Materials developed by K. Watkins, J. LaMondia and C. Brakewood Fare Policy & Technology Unit 8:...

Materials developed by K. Watkins, J. LaMondia and C. Brakewood

Fare Policy & Technology

Unit 8: Improving Transit Quality


Motivation: Why do we care about fares?

The fare system impacts many aspects of the transit system, including…• Planning: fare technology provides data about ridership• Operations: – fare technology impacts dwell times and subsequently

service reliability– fares affect demand and subsequently amount of service

• Finance: important source of revenue


Motivation

Fares can be highly political & subject to public scrutiny.


Motivation

While fares are highly visible, they cover only a fraction of operating costs.


“Parameters” of a Fare System

The primary parameters of a transit agency’s fare system:

1. Policy 2. Structure 3. Technology

These 3 parameters are closely interrelated: “Policy generally sets the direction for the strategy and specific structure, but technology choices can also affect the structure selected.”


Parameter 1: Fare Policy

• Definition: establishes principles and goals underlying and guiding the agency’s pricing-related decisions

• Example: Mandated fare recovery ratio


Parameter 2: Fare Structure

A. Fare Strategy– General approach: flat vs. differentiated (zonal,

distance)– Transfer policy

B. Payment Options– Forms of fare payment (period passes, multi-ride

tickets, stored value cards, etc.)

C. Pricing Levels– Actual pricing levels, including discounts


2A. Fare Strategy – Base Fare

• Basic fare strategies fall into 2 groups: • Flat fares: pay the same fare regardless of the length of the trip,

time of day, speed, or quality of service– Advantages: easy to administer & understand

• Differentiated fares: fares differ depending on length of trip (zonal or distance), time (peak or off-peak), or service (express vs. local, rail vs. bus) – Advantages: efficiency and equity


Example of Differentiated Fares

• WMATA has:– Distance-based fares– Time-based fares (peak and peak-of-the-peak)– Service-based (rail differs from bus)


2A. Fare Strategy - Transfers

• Many systems require riders to transfer between routes or between modes

• Most transit agencies offer free or reduced price transfers– Advantage: passenger convenience– Disadvantages: revenue foregone, difficulty determining validity

of transfer

• What do you think? Do you pay for a “connection” when traveling on an airplane?


2B. Payment Options

• Single-ride• Multi-ride• Period pass• Stored value• Post payment


Other Payment Options

• Initial purchase bonus• Guaranteed last ride (negative balance)• Capping – typically timed-based• Discounts: Seniors, students (e.g. university

pass programs), etc.


2C. Pricing Levels

• Pricing levels vary by mode.


2C. Pricing Levels… Can fares be fair?

• Transit subsidies v. car subsidies– We calculate the farebox ratio for transit,

shouldn’t we do the same for cars? – E.g. fuel tax, registration & fees

• Free Fares– If we accounted for all the invisible subsidies to

the motorist, and set equal transit subsidies, we would see huge growth in transit funding.

– This could make it possible to eliminate fares. – No big-city transit agency has free fares


Parameter 3: Technology

A. Type of Fare Collection – refers to the manner in which fares are paid or inspected (e.g. barriers)

B. Fare Media – instrument used for payment


3A: Types of Fare Collection

• Barrier

• Pay on Board

• Self Service or Proof of Payment (POP)

• Conductor Validated


3A: Types of Fare Collection

• Fare collection types certain for transit modes


Comparison of Fare Collection Approaches

Factor / Issue Proof of Payment (POP) Barrier Conductor-validated Pay on boarding

Equipment Needed Ticket Vending Machines (TVMs), validators, Ticket Office Machines (TOMs), hand-held readers

Faregates, TVMs, add-fare machines

TVMs, TOMs, validators, hand-held readers

Fareboxes, ticket processing units

Station or platform characteristics

Open (elevated) or on-street platform

Requires space for gates and TVMs, and defined entry/exit

Open platform NA

Handling large passenger volumes

Crowded cars can interfere with inspection. May require high number of TVMs

Doesn’t affect ability to collect fares

Crowded cars can interfere with inspection.

Slows boarding

Fare evasion Depends on inspection pattern, fine structure, level of crowding

Caused by faregate “jumping”, short-swiping farecards

Minimal, since conductor inspects or collects fare from everyone; could be problem at congested times

Caused by using invalid pass or transfer. Also caused by crowding at boarding point

Handling intermodal transfers

Transfer from bus can be used as POP on LRT; POP can include transfer to bus

Transfer from bus must be machine-readable; transfer to bus must be issued with rail ticket

Transfer from other mode can be shown to conductor

(see other approaches)

Handling zonal fares More complicated (to use and to enforce); must include origin for validation

Requires exit gates and add-fare machines

Commuter rail lines invariably zoned

Rider tells driver destination (or zone), pays accordingly


Comparison of Fare Collection Approaches

Factor / Issue Proof of Payment (POP) Barrier Conductor-validated Pay on boarding

Use of Automatic Fare Collection (AFC)

Use to buy POP ticket, or have to validate farecard – or have pass (inspectors need hand-held readers)

Faregates read farecard and deduct value or indicate valid pass

Conductors need hand-held farecard readers / processing units

Need ticket processing units / card readers; ease of revaluing is issue

Security and customer service

Inspectors provide presence on vehicles and platforms. Added security needed at other times.

