Public transport fares are often a contentious issue. Too high and they can put people off, too low and it may increase the subsides needed or you may need to cut services. So it’s interesting to think about fares in the current climate we have in Auckland. We know from the last AT board meeting that the annual fare review was up for a decision/approval in the closed session. Given this is the time of the year they usually announce the outcome of that fare review I expect we’ll be hearing soon what they’re going to do.

Over the last few years we’ve seen fares for most people (HOP users) stabilise quite a bit and even fall while fares for cash payers to increase to help encourage people to move to HOP. Given some of the trends we’re seeing and what’s planned it seems that other than perhaps a few small tweaks any substantial changes can’t really be justified – in fact possibly the opposite, reducing fares might be justified.

We know that later this year Auckland Transport will be implementing integrated fares which will see us move to a zone based system. It’s quite likely they’ll use the fare review to move towards what’s planned for integrated fares and that could see some interesting changes, one of these could be around Orakei train station which sits outside the City zone in the proposed map below.

RPTP Integrated Fares Zones Map

The NZTA require that by mid-2018 public transport has a farebox recovery ratio of 50% – the percentage of costs that are covered by passenger fares. Auckland has traditionally hovered around 45% meaning that if we’re to meet the national goal then AT needs to do better – whether 50% is the right level to get the best economic outcome is for a different debate. Many of the current initiates such as electrification, the new bus network and PTOM contracts are all expected to improve Auckland’s performance through both reducing costs and increasing patronage and therefore revenue (AT’s farebox recovery policy is in the RPTP). For this year Auckland Transport and the Council set a formal target of 46-48% as part of their Statement of Intent.

The good news is that the surge in patronage that Auckland has been experiencing over the last year has had a noticeable impact on the farebox recovery ratio. The most recent data up to October last year show it sitting at top of the target range at 47.8%, that’s up from 45.9% the at the same time the year before. Does this suggest perhaps there’s some room to move on fares while still keeping the farebox recovery ratio within target?

2015-12 - Farebox Recovery Ratio

In the past when they’ve raised fares AT have said that one consideration in setting fares is the cost compared to driving for an individual. We know that in recent months fuel prices have fallen (shown below) which obviously makes it cheaper to drive. The decrease

Petrol Prices 2016-01-22

Diesel prices have fallen even more sharply and that will likely be having an impact on bus operational costs.

Diesel Prices to 2016-01-22 (2)

There are likely to be some other factors I’ve overlooked however it seems to me that given the broad factors we’re seeing that raising prices is about last thing we should be doing.

Inevitably when discussing fares many like to compare Auckland’s to those in other cities. In September I took a look at a number of Australian and Canadian cities. One thing that was clear from doing that activity is it’s incredibly difficult to say whether fares are too high in Auckland. Every city has very different fare structures and often who is cheapest depends on distance travelled and the mode used.

Lastly another topic people love to raise is fare evasion and suggest we should gate all stations immediately. To put some things in perspective the last I heard fare evasion – which I believe is based on how many passengers are found without a ticket by the ticket inspectors – sits at around 6-8%. The amount of lost revenue from those evading fares is the vicinity of $2.5 million. The reality is that if AT tried to eliminate fare evasion the amount of money they would need to spend on staff and infrastructure to enable it would dwarf the amount of money they end up collecting. The key is to get the right balance rather than an impossible attempt to stop all evasion (which still happens on systems fully gated)

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    1. It’s not really integrated fares though. If you make your way from New Lynn to Glen Innes by bus, it’s one zone. If you go by train, it’s three zones. True integrated fares would be the same price between two points regardless of mode or route.

      1. London uses a zonal system for the train network (both TFL services and National Rail services). Beginning in zone 3 in South London (lets say Crystal Palace) and finishing in zone 3 in East London (lets say Canning Town) depends on which direction the journey took place.

        If it was on the Overground Train changing at Canada Water (it would be a zone 2-3 fare (not a zone 3-2-3 fare))
        If it was via the city changing to the Jubilee Line at London Bridge, it would be a 1-3 fare.
        The difference is the interchange card-readers which informs TFL of the route taken and calculates the correct fare. AT could do this similarly with hop cards.

        If implemented in this way, a trip from Mt Albert to Penrose would be two zones, not three

        It might be slightly different with buses as AT plans to integrate them into zones as well. London’s bus network is not integrated with the train network and is a single fare per journey (up to a daily cap)

      2. We’ve been through this before Geoff. New Lynn to Glen Innes via the city zone will be two zones.

        It’s calculated by the number of *different* zones you pass through, passing through the same zone multiple times during a trip only counts that zone once. That is the difference between “zones” and “stages”.

