Metro Board Committee discusses need for fare restructuring

The issue of fare restructuring — and problems with Metro’s current fare structure — were discussed today by the Metro Board of Directors’ Finance, Budget & Audit Committee. Metro staff are currently finalizing fare restructuring options that will likely be released to the public in early 2014.

Among options likely to be looked at are offering unlimited rides on a single fare for a certain time period (for example, an hour or 90 minutes), different fares for peak and off-peak hours and a simplified zone structure and/or offering flat fares for zoned buses.

Since the passage in May of the 2013-14 budget, Metro CEO Art Leahy has been telling the public and Board members alike that staff would be proposing a fare restructuring as part of next year’s budget. The big issue: Metro is seeking to avoid a budget deficit beginning in fiscal year 2017.

On Wednesday, Leahy also outlined other reasons why fare restructuring is important. In particular, Leahy said that the bus and rail route structure was designed to encourage transfers to help people reach a myriad of destinations around Los Angeles County. The average rider, in fact, has to transfer at least once to reach their destination.

On the other hand, Leahy said, the agency has a fare structure that discourages transferring by charging the full fare per transfer. As a result, riders take longer routes to avoid transfers — and that, in turn, doesn’t promote efficient use of the system, driving up operating costs and requiring riders to spend more time on transit than they should.

From a financial viewpoint, Metro staff offered several statistics. The most significant:

•Metro’s farebox recovery rate is 26 percent whereas the agency’s Long Range Transportation Plan, released in 2009, calls for getting that number to 33 percent. Farebox recovery is the percent of operating costs actually covered by fares.

•That farebox recovery rate, according to Metro staff, is the lowest among peer transit agencies around the world. If nothing is changed, Metro would be faced with a $36.8-million deficit in 2017 that would grow in subsequent years.

•There have only been three fare increases in the past 18 years, the most recent on July 1, 2010, when fares were raised for regular riders. At that time, fares for seniors, students, the disabled and Medicare recipients was not changed thanks to Measure R.

Leahy said that if the agency chooses to do nothing, a host of problems could arise including taking on more deferred maintenance, the evaluation of service levels and the potential loss of federal grants.

Metro staff are currently finalizing fare restructure options — there will be a number of them — to be included in a public notice and hearing date. Leahy said that three to six months would be needed to implement a fare change.

29 replies

  1. mike dunn,

    Have you Googled how other countries around the world run zonal or distance fares on buses?

    Maybe you need to open your eyes that there are ways to do it using contactless card technology.

    Here’s how Singapore does theirs:

    We live in the 21st century, there are 21st century ways to do things than the manual and labor intensive and inefficient 1950s method that you only know of. All you need to do is learn the phrase “how does other countries get to do it.”

  2. Some changes must be made to both the MTA’s fare structure and to the municipal operators who receive a higher per passenger subsidy than MTA operations receive. This has been a long standing policy that has existed prior to the RTD/LACTC merger. That is the main reason that Santa Monica, Culver City, etc. have lower fares.

    Those who favor zone checks as we had many years ago are not aware of the service delay it causes. At the zone limit, the bus operator must park the bus and walk thru the bus collecting zone checks and then convince those who have not paid to come forward and pay their additional fare. It worked when the buses were not as crowded and passengers were not as uncooperative. It may work now on a limited basis but will not system wide. Imagine your riding on the 4 line or the 20 line and when the bus reaches Vermont Ave. the bus stops, the operator leaves his seat then walks thru the bus collecting zone checks. Is there a easier way of doing it? Perhaps stamping on everyone’s forehead if they paid or not then a laser scans the bus but I don’t think anyone will like that.

  3. If the gating fiasco has shown, it’ll take another ten years to do any kind of fare restructuring thanks to bureaucratic red tape. Politics, kick-backs, and baby-kissing has priority over common sense proposals.

  4. Agreed. Monthly unlimited ride passes should remain untouched. What needs to change is the pay per boarding idea to something more fairer.

