Saturday, November 16, 2013

Farebox Recovery

One thing I want to talk about on this blog is how transit is funded. There's way more to talk about than one post can handle, so let's think of this as more of a series, with this post as the prelude.

It's common in North America for transit networks, whether they are focused primarily on bus or rail, to have their most of their capital and operational costs funded by tax money. For those unfamiliar with the difference between the two, capital costs are the funds used to build, expand, and improve transit networks. This can be everything from excavating a subway tunnel to adding a sign to a bus stop that shows when the next bus will arrive. Operational costs, by contrast, are money required to run and maintain the system that's been built, including paying the drivers, maintaining and storing buses and trains, and so on.

I'm going to start by talking about operational costs. In particular, I'm going to focus on something called the farebox recovery ratio: The amount of operational cost that is covered by passenger fees. I'll start with the table that follows, sourced from the wikipedia page on the same subject, which in turn cites its own sources. I've taken the liberty of labeling which transit systems we're talking about, since there could be more than one in a city (Seattle, for example, is served by multiple transit agencies).

The table is ordered by farebox recovery ratio, from highest to lowest. I'll continue talking about this after the table. Take a look at it first. Disclaimer: The data is not perfect and some of it is old, but I still feel we can do a decent bit of analysis on this.

System Ratio Fare system Year
Hong Kong (MTR) 186% Distance based 2012
Tokyo Metro 170% Distance based 1991
Osaka (OMTB) 137% Distance based 1991
Singapore (SMRT) 125% Distance based 2008
Osaka (Hankyu Railway) 123% Distance based 1991
Taipei (MRT) 119% Distance based 2011
Toronto, Hamilton and area (GO Transit) 82.2% Distance based 2011
Amtrak 71% Distance & demand based 2009
Berlin (BVG) 70.3% Zone based 2010
Zurich (S-Bahn) 66% 1991
San Francisco Bay Area (BART) 64.5% Distance based 2008
Toronto (TTC) 63.2% Flat rate 2010
Washington, DC (WMATA) 62.1% Distance based 2010
Philadelphia/New Jersey (PATCO) 61.4% Distance based 2002
Winnipeg 60% Flat rate 2011
Beijing Subway 59.5% Flat rate 2012
Philadelphia (SEPTA) 58.6% Flat rate 2002
Montreal (STM) 57.1% Flat rate 2006
Las Vegas Monorail 56.0% Flat rate 2006
New Jersey (NJT) 56% Distance based 2001
New York City (MTA) 55.5% Flat rate 2009
Chicago (CTA) 55.2% Flat rate 2010
Copenhagen (service not specified in source) 52% 1991
Ottawa (OC Transpo) 52% Flat rate 2011
Vancouver (TransLink) 51.9% Zone based 2010
San Francisco Bay Area (Caltrain) 51.3% Zone based 2011
London Underground 50% Zone based 2004
Vienna (Service not specified in source, presumably Wiener Linien) 50% Flat rate 1991
Calgary Transit 50% Flat rate 2011
Helsinki Regional Transit Authority 49% Zone based; 2011
Brampton (BT) 46% Flat rate 2012
Mississauga (MiWay) 46% Flat rate 2011
Boston (MBTA) 43.7% Flat rate 2002
Munich Transport and Tariff Association 42% Zone based 1991
Amsterdam Metro 41.3% Zone based 2007
Madrid Metro 41.3% 2007
New York/New Jersey (PATH) 41.0% Flat rate 2002
Paris (RATP) 40% 2007
Edmonton (ETS) 39.4% Flat rate 2007
Quebec City (RTC) 39% Flat rate 2011
Stockholm Lokaltrafik 37% Zone based 2007
New York/Connecticut (Metro North) 36.2% Distance based 2009
Rome Metro 36% 2007
Brussels ITC 35.2% 2007
Harrisburg, PA (CAT) 35.0% Flat rate 2005
Atlanta (MARTA) 31.8% Flat rate 2007
Minneapolis - St. Paul Metro Transit 31.4% Flat rate with rush hour and express surcharges 2008
Los Angeles (LACMTA) 30.6% Flat Rate 2004
Dallas (DART) 28.4% Flat rate 2008
Milan Transportation System 28% 1991
Long Island Rail Road(MTA) 26.6% Zone based 2009
Maryland (MTA) 26.3% 2002
Orlando (Lynx) 25.7% Flat rate 2012
Puget Sound Region (Sound Transit) 22.2% Zone & Distance based 2007
Portland Metro Area (TriMet) 22% Flat rate 2010 2012
Cleveland (GCRTA) 21.5% Flat rate 2002
Canberra (ACTION) 21% Flat rate 2007
Puget Sound Region (King County Metro) 19.1% Zone based 2006
Miami-Dade Transit 16.1% 2002
Staten Island Railway(MTA) 15.2% Flat rate 2002
Detroit (DDOT) 13.9% Flat rate 2002
Tacoma (Pierce Transit) 13.0% Flat rate 2009
San Antonio (VIA) 12.8% Flat rate 2012
Austin (CMTA) 9% Flat rate 2007

The first thing you probably noticed is that Asian cities dominate in farebox. American tend to be on the lower end of the spectrum, generally below 50%. Granted, there are scant few Asian cities listed here, but they all tend to be very high on the scale. Only Beijing falls below 100% farebox recovery on this list.

So, why is that? There are three main factors at play: density, land use, and mode of transportation. Asian cities tend to be much more dense than American, which naturally leads transit becoming more cost effective. Land use is also a factor in this: You are unlikely to find homes and places of business built around the car, nor are the cities dominated by acres of highway and parking lots. It is more difficult to get around by car, so people will travel with transit to avoid the hassle.

Finally, there's the mode of transportation: The Asian cities, Tokyo most famously, are based around rail transit, which scales extremely well with use. Many American cities, particularly those on the low end of the spectrum, are based around buses, which aren't nearly as cost effective (particularly when you run buses that are peak-commute oriented, which are very inefficient).

But I think the real question we need to be asking is this: Is it bad if a transit agency has less than 100% farebox recovery?

This is more of a philosophical question, and your answer may be different than mine depending on your viewpoint. My answer is no: while 100% farebox recovery would be nice, it is not a necessity, nor should it be a priority. You'll notice that no city on the list outside of Asia has reached 100%, so apparently it's very difficult for most cities to reach it.

That being, said, I do support certain policies that would lead to higher farebox recovery. Examples include building rail transit, buiding transit oriented development around areas served by frequent high-capacity transit, and going with driverless vehicles where possible.*

But I support these because they make transit more useful, and making transit more useful is generally what will lead to better performance and better farebox ratio.

We'll revisit this topic in the future. There's much more to say about it.

*You'll notice Vancouver's TransLink has a higher farebox ratio than Portland or Seattle. Part of this is lower operational cost of the SkyTrain, which uses driverless trains.