        1. AT confirmed quite some time back that each zone boundary crossing is counted, which makes it three. But whether it’s two or three, it should be one. If the train fare isn’t identical to the bus fare, it’s not an integrated fare system.

  1. Wages have essentially remained static for years and vehicle licencing fees have dropped, the exception being motorcycles and patronage up (not so much on buses) so fare reductions can be justified!. Fare evasion official figures never equated to what I saw in reality and were always conveniently low, that is the reason Grafton with its large school pupil patronage varies so much. The truth is people aren’t that honest and or skipped tagging on when running late for a train which worked out fine for them if they didn’t get off at a rare gated station. The council are more than happy to have an army of parking wardens so why not the same attitude to Ticket Inspectors?

    1. because the aim of parking wardens isn’t to gather revenue but to ensure that car parks free up and rotate in a predicable fashion.

      Ticket inspectors are there to gather money.

      1. That was said toungue in cheek was it not? Parking wardens are ALL about revenue, hence there are so many of them, a nice little earn! If it was to free up parking they’d tow you straight away.

  2. While spending more on enforcement may actually lose money, there are additional ethical concerns here about allowing evil to continue.

    I recommend you read about Bill Bratton and the NY subway… fare evaders often commit other crimes too

    1. If you remove opportunistic fare evasion and get the rate down to a few percent, there is no ‘evil’ left. What you are left with are basically people that can’t afford to travel in anyway, and a comple crack down would simply mean they don’t (rather that get them to buy tickets).

      You could consider the last few percent as a social service to the city’s most vulnerable residents. Or you could smash them with the law and order book to no real gain.

      1. Disagree…give people an inch and they’ll take a mile. Not a great leap to suggest that minor dishonesty has a “gateway effect”, and will just encourage further testing of and disrespect for law and societal norms.

        Gating and other evasion prevention is drawing a very important line in the sand IMO. It’s actually a moral service to the potential evader when viewed this way.

    2. Agree…give people an inch and they’ll take a mile. Not a great leap to suggest that minor dishonesty has a “gateway effect”, and will just encourage further testing of and disrespect for law and societal norms.

      Gating and other evasion prevention is drawing a very important line in the sand IMO. It’s actually a moral service to the potential evader when viewed this way.

    3. “Evil”?? Hyperbolic much?
      There are many things that could be labelled ‘evil’ – fare evasion is not one of them.

    4. The ‘zero tolerance/broken windows’ theory is racist nonsense. Nonsense because it has resulted in the “school to prison pipeline” in the US, where teenagers who get into a bit of trouble get a legal ton of bricks dropped on them, turning them into hardened criminals on the “might as well be busted for something worthwhile” principle. Racist because inevitably the kids who are in trouble are those from marginalised communities. Note the other commenters here wanting it to happen in Glen Innes and South Auckland, hint hint dogwhistle.

      1. If you make public transport an antisocial and unpleasant experience, the middle classes will turn off it and flee back to the roads. Discipline on PT must be maintained otherwise it’s just back to all those hosking clichés.

        Im all for raising benefits or the minimum wage if you want to help the poor. Don’t instead reward the most brazen with de facto free PT at the expense of the honest.

      2. My kids stopped using the South Auckland trains and now alternate between car and bus – in the afternoons and evenings it can be a very unpleasant experience with thefts and standover tactics common. Don’t cry the racism card – people say it as they see it. And I suspect a number of these intimidatory practices are carried out by those without tickets. So what we need – if gating is considered uneconomic is police on trains – the current lot of ‘inspectors’ turn their eye and wont take on the miscreants. Loss to scumbags thieving on the trains to date amongst my kids and family who used to use the trains, 2 cell phones, 1 wallet and a sports bag, and many trips fraught with intimidation and no one did bugger all. The cops cant do anything about a loser who grabs a phone and jumps off as the train reaches a stop. Something needs to change.

      1. The family pass is a specialised solution to a much wider problem – the fact that off peak fares are too high. If off peak was a lot less we wouldn’t need a whole lot of special passes for families and tourists etc.
        The other day my wife and I were going to Waiheke island, we considered catching the bus, but it costs about half the price to drive and park in town. Parking is much cheaper off peak, traffic is much better off peak, but PT is the same price as peak despite a reduced service.