  5. We can do distance based fares on the condition that we still have the option of buying unlimited ride monthly passes and the price of that monthly pass remains the same as it is today.

  6. @Jason Lee

    30 minutes is just an example. TAP records the time you enter the system on a bus so we can set the grace period to whatever we want. It can be 60 or 90 minutes. Whatever makes sense. The point is the system is already capable of doing that.

  7. Cell phone companies like AT&T, T-Mobile, Verizon, and Sprint make tons of money by giving consumers a choice between a prepaid pay-by-the-minute plan and a monthly unlimited plan.

    Everyone wants to talk, but everyone’s minutes differ from person to person. If cell phones operated in a pay-by-the-call system, then it wouldn’t be fair because one person can have a conversation for 1 minute while another person can talk over the phone for over an hour all for the same price. That’s why cell phone companies made it a choice for the consumers between pay-by-the-minute or an unlimited talk per month plan.

    For that same reason, pay-by-boarding has to be fixed to pay-by-the-distance. Everyone has their own point A to point B travel needs everyday, but everyone’s point A to B differs from person to person. If some people travel on Metro a lot, then they can choose to buy an unlimited ride monthly pass. If some people don’t see a need to travel on Metro that often, or only have to travel close by and don’t go that far that often, then they would benefit by the pay-by-the-distance plan.

  8. If we spent so much money on TAP and gates, shouldn’t we opt to use a fare structure that best utilizes what they are capable of? So many things can be done with a smart card. But they way Metro is using it is analogous to spending so much money on a high end computer system with the best video card available on the market today, only to keep playing Solitaire when you can be playing CoD: Ghost.

  9. The Blue Line and Red Line are poorly maintained.

    Metro should tell people what their budget is for the Sheriff’s. Which you never see on either the Red Line or the Blue Line. Why don’t you cut costs there? Instead of the Sherif’s taking the money for other projects.

    I wouldn’t mind paying more for Long Beach if there weren’t so many stops and the condition of the trains were better…and they didn’t break down as often as they do.

    Let’s face it…Metro is not allocating monies to do maintainence on the Blue Line or Red Line now or when they had money. I don’t see that changing with a fare increase.

  10. First things first, Metro needs to clarify what their goal is. Is the goal to increase ridership numbers or is the goal to boost up revenues?

    If the goal is to just increase ridership numbers, then that’s easy. Make transit free for all. Then everyone will use transit because it’s free. Short or long trip, doesn’t matter, it’s free! Who doesn’t want a free lunch, right?

    Hey if the bus or train didn’t cost me anything for short trips involving going to the neighborhood supermarket or for longer trips like from Santa Monica to DTLA, I’d and everyone will use it in a heartbeat! Of course, it will cause huge human congestion onto our buses and trains, but at least the ridership numbers will be high, right?

    Or if the goal is to increase revenues, then the best way to go is to move to distance based fares that start off with a low base fare that gradually goes up the farther you go.

    No one is going to ride the bus or train if it starts off at $2.00 because what if someone only wants to go the neighborhood supermarket only 2 miles way? It’s not going to be fair to charge that person $2.00 just to travel 2 miles while another person can travel over 20 miles for 2 bucks. Metro will in fact, end up shooting themselves in the foot because that person will choose not to use the bus or rail for shorter trips and instead seek cheaper alternatives instead.

    Now if the goal is to increase ridership numbers and increase revenues, then they should reduced the starting base fare to $1.00 and gradually increase it by a dime for every mile traveled with a maximum automatic daily cap of $6.00 a day. This way, riders who only have a short trip such as going to the supermarket will only pay what they need, while those who want to go from Santa Monica to DTLA will be capped at $6.00 a day, or if they want can also choose to go with a monthly pass.

  11. Irwin,

    One major flaw with your idea:

    How does TAP “know” that your 30 minutes is up to qualify for the reduced transfer price?

    Is it based on the time when you TAP on board the bus? If so, 30 minutes is too short of a time because 30 minutes can be used on the bus ride alone which can vary with traffic.

