Is collecting fares worth the money?

[Prince George]

Interesting article on Planitzen that suggests that many places don't account properly for how much it costs to collect fares on public transport. The extra infrastructure that's needed, the time that buses are sitting around waiting for passengers to pay, the policing and legal costs of pursuing fare-evaders. The author says that in many cases they are failing to see that it is actually a net loss for them to do all this - they aren't gathering enough fares revenue to adequately cover those costs, and that it would be simpler and cheaper for them to simply let the public transport be free.

Some comments on that article argue (in effect) that the fares are a useful form of demand control. I'm not sure that I buy that myself, but it's a interesting point of view too.

[Norman]

There have beenm many, many discussions about free PT, but in the end, it would increase pointless trips for 1 or 2 stops, and increase vandalism.

[Prince George]

There have beenm many, many discussions about free PT, but in the end, it would increase pointless trips for 1 or 2 stops, and increase vandalism.

Really? Does the Bee Line suffer from vandalism?

[Gazeby]

The reason that the cost of a conductor is out weighing the cost of fare revenue is that the way they go about collecting fares. Take the tram for example. the conductor runs down the corridor asking if passengers need a ticket. A high percentage of people dont say yes (when you know they just boarded without validating) or they look the other way or put there ipod on and make out they didnt hear. IF the conductors said please show me your tickets and they do on odd occasions but not regularly as they should, the amount of people who get up pull their tickets out or quickly get off at the next stop to avoid paying. This is where the lost revenue is occuring and 9 times out of 10 these are thepeople who whinge that the system is not good enough. There is a high number of people getting free rides everyday because the conductors are not very strict in their ticket validating/checking system.

[Norman]

There have beenm many, many discussions about free PT, but in the end, it would increase pointless trips for 1 or 2 stops, and increase vandalism.

Really? Does the Bee Line suffer from vandalism?

I'm not exactly sure as I didn't use it very often, but the trips were mostly only 1 or 2 stops anyway because it was a high frequency, short distance travel option.

[AtD]

A random collection of unstructured thoughts:

Interesting outside-the-box thinking. I can see the costs of idle buses and driver's time could exceed the revenue collected on a bus, but less so on trains and trams where ticket purchase doesn't hold up the vehicle.

The infrastructure is a big cost. The myki system in Melbourne cost a staggering $1.3b dollars according to Wikipedia. I'd like to see the cost/benefit analysis of that!

Pre-paid tickets shift the majority of the burden of wasted time from the bus+driver onto the retailer, who is usually private. As far as I know, there is no mark-up on Metrotickets. There are considerable savings to those who pre-pay, which could be justified by the saving of bus+driver time.

The demand control argument is a valid one. I have heard anecdotes of free or nearly-free PT being used by the homeless as a mobile shelter during bad weather. This not only uses up capacity but also creates a perceived public safety risk.

It would be interesting to do a study to see what the time savings and revenue impact would be for a totally free system. It would be relatively easy to predict the 'first round' effects from existing patronage. The big question would be how much extra patronage would arise from free trips and would this be less or greater than the increased services made available through time savings.

As a general rule, any resource where:
-consumption is without charge
-each additional user detracts from the utility of other users
suffers from the Tragedy of the Commons problem. The resource is used for wasteful or inefficient purposes and may become unusable. In extreme cases this can result in a reduction in net social benefit. Road congestion is a prominent example, and the "Commons Dilemma" has been used as justification for road pricing schemes such as the London Congestion Charge.

[monotonehell]

In case anyone doesn't realise this, revenue collection doesn't completely pay for the PT service in Adelaide, the Government subsidises part of it.

A single trip ticket is subsidised the following way in Adelaide (2006 figures):
Single bus fares are subsidised by $2.90 (on top of the $4.10 face price = $7.00 total cost).
Single train fares are subsidised by $8.80 (on top of the $4.10 face price = $12.90 total cost).

So why doesn't the Government pick up the rest of the tab? I'd guess that the reasons might be partly because they don't want to have to wear the extra expense on the budget, partly because it would increase demand (thereby further increasing total cost) and partly because putting a ticket price on a product makes people view it as something that has a value. If they gave away free PT then people would treat it differently. Putting a price on it gives it worth in the traveller's mind.

