Lesson

Establish a coordinated fare structure to effectively accommodate differences in fare structures across participating agencies.

Experience of seven partner public transportation agencies in the Central Puget Sound region of Washington in setting up a regional fare card program.


4/14/2006
Washington,United States


Background (Show)

Lesson Learned

A challenge for the RFC Project in designing a multi-agency fare system that meets the needs of all seven participating agencies has been the strong desire among the partners to maintain autonomy when it comes to local fare policy. Key insights gathered from this experience are presented below.

Allow each participating agency to maintain autonomy in adapting their fare policy in a regional partnership.

In broad terms, multi-agency fare management programs generally take one of two forms:
  • Integrated fare structures that operate on a single standard when calculating fares, as applied consistently across all participating agencies (1). When this structure is applied, travelers pay fares according to a consistently applied system of zones, discounts and rate policies applied ubiquitously within the region served by the regional fare management program. Examples of integrated systems can be found in Phoenix, Arizona (Valley Metro) and Hong Kong (Octopus).
  • Coordinated fare structures that enable passengers to use a single fare medium but allow partner agencies to retain autonomy in setting fare policies. Thus, passengers enjoy the convenience of using a single fare card but may encounter complex fare structures with features (e.g., discount rates on fare card transactions, transfer credits) that vary from one agency to the next. Examples of coordinated fare structures can be found in Ventura County, California (Passport) and the San Francisco Bay Area of California (Translink).
The RFC partner agencies have adopted a framework for coordination of existing agency fare structures. The demand for the coordinated framework is driven by the wide variance among the partner agencies in their fare policy objectives, customer base, and overall mission. Some agencies are interested in fare recovery and have limited capacity to offer discounted fares (e.g., Community Transit, Washington State Ferries), while others are more interested in expanding regionalism and increasing transit usage (e.g., King County Metro (KCM), Sound Transit (ST)).

Understand the revenue share implications of a coordinated fare structure

A coordinated framework allows for local control of certain fare policies, though local autonomy results in technological and fare structure complications that can drive up programming costs and negatively impact customer service. For example, inconsistent discount rates would result in customers being charged different fares for inbound and outbound trips. Furthermore, the amount of revenue allocated to each agency would also differ. To illustrate this point, consider the following example.

Example: A rider takes a morning trip on a KCM bus with a $1.50 fare and transfers to an ST bus with a $2 fare and then returns later that night taking the same buses in the reverse order. These calculations examine the morning trip (2).
  1. Assume the discount for KCM is 10% and the ST discount is 15%.
  2. Assume that fares are allocated based on a purse contribution value (discounts applied).
  3. The total fares paid from the purse would be $1.35 ($1.50 – 10% discount) + $0.55 ($2 - $1.35 credit from first fare – 15% discount on remaining fare) = $1.90.
  4. Total purse contribution value (total fare – discounts applied) = $1.35 (KCM) + $1.90 (ST) = $3.25.
  5. KCM share of revenues = $1.35 / $3.25 * $1.90 = $0.79.
  6. ST share of revenues = $1.90 / $3.25 * $1.90 = $1.11.

If both KCM and ST offered an identical 10 percent discount, the KCM share would increase to $0.80 while the ST share would be $1.15. Thus, in this instance, KCM would be partially subsidizing the higher ST discount rate.

On the return trip, the total fares from the purse would be equal to $1.70 because the rider would receive credit for the larger 15 percent discount on the first leg of the journey, the ST share of purse revenue would be $0.90 and the KCM share would be $.80. In the absence of the discount rate differential, the ST share of purse revenue would be $0.92 and the KCM share would be $0.82. Once again, KCM would be subsidizing the higher ST discount rate.

Even in lieu of these revenue allocation and customer service issues, partner agencies have stressed the need to retain local autonomy implemented through the coordinated fare structure. Thus, the strong desire of local partner agencies to retain autonomy with respect to the setting of fare policies has driven the design of the fare structure.


(1) Lobron, Richard. Developing a Recommended Standard for Automated Fare Collection for Transit: Scoping Study-Regional Fare Management Programs. TCRP Project J-6/Task 42. February 2003. Washington, D.C.

(2) Edmonds, Lex of ERG Group. Central Puget Sound Regional Coordination System: Finance/Fares SAAT – Discount Fare Incentive Overview. May 26, 2004. Seattle, WA.


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Source

Evaluation of the Central Puget Sound Regional Fare Coordination Project

Author: Cluett, Chris et. al.

Published By: Prepared by Battelle for the USDOT FHWA

Source Date: 4/14/2006

EDL Number: 14300

URL: http://ntl.bts.gov/lib//jpodocs/repts_te//14300.htm

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Lesson Contacts

Lesson Contact(s):

Chris Cluett
Battelle
206-528-3333
cluett@battelle.org


Agency Contact(s):

Candace Carlson
King County Metro, Washington
206-684-1562
candace.carlson
@metrokc.gov

Lesson Analyst:

Firoz Kabir
Noblis
202-863-2987
firoz.kabir@noblis.org


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Notes

Lesson of the Month for April, 2006 !


Lesson ID: 2006-00224