SUPPORTS ITEM NO. 3
T&T COMMITTEE AGENDA
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
RECOMMENDATION
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
fares.
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.
COUNCIL POLICY
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
PURPOSE
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.
BACKGROUND
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 Zonal fares were first introduced in 1974, withdrawn in 1980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
percent).
There are several ways in which this can be achieved which are described
below.
DISCUSSION
The following principles have been considered:
Equity
- 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
Finance
- 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
($1.50).
Comments
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.
CONCLUSION
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
percent.
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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