JUNE 3, 1997

                             ADMINISTRATIVE REPORT

                                           Date: May 27, 1997
                                           Dept. File #4252-4
                                           CC File No.: 5551-2

   TO:       Standing Committee of Transportation and Traffic

   FROM:     General Manager of Engineering Services

   SUBJECT:  BC Transit Fare Policy


        A.   THAT Council support implementing zone fares all day while
             holding the existing pricing (Option "B") as an interim step
             in attaining the 35 percent cost recovery target through

        B.   THAT the VRTC consider, in the future, increasing peak period
             fares relative to the off-peak fares to encourage off-peak
             ridership and to more closely mirror the actual cost of
             providing peak period service.


       That a fourth Fare Zone be established
       That differential zone fares be established in the off-peak
       That off-peak fares be lower than peak fares
       That a downtown loop fare zone be established
       That BC Transit consider more innovative fare policies in order to
        encourage ridership, such as group based discounts for educational,
        other government and major employment institutions


   BC Transit staff are reviewing the fare structure of the transit system
   as directed by the Vancouver Regional Transit Commission. The purpose of
   this report is to inform Council of the public process and the options.
   The Commission will be making a decision at its June 11 meeting. The
   issue of downtown loop fares is still under review and will be dealt
   with in the fall.


   The fare structure of the regional bus system has been constantly
   evolving. Zonal fares were first introduced in 1974, withdrawn in 1980
   and reintroduced in 1984. At that time a one-zone fare was $0.90. The
   last fare increase was in 1993 when the one-zone fare became $1.50. This
   cash fare is now one of the lowest base fares of any Canadian city.
   (Fares range from $1.50 in Vancouver to $2.00 in Toronto.)

   At its January 1997 meeting, the Vancouver Regional Transit Commission
   approved TransAction 2002, the system's five year plan. Among other
   items, this plan included proposals for two fare increases: the first
   scheduled for September 1997, the second will be scheduled for September
   2000.  The purpose of these increases is raise the cost recovery from
   fares to 35 percent from its current level of 30 percent. The immediate
   goal is to raise fare revenue by 5 percent (to a cost recovery of 31.5

   There are several ways in which this can be achieved which are described


   The following principles have been considered:

        -    the fares should mirror the cost of providing the service; for
             example, longer trips should cost more
        -    there should be some recognition that public transportation
             provides for the mobility needs of the urban poor

       Administrative Simplicity
        -    the fare structure should be easy to understand and easy to
             administer in order to minimize fare disputes

        -    fares should deliver the desired revenue to offset the cost of
             the system, avoid service cutbacks and the requirement for
             revenue from other sources
        -    a degree of subsidization can be expected to offset the hidden
             subsidy of the automobile.

   With these objectives in mind the following proposals have been made.

   Concession Fares

   It is proposed that concession fares should be raised, in increments, to
   75 percent of the base fare from the existing 50 percent. This proposal
   is based, in part, with the understanding that income distribution among
   the various age cohorts is changing in Canada. For example, seniors are
   relatively better off than in the past, while young adult Canadians are
   less so. However, the present fare regime favours seniors over younger
   workers who pay a full fare. 

   Initially, concession fares would rise to $1.00, which is common to all
   the alternatives discussed below.

   Fare Options

   The following options are presented to change fares.

   All options have the immediate effect of reducing ridership, as people
   react to the higher of fares  and either choose other modal options or
   forego trips.  This short-term ridership loss will be temporary as
   people become used to the higher fare level. Also population growth and
   the resultant new ridership further offsets loss due to fares.
   Notwithstanding the ridership loss, each option achieves the target of
   raising overall revenue by five percent.

   Option "A" "Encourage Loyalty"

   This option raises cash fares and faresavers, but decreases prepaid
   monthly fare passes. One zone cash fares increase to $1.75, from $1.50
   and faresavers to $16 from $13.75. Monthly passes are reduced from $54
   to $52.50.

   Option "B" "Fairer,Easier"

   This option drops the mid-day discount for multi-zone travel, (i.e.,
   retains zone fares all day), but leaves the fare structure otherwise
   unchanged. Single zone fares would still be applied to evening (after
   6:30 P.M.) and weekend travel.

   Option "C" "Encourage Local Trips"

   Fare increases are applied to two and three zone travel, both cash and
   monthly passes. A two-zone cash fare increases from $2.25 to $2.50 and
   three zones from $3.00 to $3.50. One-zone fares would  remain the same


   Option A, in raising fares for one-zone travel, would have the greatest
   impact on lower income groups.

   Options B or C are most consistent with Council policy.  Option B raises
   fares in the off-peak to be identical with the peak, which reflects the
   cost of providing the service.  It is also easier to administer and
   implement.  This will also eliminate the difficulty BC Transit operators
   reportedly have in ruling on fares as time periods change.  However, by
   definition Option B eliminates the differential between peak and
   off-peak multiple-zone travel.

   Option C raises 2 and 3 zone fares in the peak to more closely cover the
   cost of this service, but leaves the flat fare structure in the
   off-peak. Some municipalities have concerns with this option,
   particularly for two-zone trips close to zone boundaries which can be
   relatively short (e.g., east Vancouver to Metrotown).

   On balance, Option B would be the easiest to implement now.

   The three options presented do not include a fourth suburban fare zone.
   BC Transit achieves its revenue targets with any of the three options
   presented, and a degree of simplicity is retained with only three zones.

   Downtown Loop

   The above proposals do not address the issue of a reduced fare zone on
   the downtown peninsula. However, the Commission will consider this issue
   in the fall. Such a fare zone will be more practically administered when
   closed downtown route loops are introduced in September 1997. Other
   municipalities have asked for similar treatment and BC Transit is
   obliged to deal with this issue comprehensively.

   Public Process

   A discussion paper was  presented to the Commission in March and
   subsequently at a workshop session. Various interest groups including
   Transport 2000, the Transit Users Group, the GVRD, the transit union and
   the Municipal Advisory Committee (staff) have reviewed the material.  BC
   Transit also undertook a telephone interview survey of customers.

   The public will also review the proposals on May 28, at the Robson Media
   Centre.  The Commission will be making a decision on the fare structure
   at its June 11 meeting. 


   BC Transit has not had a fare increase in 4 years, a period in which the
   cost to finance the system has increased. Moreover new service is
   required. In January 1997, the Commission approved TransAction 2002, a
   five-year plan which calls for cost recovery from fares to increase to
   35 percent from 30 percent in this period. An immediate goal for the
   first of two fare increases is to raise overall fare revenue by 5

   The public will have an opportunity to comment on the proposals as have
   many special interest groups and the Commission itself. The Transit
   Commission has indicated it wishes to increase fares in September.
   Therefore, the Commission is required to make a decision  at its next
   meeting in June.

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