Free Transit, or Some Better Ideas

By October 15, 2018 No Comments

Should public transit be free?

This idea has been raised during multiple debates in Toronto’s current municipal mayoral race. We even got a call this week from CityNews Edmonton to comment on the concept. At first, it’s compelling–if we want people to use transit, why should riders pay for transit at all? But upon further reflection, there are good reasons for maintaining fares–and deploying them wisely.

The Tallin Example

In general, major cities require riders to pay for transit service. One large city exception to this is Tallinn, the capital of Estonia–which has been cited as an example of a free-transit city lately. In Tallinn (pop. 425,000), transit is 100% free, system-wide, 24/7, with the goals of discouraging driving, easing road congestion and reducing pollution. But reports show it has produced mixed results; for instance, it has shifted more walkers to transit than it has drivers to transit, and since its roll-out, average driving distances have actually increased.

A Case of Missing Funding

Tallinn’s free transit is funded by a federal tax transfer, instead of fares: for each registered resident, the city receives a €1,000 share of annual national income taxes. As a result, Tallinn receives about €20 million annually to pay for the program.

Here in Toronto, about 73% of the cost of TTC operations is paid through the fare box, giving us one of the higher fare recovery ratios in North America (the remaining 27% of operating costs are funded through the City’s tax-supported budget). In order to eliminate fares completely, Toronto would need to find an alternative, sustainable source of funding for this 73% – about $1.27 billion. So what are our options?

We could redirect dollars from other tax-funded City services, but with a price tag of $1.27 billion, this seems highly unfeasible in Toronto’s already stretched-thin budget. We could significantly raise property taxes, or introduce new revenue tools, but Toronto City Council has voted time after time to keep tax rates at or below inflation. We could request support from the Federal or Provincial governments, but both levels of government support is needed to build new major capital projects, like LRT lines or subways.

The fact is, we already need to find greater resources to meet the growing demand for TTC service in Toronto, not cut its most reliable and basic source of revenue. Whether it comes from the fare box, the City, the Province or the Federal government, we need sustainable funding sources that will not “rob Peter to pay Paul” in terms of City services or in terms of capital vs. operations.

Mode Shifting: It’s Not About Price

In addition to funding, part of the challenge in implementing fare-free transit is that cost alone is not the deciding factor in motivating drivers to switch to transit. Like in Tallinn, lower fares often lure would-be walkers, rather than shift trips from car to transit.

If our public policy goal is to get drivers out of their cars and onto transit, saving a few bucks is likely not enough to disrupt established car-oriented routines. After all, transit is already cheaper than the overall cost of driving in many cases.

When striving for fewer cars on the road, we need to consider other elements of service: people’s access to transit, comfort, convenience, wait times, service levels, and many other factors beyond just the price of a trip. Ultimately this means MORE investment; expanding the transit system and improving service may be more effective than fare elimination in encouraging people to take transit instead of driving.

Harness Fares for Public Good

Free fares put strain on our City coffers and may not ultimately be effective in boosting transit ridership. So rather than eliminate fares altogether, what if we harnessed them as a tool for public good? Maintaining some sort of user fee for transit  gives us latitude to tinker with fare structures to achieve public policy objectives. Whether the goal is to shift travel behaviour, increase ridership, manage demand, or provide equity benefits, there is a fare-based tool for that. Let’s look at some examples.

Time-Based Pricing

Everyone knows that congestion on the TTC’s most used routes is on the rise, as our population grows. Many people who live on the Yonge subway line opt to drive rather than face the crush to and from work. The last thing you’d want to do in this situation is encourage more ridership at peak hours by offering fare-free travel across the board.

On- and off-peak pricing can be an effective way to manage this demand, and to encourage shifting travel behaviours to ease transit congestion during rush hour. Discounted off-peak fares can be balanced with higher on-peak fares to even out demand and operational costs throughout the day. Singapore, Sydney, and London, UK, along with many other major cities, have implemented some form of time-based pricing on their transit systems.

