail fare (e.g., $2.50), valid for unlimited travel during specific time period (e.g., 1.5 hrs.); includes rail-bus transfers; lower bus fare (e.g., $1.50) allows only bus-bus transfers X X X

Establish premium for cash bus fare (e.g., TAP fare $1.50, cash fare $2.00) X X

Introduce free (or reduced-price) bus-bus transfers (with use of TAP card) X X X X X

Introduce free (or reduced-price) rail-rail transfers X X X

Establish a premium fare for peak-period service (or off-peak discount) X XEstablish special off-pk CBD fare on rail X XEliminate peak period senior reduced fare X

Possible Fare Structure ModificationGoals Addressed

Zonal/Distance-Based Fares

• Advantages Often considered more “equitable” than flat fare (pay more for longer

trips) Potential for additional revenue (depending on actual fare levels and

distribution of trips)• Disadvantages

Adds to complexity of transit use; requires tap-on/tap-off (with TAP card) on bus and light rail

Complicates enforcement (on light rail) Complicates provision of passes: Offer separate set of passes for each

zone/price point? Offer single set of high-priced passes? Fare increase for many riders, none for others

• U.S. transit industry trend Relatively few agencies (15%) use zones/distance-based pricing Trend has been to simplify (eliminate or reduce no. of zones)

Service-Based Differentials

• Advantages Considered more equitable than flat fare (pay more for

premium service levels) Additional revenue (assuming no reduction in local bus fare);

easier to understand and administer than zones• Disadvantages

Adds somewhat to complexity of transit use, but less than zones

Requires additional sets of passes Fare increase for some riders

• U.S. transit industry trend About a quarter of U.S. agencies use service-based pricing Most often express bus premiums, but higher rail fares in

some cases

Time Based Differentials

• Advantages Considered more equitable than flat fare (pay more for service

that costs more to operate) May produce modest amount of additional revenue (assuming

peak fare is raised, rather than off-peak fare reduced) May shift some riders from peak to less crowded off-peak

• Disadvantages Adds to complexity of transit use Complicates enforcement (on light rail and bus) May requires additional set of passes

• U.S. transit industry trend Very few agencies (4% bus, 8% rail) use peak/off-peak

differentials Some agencies have tried it, and eliminated it

Payment Method Differential

• Advantages Will produce modest amount of additional revenue

(assuming cash fare is raised, rather than TAP fare being reduced)

Will promote TAP use – and thus reduce cash -- on bus

• Disadvantages May generate complaints that charging higher fare

with cash is unfair to lower-income riders• U.S. transit industry trend

Has been instituted by several agencies, in conjunction with introduction of electronic payments

Changes to Intra-Agency Transfer Policy

• Free/reduced-price transfers (bus-bus or rail-rail), only with use of TAP card Advantages: improve rider convenience, more equitable

than existing no-transfer policy (given low-price transfers with the munis), promote TAP use/reduce cash on buses

Disadvantage: loss of revenue• Short-term unlimited riding (i.e., anywhere in system within

1.5 or 2 hours) Advantages: improve rider convenience, may generate

revenue (if fare increased), more equitable than existing no-transfer policy (given low-price transfers with the munis), easier to administer than traditional transfers

Disadvantage: loss of revenue (if fare not increased)

Evaluate Scenarios and Develop Recommendations

• Establish evaluation criteria based on highly rated goals:

Increase revenue per boarding

Maximize convenience & simplicity

Facilitate transfers within Metro

• Develop evaluation guidelines

Quantitative criteria – impact on ridership and revenue, from Fare Model

Qualitative criteria – other criteria, based on fare policy goals

• Evaluate alternative fare scenarios

• Develop short list that addresses Metro’s needs and goals