    If you mean within 30 minutes of getting off of a bus, then there’s another problem because TAP doesn’t record what time you got off the bus. We have no TAP-out system for buses.

  12. A flight from LA to SF is a lot cheaper than a flight from LA to Seoul, right? It should be no different with Metro. Pay less if your trip is closer, pay more if you want to travel farther.

    Why should the Blue Line rider going from Long Beach all the way to Staples Center only get to pay $1.50 because he/she is lucky to have an one-seat ride for such long trip, while a person residing in Koreatown ends up paying $3.00 because it involves a transfer from the Purple Line to the Blue or Expo Line? Koreatown is much closer to DTLA than Long Beach, hello?

    Even the Seoul Subway is smart enough to operate that way.

    Base fare is 1050 won, or about $1.05. After 10 km, it costs 100 won (about 10 cents) for every 5 km. After 40 km, it costs 100 won for every 10 km. Simply said, the farther you go, the more it costs. And everything is so easy by just tap, tap, tap of the T-Money Card.

    It’s only common sense.

  13. You have a sophisticated smart card fare system but you keep insisting on forcing the card to adopt to an antiquated fare structure. I would just activate the following functions on your TAP cards:

    1. Distanced based fare on rail and BRT with free transfers when using TAP card
    2. Raise the base fare on bus to $2 but…
    3. Reduced fare (e.g. $1) on bus to bus transfers within 30 minutes when using TAP card
    4. Automatic daily fare cap on Metro system (bus and rail) after $6 when using TAP card (equivalent of 2 base bus fare and 2 bus transfers in 24 hour period)
    5. Reduced fare (e.g. $1) on rail/BRT to bus transfer within 30 minutes when using TAP card
    6. Automatic inter-agency transfer fare (e.g. $1) within 30 minutes when using TAP card

    Discontinue paper inter-agency transfers which is a big source of your revenue leaks. Your farebox recovery will go up if you just actually use the TAP card properly.

    Now if people insist on using cash, they won’t enjoy any of these benefits.

  14. I think Metro needs to make sure the monthly pass stays the same. I use the monthly pass through my emplyer, and the cost is a significant driver of new users from my office (I’m a big metro boster around these parts). I think the monthyl pass needs to be discounted a bit to encourage more folks to buy it (instead of just paying per ride). that way, the number of Metro customers continue to grow.

    Base bus fares should remain the same, while singe ride rail fares should increase. Most cities charge less for bus fare than rail.

  15. Another really useful option would be automatic conversion to a Day Pass on your fourth ride. It’s frustrating to have to figure out, at the beginning of the day, if I’m going to make enough trips/transfers to make a day pass worthwhile. Instead, the TAP system should cap daily fares at the cost of a day pass (currently $5). London does this quite successfully.

    Moreover, this solves the problem of bus driver training. Many drivers don’t know how to add a day pass to a TAP card, which ends up costing me a lot of money and annoyance. Capping the daily fare (automatic conversion to day pass) would solve this problem, too.

  16. How about we meet halfway and keep it at a $2.00 flat rate fares for buses with free transfers, while rail goes distance based? London and Washington DC operates similar to that way; rail is priced by distance, buses are flat rate.

    That way Metro can “test out” and make people “get used to” the TAP-in/TAP-out concept when they ride rail, and once riders get comfortable with that, Metro can then decide later if they want to “phase-in” distance fares for buses, starting with the Orange and Silver Lines..

    I believe that’s how Singapore did their fare restructuring. They introduced distance fares on their MRT rail lines first, and then they phased in the distance base fare concept to buses once everyone got comfortable with TAP-in/TAP-out.

  17. In NYC (where I live), pay-per-ride MetroCards have a 2-hour transfer to go from bus-to-bus, bus-to-subway & subway-to-bus. (There’s also a subway-to-subway transfer area in Midtown Manhattan at 59th St/Lexington Ave & 63rd St/Lexington Ave stations.) NYC MTA also has 7-day & 30-day passes.