If no ticket agents, security needed in stations and on trains

Conductors provide presence on all trains

Driver responsible for security and customer assistance on bus

Customer convenience Needs validation of multiride or stored value tickets; may be queues to buy or validate, but not to board

Depends on types of payment accepted in gates (easiest if cash accepted); may be queues

No need to prepay or validate, no need for exact change, and no queuing to pay or board

Needs either prepayment (pass or multiride option) or exact change; may be queues

Capital costs Lower than barrier unless high vol. Requires many TVMs

Cost of faregates high, but requires fewer TVMs than for POP (validation at faregate)

Lower than POP; may be lowest (depending on number of TVMs used)

Lowest costs; fareboxes, but no TVMs

Operating costs Higher labor cost than barrier.

Lower labor cost than POP.

Highest labor cost Lowest labor cost


3B: Types of Fare Media

• Cash• Tokens• Paper Ticket• Magnetic Stripe

– magnetic variations along longitudinal “tracks” in the stripe can store a certain amount of data

• Smart Cards – small plastic card with an embedded

integrated circuit or processor that is used to store data and perform simple fare logic

• Credit/debit/ATM card


Magnetic Stripe v. Smart Cards

Magnetic Stripe Smart Cards

Strengths • Cards are inexpensive (< 10 cents)• Cards can be readily vended from point of

sale devices (TVMs) or possibly from fareboxes (TVMs that vend smart cards are much more expensive)

• If cards are used for stored value (rather than rides), when the card balance drops to a small level, some customers may purchase a new card rather than revaluing the old one. This means that residual value may never be used, which could become extra revenue.

• Data capacity and security features needed to support multiple card applications. Such partnerships can help spread system costs and make card use more attractive.

• Data capacity and processing also enable introduction of special features:

• Registering the card, so that value is not lost with the card

• Automatic revalue from credit card• Automatic employer or other transit

benefits on cards• Contactless easy to use for disabled /

seniorsWeaknesses • Data capacity may be too limited to

support multiple agency pass or multiride options. May be limited to stored value.

• Card readers require considerable maintenance / cleaning. Card slots are vulnerable to insertion of foreign items

• Card readers tend to be more expensive to purchase.

• Cards are expensive ($1.5 to $10 each). To ensure cards are retained, a fee or deposit may be required, raising equity objections. Not suited for one time use for visitors.

• Variety of card interfaces in market place complicate potential to integrate with other regions or applications.


IN-CLASS EXERCISE


NEW FARE TECHNOLOGY CASE STUDY 1: CHICAGO


Current Fare System: Chicago Card

• Introduced system-wide in 2002

• Valid on Chicago Transit Authority (CTA) buses and trains

• Some acceptance on Pace; not on Metra

• 32% use Chicago Card*


New Fare System: Open Payments

• Accept contactless credit and debit cards (bankcards)

• American transit agencies accepting bankcards:– System-wide: Salt Lake City

(Utah Transit Authority) – Pilot Program: New York City

(MTA, PATH and NJT)

• Upcoming Chicago Launch (Summer 2013):– CTA trains and buses– PACE buses


Advantages of Open Payments

Transit Riders• Convenience• Interoperability

Transit Authority• Operational Cost Savings• Future Technology

Financial Institutions• New Customers• Consumer Education


What about riders without bankcards?

• CTA has a sizable rider population without bankcards

• Multiple fare payment options may be needed to accompany bankcards– Transit-Only Prepaid Cards e.g. gift

card– Network Branded Prepaid Cards e.g.

general purpose reloadable card

• CTA’s Ventra system has a prepaid card that can be either transit-only or general purpose


NEW FARE TECHNOLOGY CASE STUDY 2: BOSTON

Source: MBTA


Original Fare System: Paper Tickets

• Zonal fare policy with period passes and pay-per-ride

• Conductor-validated system using flash pass or hole punch

• Charlie Card smartcards used on MBTA bus, subway and light rail

• Charlie Card not expanded to Commuter Rail due to high costs & complexity


New Fare System: Mobile Payments

• November 2012: – 1 year pilot program of

mobile payments

• Advantages of Mobile:– No waiting in ticket

lines– Losing a ticket– Don’t need cash


‘Flash Pass’ Mobile Ticketing on Your Phone

1. Select Origin 2. Purchase 3. Display& Destination a Ticket Active Ticket


Conclusion

• The primary parameters of a transit agency’s fare system:– Policy: overarching guidance– Structure: strategy (flat vs. differentiated, transfer), payment

options (e.g. period passes, multi-ride) & pricing levels – Technology: type of fare collection (e.g. barrier, POP) & fare media

• Fare policies, structures and technologies are closely interrelated.

• The real purpose of a fare system is to bring in a needed level of revenue while imposing a minimum of delay, hassle, confusion, and perverse incentives. Effective fare systems focus on these outcomes, support the goals of the network design, and accept that they will never be perfectly fair. – Jarrett Walker


Future Trends

• Increased flexibility in fare structures enabled by technology

• Importance of standards and interoperability

• Convergence toward the mobile phone (likely NFC) because multifunctional (provides travel information, payment media, etc.)


Reference

The materials in this lecture were taken from:• TCRP Reports 10 & 94: Fare Policies, Structures

and Technologies• TCRP Report 32: Multipurpose Transit Payment

Media• New fare technologies:– Brakewood et al. (2013). Forecasting Mobile Ticketing

Adoption on Commuter Rail. 2013 TRB Proceedings.– Brakewood et al. (2013). Unbanked Transit Riders and

Open Payment Fare Collection. 2013 TRB Proceedings.

Materials developed by K. Watkins, J. LaMondia and C. Brakewood Fare Policy & Technology Unit 8:...

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