Infographic: Fares, subsidies and the farebox recovery ratio

Infographic display Metro's farebox recovery ration of 29%

Click to enlarge.

You may have heard the term before, but what is the farebox recovery ratio?

It’s the percentage of revenue generated by fares paid by customers of a transit agency in proportion to the total cost of operations. And it’s an important concept to know about to fully understand how Metro funds transit.

Metro rider’s fares pay 29% of the total cost of transit operations. The remaining 71% is funded by a variety of sources including: state and local taxes (45%), federal grants (22%) and advertising, property leases and other revenue sources (4%).

The Metro long-range plan seeks to raise the farebox recovery ratio to 33%.

Source: Metro FY11 Budget

Categories: Policy & Funding

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19 replies

  1. I think it’s confusing for some people because it seems like the buses run more on time in places like NYC just because they have shorter headways (because much higher demand). It’s not that the buses are on time, it’s just that you don’t have to wait much longer for the next late one =P.

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  2. I would prefer the Fares portion be larger, and not just to 33%. Were there less subsidy there would be a number of advantages. A higher percentage would prompt Metro to listen to its customers (anyone who has dealt with Metro’s Customer “Service” Center will understand); the possibility of a rider strike would significantly impact revenues. There is the possibility of claiming more on one’s taxes regarding travel expenses, such as with the CA AQMD’s Parking Cash-Out program.

    On the other hand, there should be more consideration of where the funds are going. The nearly $6 million monthly to the LASD and the staggering failure of the Fare Gates (which, if done properly, SHOULD greatly reduce the dependence as well as the costs of the LASD) are two drains on resources that continue to increase in cost. One need not ride the trains frequently to observe how the LASD “works”: only on the trains to collect fares, and not at all on the busses where most of the security concerns occur.

    There is also the $27 millionthat is set aside annually for towing private motorists’ vehicles off the freeway, which may not seem like much in the Metro budget but quite a bit when one considers all the penny-pinching (such as eliminating the free DASH transfer to cut budget costs in 2008; that was a mere half-million).

    As for the percentage being affected by fare-evaders, I do not think that is why it is so low. The percentage, I am certain, is of the actual revenues generated. In any case, Transit experts—among them a former Metrolink CEO, Richard Stanger (http://www.thetransitcoalition.us/largepdffiles/TC-Metro-2008-01-31-01a-FaregatingAnalysisReport-RichardStanger.pdf) —insist that Metro’s alleged loss of $5 million annually is far higher than what Metro claims.

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  3. I’m sure some lines (busy ones- Silver Line) can make better than 50%.

    What should be happening is chasing the higher rate of returns, and cutting on lower % recoveries. This is the way a common business would be run. Innovating new, similar lines that WORK according to user demand. (Such as the freeway express ways) Because they compete and and can be FASTER than car trips.

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  4. Oh yeah, that statement by Reginald about NYC Transit is way, way off base. NYC trains and buses get delayed, stopped in tunnels, delayed by snow, flooding, extreme heat, re-routed without notice, sent local or express without notice, taken out of service, subjected to confusing re-routes for construction work on weekends. Riders have to deal with decrepit stations, rats on platforms, sleeping token booth clerks…I could go on.

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  5. “…and cutting on lower % recoveries.”
    The problem with cutting is if its done too much, the attractiveness of the line goes down and can make ridership even worse. If a system loses frequency for example, it loses usefulness for more people and they will not be as willing to plan out further ahead or wait longer for it as it is now less reliable for them. This is the mistake metro is making with reducing service on so many bus lines. More people are just not going to ride because it no longer serves as a viable method of transport for a given trip.

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  6. Amy, the low farebox recovery isn’t the result of fare delinquencies. It isn’t 8% of fare-beaters that are contributing to a 70% loss on every ride.

    It’s the 92% who pay their fares that create the most problems.

    If you want a 100% farebox recovery on every boarding, Metro would have to charge $5 per boarding. No transfers, no passes, no discounts for students or senior citizens. It’s $5 each time anyone steps on a vehicle.

    There’s one problem: With that fare policy, ridership would be exactly 0.

    On the other hand, if a fare-beater is caught, each $250 fine pays the full cost of 50 boardings. Theoretically, it would only take a couple of fare-beaters to pay fines and cover the costs of a line for all the other riders.

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  7. Connor, keep in mind that not all bus trips are equal. If you read Metro’s proposals, the agency has to trim service hours because of funding shortfalls. Planners are going after the less productive services first, so that there’s money to save for the routes people are using.

    Keep in mind, I disagree with quite a few of the proposals Metro has for June, even if the people in the tower think they have good reasons for proposing them.

    Here, though, is the problem. Metro’s average cost of operating a bus is about $125 an hour. That’s spread across the 2,200 buses in the fleet.

    Ridership, though, is highly variable.

    Take one proposal: Eliminate Line 209 service along Wilton/Arlington/Van Ness.

    It’s $125 an hour to carry a few hundred passengers along the street.

    It’s also $125 to operate a bus along Western or Crenshaw, on either side of the 209. These would be the routes 209 riders would shift to in the event of elimination.

    Western and Crenshaw bus lines each carry tens of thousands of riders a day.

    Metro saves money by taking the buses and drivers that are on 209 and shifting them to Western or Crenshaw, where the buses will be better used.

    The damage would be far worse if Metro has to start cutting service from the routes that many people are using. This is one reason why I think canceling 757 on Western is a bad idea.

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