Transit fare policy and free transit

Transit fare policy and free transit

Rueichen Tsai

Department of Urban Planning and Spatial Analysis, University of Southern California

PPD 634: Institutional and Policy Issues in Transportation

Professor Genevieve Giuliano December 9, 2022

Introduction

This report focuses on the evaluation and the dynamic relation between transit fare policy and fare free transit. Reaching out from the perspective of equity and benefit, transit fare policy making aims to provide quality, affordable service to the public. Transit fare policy making implies that “the public” usually are people of low income, students, and minority people. These groups of people rely on public transit more heavily than others. Fare free transit initiative has been touted and advocated by public agencies, scholars, and various interested parties. However, these policy making processes involved concerns, including ridership, sustainability. This paper starts with a brief introduction to transit fare policy. The second section touches upon and fare free public transit. Next, two fare free public transit experiments in the United States are introduced. The fourth section analyzes and evaluates the adoption of fare free public transit, including their roles in each scenario. This paper concluded with a discussion and policy recommendations provided by the author.

Transit fare policy

Public transit agency implements transit fare policy takes two perspectives into consideration: an operator of public transit and public transit passengers. As an operator of public transit, maintaining financial sustainability is critical to support its capital and operating expense. Several financial sources including farebox revenue, federal public transportation programs, and other funding sources such as Proposition A, Proposition C, Measure R, Measure M, and Transportation Development Act. Operating expenses include fuel costs, maintenance costs, bus operators’ wages, and administrative service To develop an appropriate transit fare policy for passengers, the transit agency considers several points First, devise a simple fare structure that passengers can easily understand to avoid fare collection disputes between bus operators and riders Second, maintain the service quality to keep the long-time riders and attract new riders. Third, price equitably when it comes to low income riders

Transit fare upholds the operation of the transportation system. It is one of the factors that controls travel behavior and influences transit system cost effectiveness Types of transit fare include the flat fare, distance based fare, zonal fare, and time based fare. The flat fare is an equitable transit fare to riders who take long distance trips benefit more than short trip riders, especially low income ones. Long distance trips provide low income riders access to more job opportunities, healthcare, and education with lower fares than other fare types assuming they don’t own any private passenger automobile. Monetarily, public transit agency benefits from distance based fare more than flat fare structure. However, the distance based fare can be viewed as a penalty pricing approach to riders who take long distance trips, thus limiting their willingness to travel further away. Zonal fare pricing is similar to distance based fare considering both systems charge riders based on the origination and destination of trip making. Passengers who travel long distance within a specific zone or district benefit the most from this system. Nonetheless, passengers who travel across zones have to pay for higher transportation costs even when they make short-distance trips. As for the time-based fare, there are two types: peak hour fare and off peak fare. This congestion pricing system charges more from riders who make trips during peak hours, generally speaking, most of whom are commuters. This fare pricing system encourages flexible trip making riders to shift their journeys to an off peak hour, thus easing traffic congestion. Public transit agency implements

each type of fare pricing system based on the local socio economic characteristics, transit operators’ financial sustainability, and social context in the operating transit area.

Fare-free public transit

The concept of free public transport is an easily misunderstood term. The fares are free in fare free transit or zero fare tickets program referred by free public transport because they are fully subsidized (Kębłowski, 2020, p. 2809), noting that subsidies have been used to prevent fare increases instead reduce or eliminate fares (Studenmund & Connor, 1982, p. 261) Fare free transit takes the form of pre paid travel tickets and boarding with student/resident identification cards. Generally speaking, fare free public transit eliminates the barriers to mobility access and embodies mobility equity It provides mobility access to education, leisure, and employment Economic constraint prevents low income families from accessing private vehicles, including the cost of purchasing vehicles, maintenance, fuel, parking, and car insurance. Fare free transit has been adopted in different areas for various reasons and resulted in several outcomes. On the one hand, the motivation for implementing fare free transit could derived from political desire to serve politician’s agenda or political party. On the other hand, it has been considered one of the policies that addresses mobility justice by making transit available to everyone; low income passengers benefit the most. From the perspective of social justice, public transit passengers do not contribute as much to traffic congestion and air pollution as private vehicle drivers. As a result, fare reduction or elimination should be implemented (Kębłowski, 2020, p. 2816) The access to opportunities accelerates economic activities, boosts regional growth, and increases the public transit ridership by luring people out of automobiles, thus lessening congestion and air pollution are motivations for free transit. Perone (2002) at least specifies six reasons for advocating fare free public transit. (1) increase the use of public transportation and lessen traffic congestion; (2) farebox revenue is relatively minimal and not worth the time and effort to collect; (3) a desire to ‘fill empty buses;’ (4) to lure younger people to public transit in order to encourage future ridership; (5) accommodate “certain niche passenger markets in resort areas where transit operating revenue can be gained through other sources;” (6) served as a mean to help redevelopment in a particular area. However, concerns about implementing a fare free policy varied from region to region, given the scale of the community and transit agency’s financial health

