Auckland has made some big and important strides to improve public transport in recent years, and big changes like electrification, the new bus network, City Rail Link and light rail have or will help to improve PT. While lots of good things are happening, there’s still a lot more to be done.

To help explain one area that’s been bugging me of late, let’s start with this short video showing Vienna’s transport goals.

The video is simple but clear on the goals for Vienna and contrasts with documents in Auckland where goals are either absent or hidden away so they can be ignored. One thing to note is that as of 2015, driving accounted for just 28% of ALL trips in Vienna and they want to move this to 20% by 2025 and eventually reach just 15%.

But one aspect that I find particularly interesting is the discussion of costs. They say

Owning a car in the city is 20 times more expensive than buying an annual pass for the Vienna public transport network. More than a third of the city’s population are already annual pass holders.

Vienna is aggressively pushing passes, particularly their annual pass which is a fantastic deal. The pass can be issued for a year from the beginning of any month and costs just €365 ($628). By comparison, a Vienna monthly pass is €51 (€612 annually) or a weekly pass is €17.10 (€889 annually).

The annual pass doesn’t even have to be paid off in one go and payments can be spread out monthly over the year. It has other benefits too, including free travel for up to two children on Saturday afternoons or free travel for your dog. Companies can even buy them for their staff.

The theory behind pushing passes is fairly straightforward, by having a pass with unlimited travel, people are far more likely to use public transport for a wide variety of trips, than say just using it for commuting and then jumping back in your car on the weekends.

This is also the way that we’re seeing other aspects of society move too with services like Netflix or phone and internet providers and their increasingly used unlimited plans.

But Auckland Transport is going the opposite way. Their strategy has been to push people off passes and towards using stored value by hiking pass prices. It’s a strategy that seems to be working too, prices have increased by about $25 per month over the last four years ($300 annually), rising faster than the increases other fares. Where there once were multiple options for a bus and train pass, depending on how far you travelled, there is now just one monthly pass that costs $215 ($2,850) annually. The change in the use of passes is shown in this graph of HOP balances. Two years ago, just over $2 million worth of passes but that number now appears to have halved.

So what’s causing this strategy from Auckland Transport?

The answer unsurprisingly comes down to money. AT have a requirement from the previous government (through the NZTA) to achieve a farebox recovery target of 50%, in other words, half of PT costs are paid for by user fares. Auckland did meet that threshold for a while back before changing the fare structure (integrated fares) and starting the roll out of the new bus networks. Farebox recovery is now around 45%.

Transport Minister Phil Twyford has previously expressed being open to using altering the farebox targets but we haven’t heard of any specific changes yet.

I should point out that I’m not suggesting that all fares should drop. As I’ve pointed out before, I do think that for the time being, that overall revenue is probably more valuable going back towards improving services. But I also think there are some selected options for changes and monthly passes would fall into that.

Passes change perception of PT

Here is a quick example of how changes to passes change my perception and use of PT.

As many readers will know, I have a fairly decent commute across multiple services from West Auckland to Takapuna. This is a 4-zone trip. I also once a week ride my bike to work (normally riding in one day, riding home a few days later). Traditionally I’ve almost always had a monthly pass as it was the easiest but as an added bonus, let me use PT elsewhere. As a result of this and the changes to monthly passes it’s altered how I pay for my PT.

I find myself now building a spreadsheet every now and then to see if it’s worth me buying a pass or not. That’s not a great customer experience to have to worry about. If I don’t have a pass (much more often), I’ve started to notice I’m thinking twice about incidental travel and are much more likely to look at alternatives to catching a bus or a train. This makes me wonder, if I’m thinking this way, surely many other PT users are too. I wonder if AT’s primary PT goal of increasing PT usage is being impacted by policies like Farebox.

Edit: I forgot to add that AT appear to not only trying to force people off passes with pricing but I found yesterday when I went to get one that buying one online has been made much harder. The option to do so is deep in the AT HOP website that I suspect most wouldn’t find.

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103 comments

  1. I’m reminder of the period in the mid-late 2000s where fuel prices rocketed and so did monthly pass prices. Then prices came back down and the pass prices kept going up. Fuel has only just reached those levels again, yet the price of a pass has effectively doubled.