        1. The more kids I take somewhere the more cost effective driving and parking is. Especially cuz family pass has to bought at a major retail outlet.

    1. Slight modification: why not just allow kids to travel free on weekends? Then all the adult needs to do is buy an adult ticket and all the kids need to do is tag on. Saves having to introduce a whole new paoer ticket..

  3. the nonsense that are farebox recovery ratios are really laid bare the day after the announcement of a $2.5b capital investment.

  4. cheaper weekends and smart deals, that’s what they need to do. Leave the base fares untouched and play with capacity at the fringes. If AT gives me 50 bucks I’ll show them how

    1. I’ll do it for free.

      20% off from 5:30am – 7am and 6:30pm – midnight. 40% off 9:30am-4pm, and Saturdays, Sundays, and Public Holidays.

      All services.

    1. Gosh. I was excited to discover $6 daily caps on weekends in Melbourne, but that leaves Melbourne in the shade!

      As a start, I’d just like to see any daily cap in Auckland. They’ll probably refuse and cite Pukekohe, as if stopping a few commuters from getting a good deal justifies holding back proper fare products for the rest of us.

    2. Its actually a bit cheap and causing real capacity problems. Also tends to be a subsidy that benefits tourists more than locals. So while i support caps im not sure sydney is a good example!

  5. Gates at the next couple of busiest stations would surely at least break even?
    I don’t think the bulk of fare evaders are people that can’t afford to travel, rather they are trying it on, beating the system and don’t recognise the moral obligation.

      1. Wow, I need to start making gates!
        This is what happens when you outsource fairly simple things like integrated ticketing to big overseas companies. It should have been done locally by a collection of smaller firms all out to make a fair profit.

        1. Well said, it seems anything provided for AC or AT means adding a couple of zeros to the end of the quote! Bring more services inhouse.

      2. Just to clarify: that was a high end cost estimate for a high end station (grafton). Reality is gating most stations could be done for $2-4 million. But like matt notes thats a lot compared to potential gains.

  6. Auckland’s fares *are* high by international standards, for all modes.

    What they should do is grandfather them, and allow inflation to reduce their value. What they have been doing is the opposite, and for a number of years this pushed down usage considerably as there was no improvement in service. It’s still cheaper to drive anywhere in Auckland where parking at both ends is free.

    One large concern of mine is that the fare map above has very small overlap zones. And that’s because Auckland Transport appear to be concerned to maximise per-passenger revenue, rather than maximising revenue from the system as a whole, or seeing transport as a public good. It’s rather disappointing, but I don’t expect it to change.

  7. Would you take a look at the importer margins…. they have been going up for years! Disgusting greed really!
    Their increased margin is costing everyone 15-25c per litre compared to 2008. Even accounting for inflation etc they should be 10-15c per litre lower than they currently are… it’s monopolistic extortion.
    I don’t know what Aucklands buses combined use in fuel each year (buses typically use around 30l per 100km so on an average day a bus would probably use around 200l of fuel). Not sure how many buses in Auckland but if it was 1000 then that is around $73,000,000 pa in fuel…. so if importer margins were lower they could collectively save around $7m pa! – that would sure help with fare box recovery!

    1. I would be quite surprised if the bus operators are paying anything like the importer margin that retail users do. They probably have contracts with their fuel suppliers that specify cost (importer cost + NZ tax + ETS) plus a number of cents margin.
      It is also a bit misleading to say that diesel prices have fallen even more sharply. The retail price of petrol includes a lot more tax than the retail price of diesel. The retail taxes on petrol haven’t been dropping, and neither have taxes on diesel vehicles (RUCs).

      1. You would hope so Errol, however councils in NZ are seen as a pushover golden goose that easy money can be made from.

        1. I have a hard time feeling sorry for Auckland’s transport departments – bus pass prices went up from $71 for a single zone monthly pass to over $100 in the space of a year when fuel prices went up, but they’ve never come back down since despite that being the stated reason for why they went up in the first place.

        2. I would assume it is the companies negotiating fuel costs rather than the council but I could be wrong.

  8. “The NZTA require that by mid-2018 public transport has a farebox recovery ratio of 50% ”
    What is the recovery rate on the city’s roads? Ok the Council gets a proportion of the government’s take on RUC and petrol tax but a large share on the road budget comes from rates.