    I think if LA METRO offered free transfers in the same way NYC Transit did in 1998, I could almost guarantee that more people will use your city’s buses, subways & light rail lines. [In LA’s case, rail-to-rail transfers must also be included.] The existing fares are VERY affordable compared to the Big Apple. $1.50 in LA vs. $2.50 (base fare); $20/$30 (7-day pass); $75/$112 (30-day pass). It’s a major reason why I’m seriously considering relocating from the Big Apple to the City of Angels.

  18. I’m actually quite satisfied with the current system of pay-per-boarding with the option of a low-cost day pass. A time-based system would be impacted by traffic, as one commenter pointed out. Putting a premium on riding rail doesn’t make sense because on many of the street running rail lines, there is no speed benefit (it takes just as long to ride the gold line from East LA to Union Station as it takes to ride the 770 that runs close by), unlike in many of those other cities where rail does have an advantage (Bart in SF, MetroRail in DC). A zone-based system might work, but I’m not sure how the other operators will participate in this. I think finding a way to raise the fare (in order to get more revenue to improve the farebox recovery ratio, even if its by fare restructing, somebody is going to have to pay more) is only going to drive people away from transit. In a region that depends on cars so much, we should really try to find a way to convince people to try out transit, not make the people who can’t afford cars pay more. I wonder is it possible to put a county tax on fuel (like 0.5%) as part of an air quality-congestion relief program to fund transit operations and to keep fares low. So far most of our tax measures are meant for building new infrastructure, but there’s not much dedicated to operating that new infrastructure, so the only way to pay for it is to cut existing service.

  19. I always wondered why we can’t do free transfers like the rest of the US, but P Hunter explained it.

    That person is right, we can’t do that here in LA. Basing fares against time is too much of a hit or miss here in LA. If you’re lucky and there are no rail delays or traffic jams, you get to use the full transfer benefit. But if you’re unlucky and there are delays or traffic jams, transit riders will be dinged more when they have to make a transfer. And let’s be real here, LA is sunny most of the time but street traffic does gets nasty during rainy season which is coming up soon.

  20. There is an esoteric reason why Metro and other agencies in Southern California have low base fares but higher pass fares, called the Formula Allocation Plan and its calculation of “ridership”, which is revenue divided by base fare (fare units), not actual riders – It has been modified recently to discourage gaming of the system but many operators still think in that way.

    I could see a distance based fare structure work on rail but not on bus. You would have too many issues with people forgetting to tap out, and the cash fare issue. One possible idea is to set a high cash fare – say $2.50 or $3.00 – and have discounts for shorter trips down to $1.50. So if you are going 4 miles, $1.50, 6 miles, $2.00, etc. on the TAP card. This way if you want to pay $3 you can, but shorter trips are incentivized. Then an all access day pass for something in the $8 range and monthly passes around $100.

    Higher fare systems tend to be more quality systems. Toronto’s $3 base fare is the highest in North America but they have buses running on major streets every 10-15 minutes, even at 11 pm at night. Some of the extra revenue needs to go in beefing up night service – routes on the 15 minute map should not drop to hourly after 9 pm.

  21. If the goal is to increase farebox recovery ratio, should we study and learn from the cities that have the highest farebox recovery ratios and do exactly what they are doing?

    Hong Kong (MTR)
    FRR: 186%
    Distance based fares

    Tokyo Metro
    FRR: 170%
    Distance based fares

    Osaka (OMTB)
    FRR: 137%
    Distance based fares

    Singapore (SMRT)
    FRR: 125%
    Distance based

    Osaka (Hankyu Railway)
    FRR: 123%
    Distance based fares

    Taipei (MRT)
    FRR: 119%
    Distance based fares

    We don’t want to spend wasteful money only to come back years later to fix it again just like we did with the dumb honor system idea. Let’s get it right the first time!

