a photo of the New York City subway
For a lot of daily commuters, the cost of entry to New York City transit is rising. Richard Drew/AP

As ridership tanks, New York’s Metropolitan Transportation Authority is hiking fares. Does that ever work? Experts sound off on how to price the bus and subway fairly.

According to preliminary figures from 2018, New York City subways and buses experienced the third consecutive year of ridership decline.

This thinning transit population in America’s biggest public transit town comes at a really bad time: By 2022, New York City’s Metropolitan Transportation Authority will face a staggering $634 million operating budget gap. As a result, the transit authority is targeting immediate staff reductions, maintenance cuts, and service postponements—which, advocates argue, could worsen the death spiral in which ridership already seems to be caught.

That scenario is what fueled indignation among New York City riders and advocates when the MTA board decided last month to raise fares in order to shore up revenue. While the base price of $2.75 per ride won’t change for subways and trains, the board voted to eliminate bonuses for adding money onto MetroCards, and raised weekly passes from $32 to $33. Monthly passes jumped from $121 to $127. (Tolls are also set to rise.) The new fares go into effect April 21.

Andrew Albert, an MTA board member and riders’ advocate, argued that the fare increases targeted riders who use the bonuses, which he called the system’s “best customers,” and will hurt economically challenged New Yorkers. “I question doing away with the bonus at a time when ridership is dropping for various reasons,” he said.

Mass transit systems nationwide experiencing ridership declines of their own face the same dilemma. If agencies don’t raise revenue, how can they fix their deteriorating service? In an age of ubiquitous ridesharing, cheap gas, and easy car loans, what is a bus or subway ride worth?

According to a range of experts, there’s no such thing as a perfect transit fare. But striking a balance between what residents are able to pay—and how they do it—can help get people riding again, rather than keep pushing them off.

Equitable fares are flexible fares

Alexis Perrotta, a lecturer at the City University of New York at Baruch College who has studied fare policies in transit systems worldwide, said fare policy should be attuned to what people can pay. After all, public transit is supposed to be “public”—driven by social need, rather than market opportunity. In her research in New York, Perrotta came across low-income straphangers who based their weekly outings around whether they could afford a ride to get there, or not. “I was hearing stories about only going to church if they had the unlimited card, and it hasn’t run out by that date,” she said.

In that way, Perrotta added, unlimited cards offer the most intrinsic value to those with the least means, who have to map out weekly or monthly expenses, and rely on public transit more than any other demographic. But they’re also the people who are least likely to be able to afford them.

For that reason, Perrotta said the MTA’s new fares will disproportionately affect low-income riders—who already inclined to take fewer trips per capita due to cost barriers. This lends importance to New York City’s Fair Fares program, a subsidy program that offers half-priced weekly and monthly MetroCards to qualifying low-income residents. It follows the lead of Seattle and Toronto, which have implemented similar programs and seen ridership grow. Fair Fares helps keep the subway accessible. But as economic inequality continues to grow in New York City and beyond, Perrotta thinks that an even better transit fare would be more closely attuned to income, perhaps by qualifying riders for a particular transit fare when they file their taxes.

“Let’s say you were able to check a box [on your tax returns] that would deduct a certain amount, and then you’d have your unlimited card for the year,” Perrotta said. “The amount you’d have to pay for that card would be directly tied to whatever income bracket you fell into.”

As Perrotta and others pointed out, single-ride fares have historically never covered the entire cost of a trip for most transit agencies. (In New York City, fare revenue is 50 percent of the MTA’s operating budget.) No matter what, transit agencies are subsidizing at least some part of your ride, so pegging revenue solely to ridership is inevitably problematic. It can be a revenue stream, but it is rarely the only one. That is why monthly passes are so important to agencies: Having regular riders who pay a fixed price, even if they don’t take all the rides, allows for a larger pool of money than one-offs.

That’s why, when the MetroCard price increase was announced in New York, Yonah Freemark, a Ph.D student at MIT and transit analyst, tweeted that it was “hilariously terrible fare policy, the exact opposite of what transit systems should pursue.” He attributed recent ridership declines in the U.S. to other fare increases like it. In an email, Freemark said that fare increases of any kind “will push people to choose other, cheaper modes—or not take trips at all.”

