Transit: Fare increase may lead to less revenue

 

In spite of 25% fare increase, bus service revenue drops 8%

 

I realize the title of this post is hardly economic rocket science, but its worth examining as transit agencies continue to look at fare increases in an attempt to close budget gaps. When transit agencies increase their fares, fewer people ride. The falling ridership may result in a net zero gain on fare collection, even though prices went up.

Santa Cruz Metro Highway 17 Express Bus August 2009 August 2010
Riders 24,127 20,724
Average weekday riders 908 767
Bike boardings 1804 2026
Farebox and passes $82,581 $74,261
Total Revenue $93,221 $85,153
Operating Cost $148,122 $154,228
Cost Recovery 63% 55%

The Santa Cruz Metro Transit District (SCMTD) recently published their August 2010 numbers. Last July, Santa Cruz Metro boosted fares 25% on the Highway 17 Express that provides service between Santa Cruz and San Jose, California with 26 round trips each weekday. Santa Cruz Metro also worked to save money by changing and eliminating routes in their entire system. Fares for all trips within Santa Cruz County remain unchanged.

System wide, Santa Cruz Metro saw a ridership increase of 2% over August 2009. For the Highway 17 service, however, ridership dropped 14%. SCMTD attributes part of the ridership loss to stable gasoline prices and continued high unemployment.

Santa Cruz Metro acknowledges as well that “a proportion of this loss is due to an expected drop in ridership after a nearly 25% increase in Highway 17 Express fares.”

For August 2010, Farebox & pass revenue was $74,261. With additional revenue through SJSU and Amtrak, the total Highway 17 revenue was $85,153. Operating cost of $154,228 brings the cost recovery to 55%, which is fantastic for a bus transit operation.

Compare to August 2009: Farebox & pass revenue was $82,581. Amtrak and SJSU brings the total revenue to $93,221. With a slightly lower operating cost last year of $148,122, the cost recovery last year was a very good 63%.

The 25% fare increase has not made up for the plummeting ridership. Right now it’s impossible to determine how much impact the more expensive fares have had on ridership — a more rigorous statistical analysis needs to be done, and more data than a single month is required — but this can be important argument when transit districts try to improve their financial situation by raising fares.

2 Comments

  • Hkkj
    October 21, 2010 - 4:40 am | Permalink

    You know, if you were really cynical, you’d think that the point was having fewer riders so you could reduce service…

  • Hkkj
    October 21, 2010 - 4:40 am | Permalink

    You know, if you were really cynical, you’d think that the point was having fewer riders so you could reduce service…

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