    1. Thats not really a relevant comparison. Farebox recovery ratios are a strange concoction that only measure operating costs. So for roads that might amount to the costs of running the vehicles (private cost, therefore 100% recovered), the cost of electricity for lights and maintenance costs (but not sure if resurfacing would be a maintenance cost or a capital cost – probably the latter).

        1. I’m not an expert in public sector accounting but presumably a new pavement or pavement rehab will end up on the balance sheet, are you saying just redoing the surface layer is different?

        2. A little bit of reading indicates it comes down to whether or not you are extending the life of the asset. I would have thought major resurfacing would fall into this category particularly where you rebuild kerb and channel etc as is often the case. It would be interesting to know what portion of this type of spending is treated as depreciable capital expenditure and what portion os treated as maintenance. Do you know?

        3. Under normal accounting principals, fixing up big potholes and other major roadworks like resurfacing, would be considered as extending the life of the road, therefore its a capital improvement.

          Regular [preventative] maintenance like sweeping the glass and crap off it and sealing all the little cracks with bitumen to keep it waterproof probably not.

        4. Yeah that would be my understanding Greg, so any concept of operational cost recovery on roads is somewhat fraught and meaningless (as it is also for PT), unless depreciation is counted in the operational costs.

    2. Ideally there would be no subsidy for PT and no subsidy for roads, then there would be no need for these types of debates.
      But road users are so subsidised that it would be political suicide to change this:
      – The land under roads does not pay rates
      – The publicly owned land under roads is not required to make a profit, it is gifted to road users often without analysis of better use. We expect our power companies to make a profit on their capitol but not our roads.
      – Pollution isn’t charged correctly – noise, particulates, carbon, etc
      – Rates pay for a lot of local roads, not just petrol tax
      – Hospital costs for accidents (or does ACC pay for that?)

      1. “But road users are so subsidised that it would be political suicide to change this.”

        If you sold it as being cost neutral (or in actual fact cost reducing), I dont believe this. But noone even tries. The only time we get mention of road tolls in NZ are about increasing revenue which politically is about the worst way you could sell them (and even then they are apparently not that unpopular).

        1. The problem is that people don’t see it as a subsidy unless it is a physical cost. Most people would see rates paying for roads as a subsidy, but most would not see roads not paying rates as a subsidy.

      2. The common perception is that high rates are the result of the “train set” whereas roads take a disproportionate of rates. Yet every politician says we need to raise more money for PT. When is someone going to say That ratepayers are paying too much of the roading budget and that there needs to be more costs recovery from road users.

  9. I’ve always maintained that the best solutions are the simplest solutions. How about:
    a) Ditch all passes and discounts, have one set of zoned fares for adults (including students), half price for children
    b) Implement daily and weekly caps (monthly is not needed if you have weekly). The cap should be around the level of a return fare for daily and 5x return fare weekly so a commuter is encouraged to use PT outside of getting to work and back.
    c) Half price fares outside peak for non-commuters.

    To implement this they may have to increase the peak fare to pay for the lower cost off peak and daily caps – but with fuel costs coming down so much they might not even have to do that.

    1. Not too dissimilar to what we already have in Christchurch. $2.50 to travel anywhere around Chch in 2hrs; $5 max per day, $25 max per week, half-price fares for children, no other discounts. Same principle for two outer zones to Rangiora, Rolleston, etc, just slightly higher fares ($3.60, $4.55). And we’ve had that system for over ten years… Only thing that would be nice from a research/analysis perspective would be adding tag-off to the process; currently no way of knowing where people finish up.

  10. wow, I’m also finding that the most striking feature of these graphs is that fuel importer margins have nearbly doubled in the last 4 years.

    1. NZ Bus Chief Executive Zane Fulljames said “Not being selected as a preferred tenderer in one of our incumbent locations is a disappointing outcome, particularly for our staff who work hard every day to deliver a high quality service and are part of the South Auckland community. However, as an incumbent we understand clearly the costs of operating in the South Auckland market and submitted a strong, high quality tender to reflect this.”

      In other words, their bid was too high. I wonder if it went to H&E or someone else. They have to worry if this trend is repeated in any of the other areas under consultation. Losing capacity equivalent to 153 of their 1070 buses has to concern them greatly.

      1. Nah, thats just gonna mean that they are finally going to retire for good the worst 150 or so buses from their fleet, the ones they’ve been keeping around forever as cheap stop gaps.

