3. 3
Subsidy Issues
• Private vehicle use is heavily subsidised
–Fuel subsidies
–Free on-street/ on-sidewalk parking
o Increases congestion
o Forces pedestrians to walk on the streets – dangerous
and inconvenient, destroys sidewalks
•If private vehicle travel is subsidised then why
not public transport?
•Political decision – it depends on:
– Availability of sufficient funds on a sustainable
basis
–Opinions on equitability in use of funds
4. 4
Subsidies and Equitability
•If subsidies are to be made-
–They should not be open-ended
–They should be generally beneficial to the
community
–They should represent a considered use of tax
money – why not education, health, etc?
–They should benefit all public transport
users, especially the poorer ones and not just TJ
users
–They should be affordable over the long term
•Need for serious policy review of transport
subsidies; public transport seems more
deserving of subsidy than private cars
5. 5
Current Fares on non-TJ Buses
•Current setoran system requires flat fares
other than on small vehicles
•Low, system-wide flat fares with no tickets:
–Encourages operators to focus on short routes –
forces more interchange
–Encourages drivers to turn short and not complete
their full journey on longer routes
–Over-prices short trips and under-prices longer
trips, maybe fewer short trips are made by bus?
–Not possible to have through fare for trips
requiring interchange since no tickets
–Does not allow concession fares e.g.,for elderly
–No record of revenue or ridership by route for
planning and monitoring purposes
6. 6
Post-Reform Fare Structure Options
•Route based fares
–Flat fares, step down fares, distance based
graduated fares
–with or without free / discounted interchange
•Start / finish location based fares
–Zonal fares – usually mode specific but
independent of route
–True O-D fares – independent of mode and route
•Time based fares
–Unlimited travel on network for a specified time
period, e.g. 2 hours
7. 7
Future Ticketing Options
•Types of tickets
–Single journey, day pass, monthly pass, multi-
journey ticket, stored value, etc.
•User categories / fare concessions
–Regular adult fares
–Persons qualifying for reduced fares
e.g., children, students, elderly, disabled, etc.?
•Payment Methods
–Cash to driver or conductor, pre-paid
tickets, flash cards, smart cards, NFC enabled
devices, etc.
8. 8
Fare Levels
•Average fare is total fare revenue divided
by total passengers for all routes in
(operator’s) network
•If total revenue adequately covers
costs, then fare level is currently OK
•If total forecast revenue for next financial
year does not cover costs then either:
–Revenue must be increased
–Services must be reduced
–Unit costs of bus operation must be reduced
9. 9
Fare Adjustments
•Each financial year:-
• Private operator must earn enough revenue to cover
all costs and make a reasonable return on his
investment. Revenue includes fares and government
subsidy, if any.
• Public operator must earn enough revenue to meet
target set by local authority.
•If private operator is to remain viable and if
public operator is not to require open ended
financial support, fares must be adjusted as
required based on agreed forecasts of future
financial situation - costs and revenues.
10. 10
Conclusions
•Short Term Options
A. No change to current system
B. Route specific flat fares based on route distance
C. Route specific flat fares with step down fares on
longer routes
We suggest you consider Option C
•Post-Reform Objectives:
– Fares should be a function of passenger distance
travelled by mode
– Free or discounted interchange
– Payment by common smart card usable on all modes
– Concession fares to be offered
– Fare increases awarded in timely fashion