  2. Agreed, this is my experience on trips to Sydney and Melbourne that have daily/weekly/weekend caps. I plan and use public transport around cost. Sydney has a Sunday limit of $3 or something very slow. I often make a point of using public transport More on the Sunday, when I’m visiting.

    1. Note that caps are different from passes: the latter are applied automatically whereas the former require pre-purchase.

  3. Good call, Matt. This is a great way that PT providers can exploit our “choice confirmation bias”. They should make it easy for us to make that initial choice to a long term commitment to PT and once we’ve made it our “choice confirmation bias” will take over and we’ll use PT even more. Then the “bandwagon effect bias” kicks in and all our family & friends join us and buy their own annual passes. Currently, my “choice confirmation bias” has me going to the garage and driving to work to confirm the choice I made to buy that car.

    1. For a given amount of revenue and service the choice is between cheap passes and expensive single trips, or vice versa.

      You can debate the merits of both approaches but you can’t escape the trade-off. That is unless you make the heroic assumption that the aggregate demand for PT is elastic.

      I personally like the combination of weekly caps and annual passes priced at say 9 times the monthly price, reflecting that 3 months of the year are fairly low demand.

  4. The bigger issue here is what you’ve hinted at at the bottom of the article: If people have a monthly (or yearly) pass they don’t think twice about taking another train tram or bus trip. Compare this to having a hop card that every trip costs you more money. Plus the infrastructure for the hop cards is significant and perhaps just as importantly there are significant time savings for bus dwell times by not having to tag on and off. My understanding is that in Germany and probably Austria too, you don’t even show your pass to the driver (so you can get on front or back doors), you just have to carry you pass. They have inspection teams that occasionally check the whole buses passes with large fines for not having a pass. I think the whole farebox recovery rates is a separate issue, but having passes rather than hop cards might a) increase patronage, b) increase speed of embarkation and disembarkation increasing efficiency and c) might save money over hop card infrastructure.

    1. Matt isn’t considering doing away with the HOP infrastructure, only adding in the passes, so his proposal wouldn’t improve b) and c). If it increases patronage while decreasing fare take, then other fares will have to go up to maintain the same farebox recovery rate. Hence farebox recovery rate is central to this discussion, I think. It must come down.

      1. +1 Heidi, farebox recovery is no longer a good KPI for AT.
        PT needs to be used as a tool to get cars off the road. There should be bonus points for other mode changes as well.
        AT HOP can do Passes. Some examples are Gold Card, Student and there must be others that I do not know about.

        1. There’s not much evidence that PT does get cars off the road in the long run.

          The same arguments that give rise to induced demand from highways also apply to PT.

          See duranton and turners paper “the fundamental law of traffic congestion” for more info.

          1. Aha, but… we can’t realistically get good bus infrastructure without reallocating road space from private vehicles to bus lanes, so it’s all interrelated.

          2. “There’s not much evidence that PT does get cars off the road in the long run.”

            Stu, isn’t Vienna an example that makes a lie of this statement? As the graphic above shows car mode share is currently only 26% (down about 10% over the last 12 years from memory) with a target of 20% by 2025.

            On the other side of the coin PT ridership is at 954 million trips per year (up 4% from memory) for a city with a population only about 10% bigger than Auckland. Do D & T suggest that people make endless trips because the last one is effectively free? The figures suggest that more people are abandoning their cars or using them less.

            I think Vienna is a remarkable story of doing things differently with a great outcome.

          3. Takaite — no, because % mode share tells you little about car demand. The latter is measured not in %s bit trips and / or kilometres travelled. It may be that PT simply enables mpore travel overall, rather than reducing car travel overall.

          4. Or that to get PT passenger numbers up, priority at intersections was reassigned, roads were reallocated, carparks were priced, or removed and reallocated to PT infrastructure, and funding of the PT infrastructure was achieved perhaps with fuel or congestion taxes? All of which contributed to traffic evaporation at the same time. And all of which Auckland could see too.

    2. It would make sense to allow annual passes to be purchased on a HOP card (or is this just too hard)

      Its useful to keep the swipe on/off so as to see where the travel demand is & help planning the PT system.

      RE: Farebox recovery – I don’t have a problem with 50% recovery, however:
      a) Local government/AT needs the tools to manage/price all private/public commuter parking until such time as congestion tolls are introduced.
      b) A local air pollution excise tax on fuel would also help

      1. Q. Can annual passes be enabled via HOP? A. Yes, in much the same way that we enable time-limited concessions for tertiary students.