As Kębłowski (2020) identifies four types of fare free public transport, including temporary fare free, temporarily limited fare free, spatially limited fare free, and socially limited fare free. Temporarily limited fare free refers to fares that are not charged in a regular and specific period. For example, LA Metro offers free bus and train rides on October 5 to celebrate California Clean Air Day, an annual clean air day first introduced in 2018. It encourages people to leave their cars at home and take public transit (Arreola, 2022) Metro also offers free rides on Election day to encourage people to get out and vote (Salahieh, 2022). Spatially limited fare free applies to the scenario where a specific mode of transport provides services in certain regions or routes. University campuses offer fare free services to students for riding specific bus routes that fall into this category. Socially limited fare free provides specific riders, including youth, children, students, and the elderly. Los Angeles Community College District provides L.A. community college students to take free rides on buses and trains for the next school year (Petri, 2022). However, these different types of fare free systems are sometimes bundled into a transit fare program by a public transit agency. The Low Income Fare is Easy

(LIFE) program launched by LA Metro reduces the cost of transit for low income riders by providing fare discounts if qualified riders purchase weekly or monthly transit passes on Metro and LIFE participating transit agencies. Riders can get 20 free rides on one of the participating transit agencies. If qualified riders are the first time sign up to the program, they can get a free 90 day pass except for riding Metro Express Bus of J Lines. In this case, LA Metro adopts temporary and spatially-limited fare free as means of promotion for the LIFE program. Various types of fare free transit policy provide a diverse and flexible way for transit agency to promote public transit or as supplement to other policies.

Fare-free public transit experiments then and now

This section introduces two fare free transit “experiments,” in the United States. The first fare free demonstration program conducted in Trenton, New Jersey in 1979, another “experiment” was executed in 2020 in Los Angeles, California. Throughout 22 months started in March 2020, LA Metro took the opportunity of low farebox recovery ratio caused by the COVID 19 pandemic, and might use fare abolition as a way to promote public transit.

The Mercer County Fare Free Demonstration (Trenton, New Jersey)

The New Jersey Department of Transportation conducted the very first large scale free transit test in the U.S. in 1979 in cooperation with Urban Mass Transportation Administration (UMTA) today known as Federal Transit Administration (FTA), funded by UMTA and Mercer County The “Trenton Free Fare Demonstration Project” was a 12 month test program beginning in March 1978, and ending in January 1979, administered through Mercer Metro bus system off peak hours, Monday through Saturday, from 10 am to 2 pm and after 6 pm, all day on Sundays and holidays The project's objective was to evaluate the impact of free fare transit and the effects of the fare elimination on the riders, public transit agency, affected communities, and local business The scope of examined issues including the impact of fare free transit on the ridership, passenger characteristics, effects on commercial activities, and the public attitude (O'Connor & De Leuw, 1982, p. 5). As Volinski (2012) indicates, the reported increase in ridership was 25% 30%; 45% of buses ran late, extra buses were required, driver complaints, and problem riders. One of the reasons to measure the free fare impact limited to off peak hours on public transit networks was that no transit system could accommodate the increases in ridership during peak hours in the country back in the 1970s (Studenmund & Connor, 1982, p. 263) The evaluation report conducted by a private company with UMTA on the Trenton Projects states that “free fare is probably more valuable as a tool for transit promotion than as a full time transit pricing strategy” (O'Connor & De Leuw, 1982, p. 5). The demonstration project indicated that it only attracted about one percent of the local population as new riders, and many of the diverted trips were made by people who would otherwise walk; however, there was a significant retention of the new ridership. The report concluded with the findings that fare abolition might be good for transit promotion, introducing new transit services, or as a buffer to offset the expected loss in ridership before implementing the fare increase policy. Besides, another fare free demonstration in Denver, Colorado, began on February 1, 1978, ending January 31, 1979, and was conducted almost the same time as the Trenton demonstration project (Volinski, 2012, p. 13) This demonstration project fell short to collecting data about ridership, and other related to passengers, due to its change in the definition of the off peak hours, and major route restructuring, thus render itself as one of the most poorly