Especially when fare increases have outpaced inflation. A ride and a monthly pass in 2009 cost $2.25 and $81, respectively; in 2019, those figures will be $2.75 and $127—an increase of 22.2 percent and 56.8 percent. The rate of inflation was a little over 20 percent in that time period. And with the base fare remaining the same, the 30-day pass is now a worse deal: It used to be the same price as 18 round trips; now it’s 23. “It won’t be a money saver at all for many users,” Freemark said. “That means that many people will simply stop buying monthly passes.”

Compared to other major cities, monthly and weekly passes in New York City have not been a great deal for some time. New York’s transit system has a multiplier of 46 subway rides—or 46 swipes until it’s “free.” In Boston, the multiplier of 38: Monthly passes are $84.50, and base fares (with a CharlieCard) are $2.25.

It also doesn’t help that New York’s subways and buses are continuing to become less cost-competitive at a time when Uber, Lyft, Via, and other emerging services are both abundant and often don’t cost much more than an MTA swipe.

Still, Freemark agreed that there’s no such thing as a universally perfect fare for any city, because it depends on who’s paying. “I can't point to a perfect number,” he said. “Every option incorporates a range of tradeoffs between accessibility, affordability, and equity.”

Way to pay

But if monthly passes are so important—both for agencies to reap revenue, and for customers to ride transit more—agencies have to first address how hard it can be to buy them, whatever their cost, said David Block-Schachter, the chief business officer of Transit, a real-time transit app, and former chief of technology for Boston’s MBTA.

In January, he wrote a Medium post on why pay-as-you-go contactless payments, where riders can use their phones or credit cards and never have to visit a vending machine again, could hurt the bottom line of transit agencies by making monthly fare deals less appealing. But in the end they are the right thing to do because they have the potential of improving customer convenience, and experience, Block-Schachter argued. He cited contactless systems in place in various cities—Oyster in London, Ventra in Chicago, and the coming OMNY in New York—as examples of platforms that could, in the long term, boost ridership by fixing an image problem.

“Fare systems need to get out of people’s ways, because that can increase the perception of trip speed and the actual way you take modes like buses, and even the subways,” Block-Schachter said in an interview. “Think about the election, when Hillary Clinton didn’t know how to use a MetroCard and swiped a bunch of times—these are things that are actual perceptions of how long or archaic things are, and keep people away from using the systems.”

Furthermore, he added, transit agencies must recognize that ridership may be contending with the reality that riders have more options than ever. Rather than fall behind the curve, Block-Schachter argues that agencies should see rides as part of a larger “ecosystem” of mobility products. Building monthly fare payments into a mobile platform that includes other services people are using—that’s the “mobility as a service” (AKA “MAAS”) vision that thought leaders enjoy talking about—could help agencies capture more revenue.

Helsinki may provide a roadmap to that future. The highest monthly price of its “Whim” mobile payment platform is €500, which pays for unlimited transit rides and car-share use. Most users are choosing the Whim Urban option, which is just €49 per month, and offers riders unlimited transit rides and discounted taxis.

It’s the service, stupid

But a perfect fare means nothing if the service is sub-par. Cities may toy with the idea of making all public transit entirely free, as in the city of Tallinn (and now nationwide in Estonia), Paris (but only for kids), and Singapore (but only in the morning). But if the subway and buses don’t provide reliable service and are a misery to use, then it doesn’t really matter what the price is, experts say.

Steven Higashide, the research director for TransitCenter, said that in his organization’s “Who’s on Board” 2019 study, which surveyed 1,700 riders in seven different American cities, New York transit users were the most likely to cite service flaws—crowding, delays, and disruptive commutes—as an area in desperate need of improvement.

The conflict between equity and ridership—where low-income straphangers are more adversely affected by fare prices, and therefore ride less—is a huge problem, said Higashide. This, he continued, can be amended with a more robust fare subsidy program, and fare-capping, which has been done in London and Dublin, and now in the U.S. in Dallas and Portland. But what TransitCenter found is that New Yorkers cared about getting the most bang for their (increasingly high) buck. And right now, that doesn’t seem to be happening. “The quality of service matters, a lot,” he said.

Other research shows that transit agencies can’t generally discount their way to ridership growth. Higadishe pointed to a November 2018 study from the Victoria Transport Policy Institute, in British Columbia, which found that if the goal is to attract both transit-dependent and “discretionary” riders—or residents who can also afford vehicle-based options—then fare reductions or discounted passes are just one piece of the price sensitivity puzzle. Making the public service reliable, frequent, and reasonably pleasant are just as important.  

“I don't think there’s a magic number [for fares],” Higashide said. “Ultimately, building ridership is about more than fares.”

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