        1. Possibly, but presumably NZBus knew well the requirements AT had for nearly new buses with modern fitout, so maybe NZBus pitched high on the basis they’d need to buy a lot of (near) new buses because of their old dungas they currently had.

          Other operators probably have fairly up to date buses already so were “PTOM ready”, unlike NZ Bus’ fleet which is clearly not by any chalk.

          Wonder when the legal argument stuff starts…

          Or is it maybe a simple case of “the lowest or any tender not necessarily accepted?”

  11. Can’t we simply leave the fares the same and rely on inflation to reduce them in real terms. There is also an argument to keep fares high so as to fund more bus lanes and rail investments e.t.c. to improve the system

    1. Yes that’s not a bad approach but only when integrated fares come in – as a ferry user I’m still being charged nearly double the proper fare by AT, and proper integrated fares cannot come soon enough.

      We would still need to fix off-peak and family fares but these should be simple enough to do.

  12. [Quote] “The NZTA require that by mid-2018 public transport has a farebox recovery ratio of 50%…” [/Quote]

    Do NZTA pay the other 50%? I thought it was Auckland council? If so, why do NZTA set the requirements?

    1. Like most local transport in NZ, the cost is shared roughly equally. NZTA pay approx. 25%, Akld Council the other 25%. Balance should come from fares.

  13. There should be a family pass on weekend to encourge people to take the whole family by PT.

    For example, lets says a family wish to go to auckland anniversity downtown, on sunday, by train for 3 stages.
    By train:
    2 Adult + 2 child (3 stages) = $25 return

    $10 parking (weekend full day on AT car park), 20km driving = 3 liter fuel = $5 fuel.
    Total $15

    It turns out driving is superior, not only more confortable, but cheaper as well.

    What AT should do is cut the price on weekend and introduce family pass for large families who travel together.

    1. I agree, see my comment higher up, though to be fair you should include wear & tear on the car (including circling several floors of a car park often!).

      Also in a sense, perhaps,4 people in a car is not to be discouraged as it is in effect a small bus load.

      NB There is currently a family train pass which you can use for up to 2 adults & 4 children, but you have to buy a clunky old paper card at a major interchange station like Panmure etc for $24:

  14. An outcome I’d like to see from the Fare Review is improvements on transfers which has been a problem for AT imo since the implementation of the Hop. There are several pre-arranged transfers set up (060090 as a local example), by creating a fair transfer system around specific routes/transfer points, some fares would drop and would also help them out with the upcoming zonal fares where we can have a true “continuation of journey” scheme.

    Some examples of others that would be done as a ‘fair transfer fare’: Panmure (H&E buses onto Train to Britomart), North Harbour/NEX & Nor-West buses onto Link/Train (1 stage) options (and vice versa) – in mind to target Newmarket travel + Ponsonby.

    Yes, it’s likely too hard to document, & implement, but it’d be nice, and especially for mandatory transfers, like the off-peak 060’s, would save users a couple dollars each trip (per Journey Planner & Call Center).

    1. Best/simplest way to do this is to increase transfer discount to $1. Too hard to program all these little things in for a year or 2.

      1. For the 060 it’s $1.50 (or more) difference for journeys into the CBD due to the way zones are calculated. Was something AT really needed to address. I’m sure there is other examples.

      2. Better/simpler than that – just charge the same zone-calculated fare for any specific journey between two points, irrespective of the number/type of vehicles used, provided that the journey is completed within a specified time, eg 1 hour for a single-zone trip. That’s what Wellington (and Auckland, I hope) is planning to do.

    2. There used to be a Northern Pass that meant one could go from most anywhere on the North Shore to Newmarket, any which way, on bus and train, for much less than the separate tickets. Around the time the HOP cards were being phased-in this pass was being phased-out, which is a shame.

      To advance sustainable living habits for young and old alike, AT should definitely encourage families to use PT for off-peak shopping trips – call it the “Quax Pass” – and weekend outings (which would also cover most sporting events and other cultural events (those events that the PT isn’t already free with a ticket to the event), as these events are usually on weekends, whether these events are free or not).

      Every Auckland resident ratepayer could be given a free Quax Pass with their rates notices, or water rates notices for tenants.

      Every arriving passenger to Auckland could be given a complimentary Quax Pass and an AT PT route map at the airport (and at the long-distance coach and train stations) – just charge it to ATEED’s budget. The Quax Pass would soon become world famous. Thanks Dick.

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