documented fare free transit programs in the United States (Studenmund & Connor, 1982, p. 263)

LA Metro fare free transit

Although the case of LA Metro is not a fare free public transit demonstration, it doesn’t devalue itself. LA Metro stopped collecting fares in March 2020, and resumed fare collection in January 2022. Over 22 months, approximately 281 million boarding, although it remains unknown the newly ridership attracted by fare free establishment

The majority of Metro’s riders are low income passengers. In a Customer Experience Survey conducted by Metro in 2019, the result shows that riders who make a household income of less than $49,000 made up 81% of Metro bus/rail riders (LA Metro, 2022) Metro’s pre pandemic farebox recovery ratio was l7%, compounded by the pandemic dropping down to 11% (Los Angeles County Metropolitan Transportation Authority, 2021, p. 185) As previous fare free transit cases show, one of the motives for running the fare free transit program is the low farebox recovery ratio, together with the fact that the majority of Metro’s riders are low income passengers, which motivated Metro to eliminate bus fares during the pandemic to evaluate the long term impact of fare free transit on its bus operation After the inception of fare free transit, LA Metro’s bus ridership bounced back faster than other cities during the pandemic. One of the explanations for the increased ridership is that most bus riders are low income, and the bus is their primary mode of transportation for commuting Some people may argue that stay at home order restricts people get back to work. However, most low income jobs required on site workers, including janitors, clerks, etc. Other findings reported by bus operators point out that without collecting fares, a two second reduction at each stop speeds up boarding time by 10 percent (Stouhi, 2021) As the decline rate of fare discount type in U Pass might indicate that more college students turn to distance learning thus choose to purchase other type of fare due to their accessibility and flexibility to avoid paying $90 at one time. Noting that U Pass can only be purchased during the specific time. For example, a valid U Pass for use from January 10, 2022 to May 29, 2022 sold by USC Transportation office, can only be purchased between January 10, 2021 and February 28, 2022 However, there might be other reasons holding students back

Low income riders (LIFE)

Senior/Disabled/Medicare

Type of Fare 2019 2022

One Trip Fare 52% 32% Day Pass 7% 11%

7 day pass 8% 15% 30 day pass 19% 32% Other 13% 10%

(Source: Metro 2022 Customer Experience Survey)

With the end of the fare free service, it remains unknown why LA Metro resumed fare collection. Was it because the ridership bounced back to the prior pandemic level and LA Metro considered fare abolition as a way to promote transit service during the pandemic? It is hard to tell due to the lack of LA Metro’s Annual Comprehensive Financial Report for the fiscal year 2022 remains unreleased. Or was it as Metro stated that they need farebox revenue to keep the transit operating properly, although their farebox recovery ratio was already low even prior pandemic? However, started in 2012, LA Metro’s bus farebox recovery ratio has been declining since then, dropping from 29% in 2012 to 17% in 2019 (Los Angeles County Metropolitan Transportation Authority, 2022, p. 185); and bus passengers is also in a downward since 2012 (Los Angeles County Metropolitan Transportation Authority, 2022, p. 195). Either the downturn in the farebox recovery ratio or the number of passenger boarding prompts us to think about whether LA Metro is about to arrive at the edge of establishing permanent fare free public transit soon.

