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