Abstract
Budget shortfalls resulting from the recent recession have prompted some US transit agencies to increase passenger fares for mass transit. Given that the top 20 US agencies, representing 83% of transit trips, either already have or plan to implement a smart card fare collection system and are looking to increase farebox revenue, we propose introducing a “Best Fare” alongside the next fare increase. A “Best Fare” can guarantee that riders will pay no more for incremental trips than they would if they purchased a discounted pass covering the equivalent time period. This policy supports transit-dependent riders for whom prepayment for multiple trips to receive the associated discount may present a financial hardship. We apply this concept in a nonlinear Fair Fare Policy (FFP) model using cross-elasticities between fare products to determine the revenue from a fare increase that is and is not coupled with a Best Fare. We provide agency decision makers a case study of how one agency could increase revenue and reduce ridership loss using a Best Fare alongside a fare increase.
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- 1.
Top 20 transit agencies are ranked based on number of unlinked passenger trips as reported by transit agencies reporting to Federal Transit Administration FY 2008 National Transit Database.
- 2.
More information available at http://www.myki.com.au/Fares/Fares/default.aspx.
- 3.
A pseudonym.
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Taylor, K.C., Jones, E.C. (2012). Fair Fare Policies: Pricing Policies that Benefit Transit-Dependent Riders. In: Johnson, M. (eds) Community-Based Operations Research. International Series in Operations Research & Management Science, vol 167. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-0806-2_10
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