Fare-free public transit analysis

Benefits and costs

Every coin has two sides, fare free public transit is not an exception. First, the benefit of fare free transit is the increase in ridership. As the report (2012) points out, most new trips with increased ridership resulted from adopting a fare free policy are made by passengers who switch their transportation modes from walking and biking. In addition, Storchmann (2003) points out that the mode shift from walking and cycling to public transport reduces the accidents related to cycling and walking. Fare free transit boosts ridership and improves mobility justice, but what undesirable outcome comes with the benefits? Several concerns emerge. Zipper (2022) indicates that the mode shift increases net emissions due to riders forgone human powered devices. From the perspective of personal health, if people make new bus trips by switching from biking and walking remain in the long run, would the change of taking less non motorized transportation make them less healthy than they were? Although it depends on the distance they travel by foot or bike. Besides, what are those new trips? Does fare free transit generate more solo trips and reduce trip chaining? Second, the Fare free transit system encourages people to take public transit without paying for their rides, resulting in reduced farebox revenue. Besides, more people taking public transit will increase ridership, but the spending on public transit maintenance, facilities, and operations would also increase. Although the farebox recovery ratio is low among public transit agencies across the country except for New York, the agencies still have to fill up the absence of farebox revenue by securing funding. Third, disruptive passengers and behaviors resulting from fare abolition are the annoyed factors to other riders. Perone (2002) points out that the number of reported cases

of vandalism, graffiti, and rowdiness is higher in free transit systems due to younger passengers who could ride for free, resulting in higher costs in security and vehicles’ need for repairs, and they usually take long distance rides. Kębłowski (2020) characterizes them as “problem riders.” As a result, the minimum fare could discourage these misbehaviors. In addition, a complaint made by a passenger who took a ride during a fare free experiment in New Bedford, Massachusetts, in the summer of 2010 (Volinski, 2012, p. 31), the passenger experienced uncomfortable human body odor because of the crowded bus with little space to sit or stand and had to stand for an extra time because of a large group of teenagers who took long distance rides. However, dealing with disruptive passenger is not annoying than dealing with fare disputes and fare collection for many of the bus operators (Volinski, 2012, p. 3). Fourth, short term experiment of fare free public transit program proved to be an effective approach in marketing public transit and increasing approximately 60% of the ridership as in the case of Asheville, North Carolina. Fare elimination helped it build long term gains in ridership. They retained a modest increase in ridership after the experiments ended (Volinski, 2012, p. 47) Fifth, the benefits and costs of fare free transit vary geographically in small urban/rural areas, university dominated areas, and resort communities. In small urban/rural areas, the transit agency is more willing to execute a fare free transit policy owing to the lower farebox recovery ratio because the absence of farebox revenue could be replaced by alternative funding without huge effort. In other cases, the transit agency is able to receive more funding through implementing fare free transit. For instance, Indiana and Florida provide operating, and capital expense grants for transit agencies based on the allocation formula that considers passenger miles. The increase ridership resulted from either fare free transit or reduced fare, passenger miles would increase thus bring transit agency more financial assistance. As in the case of the Marion City Bus Department, ridership was doubled up, and the funding they received was twice the amount of the farebox revenue they collected before abolishing fares. In this case, the funding allocation formula is the incentive for transit agencies to eliminate transit fares. Tallinn, Estonia, is another case the transit agency gets more than it gives through fare free transit. Tallinn only offered fare free transit to taxpaying residents but remained to charge visitors and tourists. The funding for this program was part of residents’ personal income tax. The transit agency lost €12 million in farebox revenue but received €40 million annually instead (Kębłowski, 2020, p. 2813) As for university dominated communities, fare free transit is implemented to reduce the number of cars on campus and ease the parking demand. In these areas, farebox revenue may be too low for the transit agency to collect due to the cost of fare collection outweighs the gains taken in, abolishing fares makes more economic sense. As for resort communities such as ski resort towns, or National Parks in the United States, fare free public transit is used to attract visitors to compete with other resort communities and improve the travel experience. Fare free transit eliminates the time to collect the fare, together with all doors boarding, thus reducing dwell time and speeding up boarding. In resort towns, paying transit fare is more difficult, and it would take longer for riders wearing hiking gear or ski gloves to fumble for tickets or cash than for urban counterpart. In National Parks, fare free transit is provided due to the limited space for private vehicles parking in mountainous areas For service workers who live in the resort area or National Parks, fare free transit eases the burden of their commuting costs. Besides, the reduction of time used for fare collecting at each stop added up could reduce travel time at the end of the day. Fare free policies adopted in these areas seem to save money for visitors. However, it is possible that the cost of fare free public transit is passed on to other service fees, such as entrance fees, food services, or souvenirs.

