Transfer fare discounts

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Transfer fare discounts are policies in which passengers in a transit system are granted an overall discount on their fare paid per trip when taking trips that span multiple transit lines or modes, each of which might ordinarily have their own per ride fare cost. Transfer fare discounts may be offered when transferring stations (e.g., for riders who exit from one station and must walk to another nearby station), transfering transit modes (e.g., for riders who take a train and a bus as part of the same trip), or even transfering across transit systems (e.g., from a subway system managed by a local authority to a light rail line managed by a regional transit authority). Transfer fare discounts are often used to increase utilization of transit systems and to lower the financial burden of transferring among distance commuters, who may be more likely to be low-income and forced to spend a higher share of their income on transit

CONCEPT


Goals
Examples

Some city or region may face the problem of low demand for multi-leg transit trips where the cost to a traveler currently equals the sum of the individual fares. The legs may be operated by a single agency or multiple agencies, and may or may not be of the same mode. The agency(ies) may consider a single-fare policy, effectively discounting up to the entirety of the lesser fare(s). Depending on the structure of the discount, different fare media may be required. New fare media may also be an opportunity to deploy new technology, for convenience or data collection. As a result, total ridership will increase or remain the same. Total farebox recovery may decrease or increase, depending on demand elasticity and sometimes existing volume-to-capacity ratios.

Specific Example: MetroCard (Metropolitan Transportation Authority)
Between 1993 and 1997, the New York City subway and bus systems movedfrom token to magnetic stripe media[1]. Upon completion of both systems’ conversion, free transfers were enabled thereby eliminating the cost of the second fare[2][3]. As a result, in the years immediately after implementation of the discount, the trend of declining ridership was reversed and New York City Transit buses attacted 30% more customers, compared to a 17% growth in subway ridership[4]. Additionally, non-work transit trips grew by 62% in the 1990s, in large part due to the fare discounts and passes[5]. Within one year the discount was extended to Express Bus and Bee-Line Bus. Eventually other specific types of transfers were manipulated[6]. Other adjacent systems such as PATH and AirTrain JFK adopted the same fare media but do not offer any transfer discount.

Tradeoffs

Tradeoffs of implementing this policy may include:

  1. Costs to upgrade and maintain farebox technology and fare media
  2. Administrative challenge of requiring all participating agecies to maintain common technology and media
  3. Complexity in proration and settlement process. When fare revenue must be allocated to individual legs, for farebox recovery analysis or to determine balances owed between separate entities, no standard exists for the calculation of each leg's share.
  4. Pedestrian travel may decrease as a result of riders using transit for short, connecting legs at zero or lower incremental cost than a full fare.
  5. Decline in Level of Service due to increased vehicle loads
  6. Point of sale may not be able to provide customer service related to all legs covered by the discounted fare.
  7. Dilution of multi-leg trip fares from gaming of restrictions or inability to enforce restrictions. For example a "transfer" may be defined as a single same customer making two, connecting legs, but the operator has no way to check if the rider on the first leg gave or sold the second-leg transfer (fare media, ticket slip, etc.) to another rider.
Compatibility Assessment

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

  1. Is there high enough prospective demand for trips involving a transfer?
  2. Is the volume of traffic in non-transit modes unsustainable?
  3. Will an increase in ridership or possible decrease in revenue conflict with the objectives of any stakeholders?
  4. Can stakeholders project the impact of the new fare policy with sufficient accuracy?
  5. Do operating agencies have the resources to upgrade fare collection systems, if necessary?
Design

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

  1. What types of riders (or trip reasons) are the target?
    1. Home-work trips during peak hours
    2. Non-work trips which are distributed more evenly throughout the day and route network
    3. Tourist trips between major nodes and points of interest
  2. Will a usage limit be required?
    1. Can discounts be compounded?
    2. Will a usage limit narrow the benefits to the intended target?
  3. What are the risks that revenues decrease?
    1. Depends on accuracy of demand elasticity and modal choice models
    2. What process takes place in the case of an unexpected (or larger than expected) decrease in revenue?
  4. Will it introduce new levels of government (regulation, funding)?[7]
  5. How will shared costs and revenues be allocated?
  6. How will usage be measured?
    1. Can new data sources support future decision-making?[7]
    2. Is reporting accuracy a factor in allocation of shared costs and revenues?
  7. Will it impact operations processes?[8]
    1. Ticket sales and collection
    2. Boarding and alighting flows
    3. Add additional guidance to help policymakers answer each design question.

ADOPTION


PolicyGraphics
Adopters
  • Adoption to some degree is widespread across the United States.

STAKEHOLDERS


Supporters
Opponents

Generally: Advocates for individual agency or regional autonomy, fiscal conservatives, and operators of competing services

REFERENCES


Research
Resources

Transit customer resources containing useful data

Non-academic research and conjecture

Footnotes
  1. http://www.gothamgazette.com/index.php/transportation/1799-nyc-subway-token-1953-2003
  2. http://www.nytimes.com/2003/03/15/nyregion/subway-token-currency-of-the-city-dies-at-50.html
  3. http://www.nytimes.com/1996/06/25/nyregion/mta-planning-free-transfers-between-subways-and-buses.html
  4. http://www.nytimes.com/1998/12/22/nyregion/new-york-s-bus-ridership-surges-after-long-decline.html?pagewanted=all
  5. http://www.straphangers.org/discount.pdf
  6. http://www.mta.info/press-release/mta-headquarters/mta-board-approved-free-transfer-between-westchester-county-bee-lines
  7. 7.0 7.1 Barr, J. (1997). Intermodal fare integration: Application to the San Juan metropolitan area. Massachusetts Institute of Technology.
  8. 8.0 8.1 http://www.konsult.leeds.ac.uk/pg/70/
  9. Dodgson, J., & Topham, N. (1987). Benefit-Cost Rules for Urban Transit Subsidies: An Integration of Allocational, Distributional and Public Finance Issues. Journal of Transport Economics and Policy, 21(1), 57-71.
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