  • Sydney’s Transport for NSW offers a 30% discount on off-peak train fares for journeys outside the morning and afternoon rush hours and on weekends and holidays.
  • Singapore’s Public Transport Council offers up to 50 cents off fares on MRT and LRT lines for riders who tap on before 7:45 AM on weekdays.
  • Transport for London’s rail services (including the Underground) apply peak fares during the morning and afternoon peak. Peak fares are also applied on the London Overground towards the city centre in the morning and away from the centre in the evening. At all other times and in other directions, off-peak fares apply.

Incentives to Curb Road Congestion

Location-based pricing is another popular solution globally. Melbourne and Brisbane offer free transit in the downtown core to relieve road congestion, while cities such as Paris and Seoul have offered free transit on smog days as a means of reducing pollution.

  • Free transit on select lines: Brisbane – Brisbane operates two free bus routes that provide high frequency service to the central business district.
  • Free transit on smog days: Seoul – As part of an emergency plan to address extreme air quality events, Seoul waives bus and subway fares during rush hour on days when the air quality index reaches above a specific threshold. Similarly, Paris and Milan offer free transit in an effort to improve air quality during severe smog events.
  • Free transit within the CBD: Melbourne – Melbourne offers fare-free transit in its central business district. Travel is free for commuters and tourists moving between destinations within the Free Tram Zone.

Affordability Hacks

We can also adjust pricing to make transit more affordable, whether as an equity measure or to increase ridership. The TTC’s new PRESTO-enabled two-hour transfer system is a great example now in practice. Allowing unlimited travel and stops within a two-hour window for a single fare makes the TTC more affordable and convenient, and it encourages people to shift multi-stop trips from car to transit. It also has equity benefits for those who do not own a car, and are otherwise dependent on transit for daily errands.

Here are some additional affordability hacks from around the world:

  • Daily and weekly fare caps: London, UK – Transport for London offers daily and weekly caps on pay-as-you-go fares, which allow riders unlimited travel while limiting the total amount paid. Capping limits automatically account for distance travelled and type of transit used (bus, subway, etc.). The system ensures that an individual taking multiple trips in one day will not pay above a certain threshold for the service in total.
  • Discounted and free travel for specific groups: London, UK – Transport for London offers discounted transit fares to youth, students, apprentices, and adults in search of employment, as well as free travel for children under 10, adults over 60, eligible veterans, and disabled persons.
  • Free transit from the airport: Boston – MBTA offers free bus rapid transit service to and from the airport. Visitors arriving from the airport can connect to the Red Line local subway system fare-free.
  • Discounted transit for low-income residents: Seattle – Metro Transit’s ORCA LIFT program offers reduced fares for low-income residents. Qualified residents apply to receive a registered ORCA card that allows unlimited monthly travel, system-wide, with savings of up to 50%. Similarly, San Francisco’s SFMTA’s Lifeline Pass allows monthly unlimited travel on local services, and is offered to qualifying low-income residents at 50% off the standard adult rate. Right here in Toronto, the TTC recently launched the Fair Fare Pass program that offers discounts on single rides and monthly passes for Ontario Works and ODSP recipients.

Why Not “Fares” for Road Use

We can’t discuss the dream of eliminating transit fares without noting the municipal services we currently enjoy without user fees, notably our roads and highways. People with the means to own and maintain a personal vehicle are allowed to drive on Toronto’s streets without paying any form of user fee, not to mention the trucking companies and on-demand ride-sharing services that do business on Toronto’s taxpayer-supported city streets.Why is it that we apply high fees to support the operating costs of our public transit system, but not to support other elements of our transportation network?

Road and congestion pricing are the flip-side of transit fare discounts and dynamic pricing. Rather than offer a discount to encourage transit use, we could charge a nominal fee to discourage private automobile use in targeted areas of the city where frequent and reliable transit is available.  With ride-sharing services increasingly contributing to congestion, a congestion tax on Uber, Lyft and other ride-hailing services is an idea worth considering, with revenue invested in transit and active transportation infrastructure–multi-modal services these companies are increasingly moving into.  

With online shopping reaching peak levels, delivery truck traffic is increasing congestion on our roads and highways, for which taxpayers incur costs in road and highway repairs and maintenance, air pollution, accidents and health care. As these businesses move much of their operations from brick-and-mortar stores to our publicly funded roads, we ought to be considering congestion charging as a way to alleviate the costs of private business externalities on our roads, our air quality, public spaces and our quality of life.