Conclusions and policy recommendations

Many public transit agencies have tested fare free public transit and conducted cost benefit analysis, evaluation, and impact frameworks for fare free transit programs in their cities to find out the impact of free transit on the local community, passengers’ attitudes, and operating transit agencies. The significant increase in ridership is a common fact that could be found in each testing program. Fare free public transit has gained momentum in the United States in the past few years. Fare free transit is the trend and seems to be the panacea for social equity and low ridership. However, what is the opportunity cost of fare free transit? How do we know fare free transit is the right direction if we don’t try other options?

The unintended consequences of the increased ridership resulting from new riders should be solved to maintain the long time passengers and other new riders who might give up taking the bus because of those unintended consequences. Improving bus service quality is crucial to keep long time passengers and low income riders who prefer quality service to reduce fares ("Should Transit Be Free?," 2019) The first policy recommendation advocates improving public transit service quality while maintaining the existing fares First, downsize the bus to half its original size, such as a mini bus that accommodates seventeen people at one time but doubles the number of vehicles. Next, adopt semi autonomous vehicles for the bus fleet. Third, transit agencies could use all of the existing funding, including Proposition A, Proposition C, Measure R, Measure M, Transportation Development Act, and alternative funding that could be used for fare free transit to improve service quality, purchasing more buses, adding more bus stops and dedicated bus lanes, hiring more bus operators to reduce dwell time for better frequency. Downsizing the bus limits the number of passengers in each vehicle, with fewer passengers, thus shortening boarding time and fewer stops to make. A smaller vehicle size allows the transit agency to create more bus stops with a small portion of curb space though curb management and the computer vision, together with the service mechanism that gives passengers the freedom to designate the pick up and drop off area as long as the stop is made on the fixed route

This mechanism considers the importance of shortening the last mile and bears women’s safety at night in mind. If we double up the number of vehicles, traffic congestion will be worse than before, however, that is the point of this policy recommendation. One of the intended consequences is to increase congestion for private vehicle users. Making public transit appealing and rendering personal driving less appealing by reducing lanes occupied by private vehicles and adding one to two dedicated bus lanes. New dedicated bus lanes could be transformed from street parking. When travel time is the same, whether taking the bus or private vehicle, road users would become willing to switch to public transit. With more motorists changing their mode choice to the bus, fewer personal vehicles are on the street.

Policy about fare free transit focuses on various reasons, including mobility justice, environmental concerns, lessen traffic and congestion. Co benefits of transit fare policies are mutually reinforcing, just as climate change mitigation policies. However, implementing a fare free transit program would cause an impact and put the financial burden on public transit agencies depending on their reliance on fare box revenue The second policy recommendation suggests the federal government to set equitable goals about expected ridership and other requirements for each public transit agency and keep providing fund to those who meet the goals by the coming fiscal year. Federal money served as a sustainable incentive for the local metropolitan transit agency to continue or start fare free public transit.

The third policy recommendation is to improve the sign up rate of the Low Income Fare is Easy (LIFE) program. The Metro On Board Customer Satisfaction Survey in 2019 (2022) shows that 86 percent of Metro bus riders make a household income of less than $50,000. However, only 8 percent of them were registered LIFE program. A Customer Experience Survey conducted by Metro in 2022 shows 83 percent of the riders make a household income of less than $50,000. Although the increased rate of using the LIFE program was up to 25 percent, the gap between the qualified riders for the LIFE program and the riders who already signed up indicates room for the transit agency to improve. It should be noted that qualified participants can apply for the program online or by mail the application. According to the Metro Customer Satisfaction Survey in 2019, 52 percent of bus riders have access or any member in their household has access to cable or high speed internet, and 39 percent has cellular data plan for smartphone/tablet. The barrier to accessing the internet to sign up for the LIFE program is least possible in this case The huge gap between the rate of qualified riders and the sign up rate could be the lack of information about the LIFE program. as a result, holding community workshops to promote the LIFE program in low income communities is one of the options.

