Sunday, July 15, 2012

Can Transit Ever be a Free Ride? In Vienna, Perhaps


If there’s one debate in transportation that’s never-ending, it’s the argument between those who say transportation systems should be free for the disadvantaged and those who believe that these systems must be self-sustaining or even profitable. The former group claims that low-income riders are dependent on mass transit to get to their low-paying jobs, so fares must be kept at nominal levels without regard for operations and capital improvement costs. The latter thinks that all entities, including governments, should be run like private companies and earn a profit. Sadly, both sides are living in a fantasy world.

In San Francisco, advocates for low-income students are pushing the Metropolitan Transportation Commission to offer free passes to disadvantaged youth. Their argument is based on the claim that school bus routes are being cut back and students’ families can’t afford to pay full price for MUNI fares. Fares climbed nearly 1.6% in July 2012, representing a 70% increase over costs in 2009. As exorbitant as that increases appears, it still leaves MUNI fares at a cheaper level than Boston and New York. But that’s small comfort to someone who suddenly can’t afford to ride.

Yet the need to raise fares was very real. This transit agency, like Washington’s Metro and virtually every other system around the US, had deferred maintenance for years thanks to a budget shortfall that’s over $20 million dollars this fiscal year---and climbing. In some cases, MUNI had gone so far as to use Glad garbage bags to insulate wiring on their fleet of electric buses. This sort of ingenuity is commonplace in underdeveloped countries. Perhaps an application for UN aid is in order if the fare increases don’t work out.

A Muni bus free of garbage bag insulation. Photo courtesy of Sam Bowman/Wikipedia.

So, is the only option to raise the fares forever upwards? That’s fine if you don’t mind catastrophic levels of vehicular traffic on the road. Part of the main justification for mass transit is to provide an alternative to sitting in traffic for hours on end. A fare rise will screen out those who either can’t afford it or simply don’t think the expense is worthwhile. Those who drop out of the transit system will inevitably get in their cars and attempt to drive on overburdened roads, thus leading to traffic jams.

Driving can appear to be a cheaper than transit to users because roads in the US are heavily subsidized. You seldom pay a toll, so the only cost is time and gas. Congestion pricing has been proposed in a number of cities, but many drivers don’t like the idea of suddenly having to pay for a road that they used to drive on for free. The scheme works well in London, but that didn’t stop an uproar from occurring when New York City proposed a congestion charge for Manhattan. 

A rare case of roads paying for themselves: the London Congestion Charge zone. Photo courtesy of Nevilley/Wikipedia.
Keeping prices for mass transit at a lower level would appear to be the best way to alleviate congestion, just to keep drivers off the road. But in terms of funding, you’re right back to where you started. The subway/streetcar/bus network will be overburdened and unable to pay its own way. Happily, there’s a way around this predicament.

Vienna in Austria recently reduced the price of its yearly passes from EUR 449 to EUR 365. The monthly passes dropped from EUR 49.50 to EUR 45. That’s a decline of over 18% and 8% respectively.
How can Vienna’s transit system keep going with such a dramatic cut in fares? Simple: they make up the revenues elsewhere.  Vienna is cleverly forcing occasional users to choose a long-term investment by raising single ticket fares 11% to EUR 2. The occasional riders are now faced with a stark choice: shell out more money to maintain the option of transit use or make a commitment that will save them a lot of cash, but will bind them to a transit mode for the long term. The rational ones will choose the discounted pass.

Vienna's streetcar fleet (part of Wiener Linien), now available at lower prices! Photo courtesy of Martin Ortner/Wikipedia.
Vienna will forego some cash from those who switched from full price single tickets to the discounted annual passes, but someone who buys a one-off pass does not have the same motivation to return to the system that an annual pass holder does. The annual pass holder has invested in multiple trips and is unlikely to let them expire, as that would be tantamount to throwing money away. The occasional single-ticket user has no such motivation. It’s the same principle that operates behind frequent flyer miles and other reward programs. However, there’s still lost revenue to be made up, as the existing user discount amounts to EUR 31 million. How does Vienna plan to make up the remaining balance?

It helps that the sales volume for the annual passes has jumped by 16% (60,000 additional passes). That’s an additional EUR 5 million in the coffers. As any big box retailer will tell you, the key to success is volume.
Fare dodging is another loss area that Vienna is tackling with vigor. The penalty for being caught without a ticket used to be EUR 70. It’s jumped a staggering 43% to EUR 100. Those users that are caught will obviously have an additional encouragement to buy an annual or monthly pass.

Does this mean that Vienna’s transit will be completely self-sustaining or even profitable? Of course not. But then again, the alternative---driving---isn’t, either. At least this model offers some measure of financial sustainability, fairness of access, and congestion improvement. That’s surely better than the model of deferred maintenance, endless fare increases, and capital starvation dominant in the US.

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