Off-peak transportation fare discounts

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An off-peak transportation fare discount is offering reduced fares for using transit outside of peak hours. Peak hours are generally the morning and evening rush hours (weekdays 7:00AM-9:00AM and 4:00PM-6:00PM). Off-peak would be any other times, including weekends. The goal is to incentivize passengers to shift their trips from times when transit is crowded to times when transit is less crowded. This can help a system deal with overcrowding without adding new physical infrastructure, improve level of service during peak hours, better use underutilized capacity during off-peak hours and even increase ridership overall. The implementation can range from offering off-peak discounts to only a subset of riders all the way to completely free service during off-peak times.

CONCEPT


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Goals

Direct Goals

Indirect Goals

Examples

Conceptual Example

A transit system is experiencing heavy usage during the AM and PM rush hours leading to overcrowding and delays. But outside of rush hours, the system is significantly under capacity. The usage ratio between rush hour and slightly before and after rush hour is 3 to 1. There is no room in the capital budget for increasing the capacity during peak hours. To address the overcrowding issue without increasing capacity, the system seeks to shift trips from peak to off-peak. To do this, the system introduces a discount for riders who ride outside of peak hours. At the same time, they increase the base fare, which helps make up some of the lost fare as well as further move trips to off-peak. By spreading trips more evenly across the day, passengers are able to have more regular service during rush hour and enjoy a more comfortable ride.

Specific Example

In 2013 Singapore was experiencing heavy usage in the city center during AM peak hours. At the 16 stations located in the city center, 18,000 commuters were exiting in the half hour before 7:45AM, compared to 29,500 in the half hour immediately after, and 59,000 in the half hour between 8:30AM and 9:00AM. To address this issue, they made the fare free for anyone exiting one of those 16 stations before 7:45AM and added a 50 cent discount for anyone exiting between 7:45AM and 8:00AM. Singapore's Metro uses a variable fare based on distance with turnstiles at both origin and destination and thus was able to accommodate pricing based on the destination time and location. They also worked with employers to shift work hours to align with off-peak travel. While originally implemented as a one year trial, it has been extended several times due to its success. As of May 2015, the off-peak discount has reduced the ratio of peak to off-peak trips from 2.7 to 2.1.

Tradeoffs

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Tradeoffs of implementing this policy may include:

  1. Total fare revenue may drop if the reduced fares for off-peak is not offset by an increase in total ridership.
  2. If the implementation includes an increase to the base fare, riders who are unable to shift their time may switch to other modes, such as personal vehicles, thus increasing road congestion.
  3. A drop in fare revenue may require increased government subsidies to make up the difference.
  4. Fare boxes and turnstiles may need to be upgraded or replaced with ones that support variable pricing by time.
  5. Depending on the increase to off-peak ridership, schedules and manpower may need to be adjusted.
Compatibility Assessment

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If answered yes, the following questions indicate superior conditions under which the policy is more likely to be appropriate:

  1. Is there a large differential between peak and off-peak usage?
  2. Is the system at or exceeding capacity during peak hours?
  3. Are riders price sensitive enough such that the system afford a big enough discount to shift their travel times?\
  4. Do a significant number of passengers pay per ride instead of using unlimited ride passes?
  5. Is it feasible to modify the payment system to support off-peak discounts?
  6. Would off-peak discounts be more economical than other approaches to tackling peak overcrowding, such as increasing peak capacity?
Design

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The following questions should be considered when determining how to implement this policy:

  1. Which time periods will be considered "off-peak"?
    1. Keeping times simple and regular will help not surprise riders with fares higher than expected. For example, Singapore's off-peak is just from system opening to 7:45AM. Anytime after that has normal fares[1].
    2. But odd hours also may have high usage and may too benefit from being considered peak. Washington, D.C., for example, considers weekends from 12:00AM-3:00AM peak[2].
  2. How much of a discount is needed?
    1. How price sensitive are the peak hour riders? At what price will a significant percentage shift from peak to off-peak?
    2. Are a significant number of trips taken by riders with unlimited-ride passes and thus have little price sensitivity?
      1. For example, nearly half of rides on New York City's subways and buses are paid for with unlimited-ride metrocards[3]. In this case, a large percentage of trips are not price sensitive, unless the off-peak discounts will encourage riders to switch to pay-per-ride.
  3. How will the revenue loss be offset?
    1. For example, if the ratio of all peak to off-peak rides is 2 to 1 and there is an off-peak discount of 25%. Without any shift of trips, there will already be an 8.3% loss in farebox revenue. If the off-peak discounts work as intended, that loss will be even greater.
      1. Will the base fare be increased to offset lost income and further incentivize riders to shift their trips to off-peak?
      2. Will other service need to be cut back?
      3. Are additional subsidies required?
  4. What infrastructure changes (if any) are needed to support variable pricing?
    1. Are the fareboxes and turnstiles capable of being configured to do variable pricing based on the time of day or would there need to be a costly improvement made to facilitate that?
  5. Will the entry or exit time be used when determining whether a trip should be charged a peak or off-peak fare?
    1. If the system is set up to charge a flat fee on entry, then there is no choice without major changes to the infrastructure.
      1. In this case, the morning and afternoon off-peak hours would need to end early enough that most off-peak riders would be out of the system by the time peak hours start.
      2. The hours could also vary based on origin. For example, origins further from the city center would have their morning off-peak end earlier to encourage riders there to be out of the system by the time rush hour starts. But this introduces more complexity and could be too confusing for riders.
    2. If the system already supports variable pricing with turnstiles/fare boxes at both origin and destination, then there is more flexibility in terms of ensuring off-peak fares are charged for trips that are completely off-peak. For example, for people who exit the system before AM peak and PM peak; and people who enter the system after PM peak.
  6. Is the change intended to be permanent or for a limited time period?
    1. A limited time change may help promote the transit system and increase overall ridership or change rider behavior even after the discount is removed[4]