2019 2022

Low income riders (LIFE) 8% 25%

(Source: Metro 2022 Customer Experience Survey)

Besides spreading the information about the LIFE program in low income communities, partnering with organizations and leveraging their steady relationship with the community to assist people in signing up for the program in Latino and Black community could increase the sign up rate efficiently as well. A ridership data (2022) shows that 58 percent and 14 percent of the riders are Latinx/Hispanic and Black/African American, respectively. Although the survey didn’t show the sign up rate by ethnicity, the transit agency still can make progress on the LIFE program sign up rate by targeting the largest ethnicity group and the second largest group. Together, they account for 72 percent of Metro riders. Noting that 17 percent of the Metro riders make a household income of more than $49,999. Assuming 17 percent of these riders are either Latino or Black, we will get 55 percent of Metro riders qualified for the LIFE program by subtracting 17 percent from 72 percent. We know that the LIFE program sign up rate is 25 percent in 2022. If we remove 25 percent from 55 percent, we will get 30 percent of the riders who are qualified for the LIFE program.

Riders by Ethnicity

2019 2022

Latino 59% 58% Black/ African American 16% 14% White/Caucasian 11% 12% Asian/Pacific Islander 8% 7% Native American 1% 1% Other 4% 8%

(Source: Metro 2022 Customer Experience Survey)

Which makes sense to promote the LIFE program in these communities with civic engagement groups, such as Public Matters, or student organizations including USC Community Health Involvement Project and Latine Student Association, which hold regular community events in the low income community, would be handy helpers in spreading the word about the LIFE program and assist the community in applying for the program. Public Matters has been working with USC Price school, USC Kidwatch, Los Angeles Walks, and five elementary schools to draw people’s attention to traffic violence in University Park for the University Park Slow Jams (UPSJ) project. Public Matters has held workshops for several projects, such as UPSJ in University Park, where most residents are Latino and Black. Their civic engagement experience and their bond to the community make them better in a better position to reach out to the community and promote the LIFE program. Another example is USC Urban Trees Initiative. The initiative partners with USC students and faculty in the City of Los Angeles to advocate the importance of growing sidewalk trees to provide shade in Boyle Heights, City Terrace, Lincoln Heights, and University Park. The majority population in these areas is Black or Mexican. USC Urban Trees Initiative’s experience working with community members makes them the ideal candidate to promote the LIFE program with fewer community pushback.

To conclude, if we only work on Latino and Black riders to improve the LIFE program sign up rate, we are still in a better position to increase the sign up rate

Informed by the case of Tallinn, Estonia, mentioned above, and from my personal experience talking with Uber/Lyft drivers, the fourth policy recommendation focuses on taxation based and socially limited fare free transit. Considering that most LA Metro bus passenger are low income, providing them with a valid bus free pass that needs to be revalidated annually would also meet the goal of social equity. As for the funding for this program, the transit agency could work with the municipality to obtain funds from taxpayers except low income households. It is important to know the public attitudes toward the policy by conducting surveys such as taxpayers’ attitudes toward paying public transit for low income riders From a personal anecdote, a conversation I had with a Lyft driver, he expressed the willingness to pay for public transit related construction, enhancement either from sales tax or other taxes as long as he could see the changes even he was not a public transit rider The fourth policy recommendation not only embodies social equity, eases the financial burden of fare free transit by making it financially sustainable, but also maintains the advantage of fare collection that could track ridership.

Fare free public transport is an umbrella term for fare abolition that takes diverse forms geographically and accommodates local economy, politics, and social context. Fare free transit is a controversial topic among experts. Traffic engineers are concerned about non productive trips resulting from fare free transit; economists worried about cost effectiveness that the transit system should be self funding. Admittedly, these concerns should be considered for any fare free transit program. However, transit agencies should not prioritize dismissing these concerns and derail from the goal of serving the public. If making trade offs, one should be gravitated toward maximizing the public benefits if it is possible. Besides, transit agencies that intend to establish fare free transit in the operating areas should not rely heavily on other fare free transit programs conducted in a similar urban geography. Instead, they should take those programs as references for transit analysis and be aware of the broad flexibilities and the possibilities of fare free public transit.

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