[AtD]

My understanding is the private companies and TransAdelaide operate the services on contract. No ticket revenue goes to the contractors, it all goes into general revenue.

Looking though the 2007 annual report, metroticket revenues were $70 million (p178) whist contracts for bus and rail services were about $220 million (p175), although the latter figure may include regional services.

The average PT user is travelling with a concession multi-trip.

[Wayno]

Putting a price on it gives it worth in the traveller's mind.

In the interest of adding value to my messages, all my posts now cost $0.20c to read. Click on the paypal link below to make payment. $USD not accepted.

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[monotonehell]

Putting a price on it gives it worth in the traveller's mind.

In the interest of adding value to my messages, all my posts now cost $0.20c to read. Click on the paypal link below to make payment. $USD not accepted.

paypal.JPG

You're assuming that people want to read them Wayno.

[Wayno]

You're assuming that people want to read them Wayno.

ah yes, but by the time you know it's not worth reading it's too late!! and so my plan for early retirement is closer by another 20c...

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My point about paying 20c to read my posts was this ==> for some things paying does not increase your level of respect, and does not work to create the societal change we desire...

[monotonehell]

You're assuming that people want to read them Wayno.

ah yes, but by the time you know it's not worth reading it's too late!! and so my plan for early retirement is closer by another 20c...

paypal.JPG

My point about paying 20c to read my posts was this ==> for some things paying does not increase your level of respect, and does not work to create the societal change we desire...

Can you actually think of something real that a person would want that that would apply to? Putting a charge on something, as opposed to giving it away, makes that person think about spending that money.

I'm unsure if free PT would be a bad thing. In fact in certain circumstances it would be a good thing. But I think in Adelaide, with our current system, we need a token charge on a trip. It needs to be enough for the passenger to not take it for granted, but not too much so that the cost benefit drives (pun intended) people into their cars.

Actually a free PT would give people a sense of entitlement, which would be dreadful in a case where demand was more than supply. Can you imagine the squabbles? If you miss a free ride entitlement turns to anger -- "where's mine?!". But if you miss a ride where you had to knock off a trip of your multitrip, you just would be miffed and write into the Advertiser.

[SRW]

Interesting question, and timely given that Adelaide Metro is supposed to be investigating a new ticketing system.

[Prince George]

The "mobile homeless shelters" argument has a hollow ring for me - what are the homeless supposed to do with themselves? Why don't we look for ways to actually solve that problem properly, instead of the "out of sight, out of mind" approach?

When people talk about demand control, I am also interested in the other side of the equation - reduction of demand for road space and funds. For every $100M of transit funding, how much effect would that have on the demand for roads, and on the budget for them? What if transit was free during peak hours - between 7-10AM and 4-7PM, say - with the precise goal of reducing the congestion on the roads? Many services may have to be increased - more vehicles, more drivers - but how would that compare with the cost of the Gallipoli Underpass?

[Aidan]

The "mobile homeless shelters" argument has a hollow ring for me - what are the homeless supposed to do with themselves? Why don't we look for ways to actually solve that problem properly, instead of the "out of sight, out of mind" approach?

Obviously they should, but that's partly the point - there are many things that would have to be done before transit is made free, and that's one of them.

When people talk about demand control, I am also interested in the other side of the equation - reduction of demand for road space and funds. For every $100M of transit funding, how much effect would that have on the demand for roads, and on the budget for them? What if transit was free during peak hours - between 7-10AM and 4-7PM, say - with the precise goal of reducing the congestion on the roads? Many services may have to be increased - more vehicles, more drivers - but how would that compare with the cost of the Gallipoli Underpass?

Again, there are various things that should take much higher priority than making transit free. Infrastructure costs are one offs, while operating costs are ongoing. And what we really need to spend money on at the moment is rail infrastructure, as what we currently have is woefully inadequate.

Despite Adelaide's fairly high level of subsidies, the revenue from fares greatly exceeds the cost of collecting them. And if the effect on performance were a problem, surely the best solution would be to introduce conductors at the busiest times?

As for policing, there's a lot more crime needing to be deterred than just fare dodging! If the legal costs of pursuing fare evaders exceed the revenue they get from the fines, they must be doing it wrong.

And from 1990 to 1991 we did have free travel, albeit only for school students. It didn't take the government and STA long to find that it's more trouble than it's worth.