ADOPTION


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PolicyGraphics
  • For governance level(s): Local.
Adopters
  • Notable entities who have implemented or adopted this policy include:
    • Country of Singapore [1] - Free metro travel before 7:45AM when exiting from select stations. 50 cent discount (about 20% off maximum fare) when exiting between 7:45 and 8:00AM.
    • District of Columbia [2] - $.40-$2.40 (20-40%) off Metrorail fares on Weekdays from 9:30AM-3:00PM, after 7:00PM; and on weekends before 12:00AM.
    • County of Los Angeles [5] - 35 cent fares (50% off) for senior citizens traveling weekdays 9:00AM-3:00PM, 7:00PM-5:00AM; weekends and federal holidays.
    • City of Trenton [4] - Bus fare was made free for off-peak times as an experiment for 12 months in 1978. There was a sustained increase in ridership of 15% even after the trial period ended and fares were reinstated.
    • County of San Francisco [6] - Bay Area Rapid Transit (BART) will start in 2016 a six month trial of a rewards program where riders will earn points for riding off-peak to earn points which can be redeemed for cash, among other things.


STAKEHOLDERS


Supporters

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Opponents

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REFERENCES


Research

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  • Transit price elasticities and cross-elasticities. Litman, Todd. Journal of Public Transportation 7.2 (2004): 3. This paper analyzes how fare changes affect ridership on the short and long term, as well as in relation to other modes of transportation.
  • Transit pricing research. Cervero, Robert. Transportation 17.2 (1990): 117-139. And overview of transit fare research including price sensitivity, fare-free transit, etc.
  • Efficiency and Equity Implications of Alternative Transit Fare Policies. Cervero, Robert B., et al. No. UMTA-CA-11-0019-80-1Final Rpt.. 1980. Research into flat fares versus variable fares based on both distance and time of day.
  • The free-fare transit experiments. Studenmund, A. H., and David Connor. Transportation Research Part A: General 16.4 (1982): 261-269. An overview of experiments in Trenton, New Jersey and Denver Colorado to provide off-peak service for free. The major finding was a sustained increase to ridership after the fare-free program ended.
  • Free Fares Policies: Impact on Public Transport Mode Share and Other Transport Policy Goals. Fearnley, Nils. International Journal of Transportation 1.1 (2013): 75-90. This paper looks at how well fare-free systems address a number of issues such reducing car usage, finding that fare-free policies do substantially increase ridership but mainly by shifting walkers and bikers to transit.
Resources

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  • Transit Pricing and Fares Transportation Research Board (1995). Practical information on different fare strategies and how to go about pricing or changing prices.
  • Fare Collection and Fare Policy Alexis Perrotta, Columbia University (2013). Discusses new fare collection technologies and how they are enabling different pricing schemes.
  • Fare System Migration TriMET (2011). A whitepaper by the Portland Transit Agency regarding installation of a new fare collection system including the available options and implications of new electronic payment systems.
  • The Future of the Passenger Train David Burns (2010). Addresses a number of current issues in rail transit including the peak demand problem.
Footnotes
  1. 1.0 1.1 1.2 Free Pre-Peak Travel Extended Until 30 June 2016
  2. 2.0 2.1 Washington Metrorail Fares
  3. Off-Peak Fares Eyed for New York City Transit William Neuman (2007). New York Times
  4. 4.0 4.1 The free-fare transit experiments. Studenmund, A. H., and David Connor. Transportation Research Part A: General 16.4 (1982): 261-269.
  5. Los Angeles Metro Rail Fares
  6. BART to offer rewards program
  7. 7.0 7.1 7.2 7.3 7.4 7.5 7.6 7.7 Off-Peak Discounts for NYC Transit: An Intriguing Idea Charles Komanoff (2009). Streetsblog
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