  5. The government has said – I think – that they would be prepared to put more money into operational subsidies to reduce fares. Cheaper annual passes would be a reasonable way for the government to do that.

  6. At $2850 a year it is the price of an old car (people see this as an asset (it’s not it’s a liability)). So people don’t see the value in our passes. An annual pass of 499 or less which would be competitive to buying a second hand car. This would immediately get a huge number of people into trains.

    1. Yes, and after listening to Efeso Collins and Sam Warburton (and others – excellent discussion) on Sunday morning radio, it confirmed for me that poorer people are making very bad financial decisions to avoid the upfront cost of a more fuel efficient car. Even well within 2 years – going by some figures used on the radio – they would be better off paying for a more expensive fuel-efficient car. But it’s that upfront cost that prevents it.

      A pass, perhaps discounted for community service card holders, and certainly paid off monthly rather than as an upfront free, could provide a much-needed alternative to buying a car. But PT for the whole family would have to be cheaper. And only some travel patterns will benefit from a pass system – I’ll get into that in another comment.

      1. Hi Heidi

        “it confirmed for me that poorer people are making very bad financial decisions to avoid the upfront cost of a more fuel efficient car”

        That was not the point at all. Poor people make just decisions just as well as rich. Unfortunately they have to make decisions under bad policy that favours the rich.

        Cheers

        1. Hi Sam, perhaps I worded it wrongly. I certainly didn’t mean a poor level of analysis, but a poor availability of ready cash. Is that not the case? Being unable to afford a more fuel-efficient car due to cashflow restraints puts them into a position where they are paying much more in fuel, which eventually makes the purchase a bad financial one. Did you use a figure of $900 in fuel tax per year, instead of $300 for a more fuel efficient car? (I couldn’t hear everything as the family wasn’t being quiet at the time) meaning they’re paying thousands extra in fuel each year because of the inefficiency.

          1. That phrasing makes more sense!

            Yes, you remember the figures correctly. The two vehicles I used are at each end of the distribution – somewhere around the 5% least fuel efficient (so most taxed) and 5% most fuel efficient (so least taxed).

            If we had a system of road user charges for all vehicles (so extending from just diesel), they’d be paying about $600.

          2. Ah, that’s why you chose those vehicles. I was wondering if you thought they were typical for different socioeconomic groups, which I don’t think they are. Richer people buy less fuel efficient cars too. A Suzuki Alto (I think that was your example?) is not exactly the typical car in wealthy suburbs: the 3, 4, 5 car households have Range Rovers, medium and large SUV’s, truck-like Utes…

            I am also more worried about how much poorer families have to pay for the extra fuel, not just for the extra tax on that fuel. That, to me, is more central to the discussion. How to enable families to avoid paying for the fuel, maintenance and other costs of car ownership, while having excellent access to their city.

            It was a really good discussion. Would love to talk more with Efeso Collins about rates, as I agree with him that trying to keep property rates low is counterproductive on many fronts. I may have missed it, coming in a bit late, but there didn’t seem to be much acknowledgement of the benefits of fuel tax as a behaviour-modifying mechanism. Also, his idea for raising property rates instead of the fuel tax would punish households who pay for PT instead of owning a car. At the Living Wage meetings I’ve been to, women in minimum wage care sector jobs have described the public transport commutes they rely on. Improving the PT for these workers seems very important to me.

    2. $1200pa ($100 per month) should be a good balance for all. Maybe one day if usage in Auckland increases to the point where we have far lower costs per service (like in Vienna) then it could be lowered further.
      I feel that at $1200pa you would get a serious uptake of users especially over offpeak periods.

  7. A pass benefits the heavy users. This is both a good thing and a bad thing. We need PT to be able to replace car ownership. Passes could help with this. But we also need to encourage a whole lot of other types of PT use; not just the great commuter who also uses PT for other trips.
    -Children going to weekly activities without their parents having to drive them – quite possibly low users who wouldn’t benefit from a pass.
    -People who don’t need PT for a commute because they walk, cycle, or work from home, but who want to use PT for everything else. They are still relatively low users who wouldn’t benefit from a pass.