  22. Right now, Metro (and OC Transit, and the other agencies) are selling boardings, but what people buy is transportation. I am paying to get from Point A to Point B. About the only thing pay per boarding has going for it is that it is super easy to administer. But, as the story says, pay per boarding is very much a roll-the-dice proposition. If your destination is a one-seat ride, you are golden. If you need to transfer, not only do you suffer a time penalty and a wait in possible inclement weather, you pay another fare. In other words, it costs you more for a lower quality ride. It’s been said that the most efficient transit system is grid-based with frequent enough service that connections aren’t too onerous. This is really nasty if an efficient system results in 2 or 3 x the fare.

    The requirement to tap on a rail transfer when you don’t even leave the fare paid zone is just goofy, and when you have a pass, it borders on the idiotic. On every other rail system I’ve been on, once you are past the fare gates you can ride as far as you need to.

    Zone fares have some measure of equity (except for those close to the boundary), but enforcement is a real issue and I’ve seen them abandoned for this reason. Zone-based routes are a definite option, particularly with timed connections or frequent service.

  23. Why will Metro have a 36.8 deficit? Is it because of the raises each year due to the union contract. Can management review the upcomming contract to see if employees and management should get raises. I am sure the most of the riders who take the train because they can not afford to drive and park in downtown Los Angeles. Where i work, the parking is $330.00 per month. I can’t afford that and that is the reason I take the train. You need to understand your riders. Without the riders, the metro employees would not have jobs.

  24. The way things work now, going to a time based transfer system is a bad idea because the TAP-in point at the gates or validators doesn’t correlate to the actual time of boarding the train.

    For example, if we go to a time based transfer system, the TAP-in point at the gates is when the clock starts ticking.

    But then, you could be waiting as much as 30 minutes for the next train to arrive in which you’re using the time when you’re not moving, just standing at the station platform.

    God forbid an accident happens down the Blue Line where more delays occur.

    So what happens when the time is up when it’s not your fault? You have to pay more. Metro’s not gonna issue a refund, yeah right.

    Or how about heavy traffic jams cause the bus to go slooooooowly? Remember the Dodger game where it took over an hour just to travel 3 miles? By the time you get to your destination, you can’t use the transfer anymore because the 90 minutes was used up just sitting in traffic!

    Time based transfer fares are better for more smaller, compact cities. With all things considered how we have traffic jams that affects how fast the bus goes and all the problems that occur on our rail lines, it’s best to go with the least common denominator: by distance traveled. You go 3 miles, you pay for 3 miles. You travel 10 miles, you pay for 10 miles. Simple as that, leaving the time factor out of the equation.

  25. Hmm. On the SF Muni, they went to a 90-minute system some time ago, (except on cable cars, where anything less than a day-pass is a whopping $6 per boarding, with no transfers issued or accepted) and seem to be doing quite well with it.

    Likewise, while the Chicago Transit Authority charges a 25 cent premium for a single “L” fare over a single bus fare (coincidentally, bus transfers are also 25 cents), once you’re in the “L” system, your fare is paid until you leave it, and you can transfer all you like between “L” routes at any of the designated “free transfer” stations. (Not that I actually DO it that way; when I’m vacationing in Chicago, I get the cheapest pass that covers the entire duration of my stay.)

    That brings up another possibility for improvement: I see we have a day-pass, a week-pass, and a month-pass. SF Muni, CTA, and New Orleans RTA all also offer a 3-day pass. On the other hand, Philadelphia’s SEPTA pass system and that of the Washington DC Metro (where MetroBus and MetroRail are on completely separate pass systems!) are more-or-less useless to visitors; I just get a pocket full of tokens in Philly, and a stored value SmarTrip card (analogous to our TAP, the Bay Area’s Clipper, and Boston’s CharlieCard).

    Personally, I think the biggest pain in the fundament about the current fare structure is the need to tap-over, even with a day-pass, when transferring from one rail line to the next. If you’re going from, say, Wardlow to Exposition Park, on a day-pass, and there’s an Expo Line train waiting when you hit Pico, that tap-over requirement virtually guarantees you’ll miss your connection.

  26. I think that metro operators need to Inforce the fare more to regaining structure that’s why metro loose money these passengers are riding the bus for free not paying hello wake up