    The central issue here is the farebox recovery system. The government needs to understand that PT needs full investment in order to make the transformational change Auckland needs; in order to increase access, improve the local environment, improve urban form, decrease carbon emissions and improve social and public health. Free public transport, or at least an across-the-board lowering of fares, is required. A pass would be great, but not if it prevents a whole swag of other users from increasing their PT usage.

    1. Agree, the fact the target is 50 % points towards it being arbitrary. I always explain to people in my profession that if you are making up a number it is important to put a decimal point on the end so it looks like it has come from a robust and defensible formula.

    2. Heidi this is a good point, what about community service card holders are automatically given a yearly pass for their whole family? Then I suppose it is a big jump for those who don’t quite meet the criteria for a community services card to be able to afford an annual pass.
      I have read Matt’s post on why services shouldn’t be free, but if they were and that were paid for by an increase in taxation – then you would have those who can afford it paying more and those who can’t paying less or nothing. (And of course that increase in taxation to cover free public transport could be all sorts of taxes like peak hour road congestion charges, carbon taxes, capital gain on houses taxes, not just income taxes 🙂 )

      1. If I wasn’t working on a few too many other things, I’d put my energy into re-analysing the free travel case, in the light of emerging environmental and social concerns. As Stu points out elsewhere, we have neither a mature welfare system nor transport system (despite, I might add, a promising state of both mid-1900s). We are also scoring poorly environmentally and in public and mental health, and need to fix our urban form. The analyses of free travel that I’ve read don’t capture our situation today.

        I imagine the ideal solution will be low fares (about 1/3rd what they are) in peak for adults, free off peak, and at all times for children, youth, elderly and for community service card holders. Charging adults for peak fares will provide some incentive to use offpeak services.

  8. “buying one online has been made much harder. The option to do so is deep in the AT HOP website that I suspect most wouldn’t find.” I found it easily, Matt, by going to either “About us” or “Projects and Roadworks” and typing either “monthly passes” or “HOP passes” into the search box.

    That’s probably because I’m used to using the search box, whereas most people might find it more intuitive to a hierarchy of clicking options. HOME – FARE OPTIONS – PASSES – would be the logical structure, I think.

  9. The absolute best that can be said about the Stephen “RONS” Joyce “Farebox recovery” model was that its intent was not to encourage PT usage. The cynic in me thinks it was to actively discourage.

    And yet despite its arbitrary setting of 50% recovery based on no academic research whatsoever, PT uptake increased but I think purely down to some options being preferable over the private car, namely rail, where available, the Northern busway and in some area’s better bus priority lanes.

    But you are right, the outright encouragement of PT is stunted by discouraging policy around passes and mandatory maximum subsidy edicts from bureaucrats in central government. This surely stifles growth.

    Twyford really needs to get his head around the issue much sooner than later. But given his portfolio’s are hectic perhaps even the associate minister should do so. And looking at the mess in Wellington at the moment government needs to deal with some of the inherited PTOM problems while they are at it!

  10. Can’t help but feeling that if it was compulsory for ALL employees of AT to take public transport, and to fund their own Annual AT Pass, that we would have a different situation. That would include the board as well, of course, so all those fat corporate cats – including Lester Levy – would have to catch a bus or train along with everyone else.

    It’s not a silly pipe dream – its having faith in your own system. London Underground did it – with their headquarters at 55 Broadway being directly over the exits of St James Park tube Station – or via a nice walk in St James Park. It’s fantastic to see democracy truly in action – I used to go there weekly and the station stop was full of people (LUL employees) getting off the train and going straight to work.

    1. You cannot come up with any other conclusion than the decision makers and “leaders” of PT in AT do not use or worse rely on the system they throw up for the public, in a take it or leave it, type attitude.

      1. Or maybe that a small group of traffic-flow obsessed leaders hold a legacy of power that prevents the vast, well-researched work produced by the rest of the organisation from being implemented. Not only preventing a good reworking of our city, but wasting our money on great work that is ignored and undermined.

          1. I’m learning more and more about it, Fraggle. And won’t shy away of posting when I’ve put together enough stuff.

        1. I think that we can learn a lot about the direction of AT by looking at the people on the Board, and what their backgrounds are:

          Lester Levy – Chairperson – (too many things to list – he seems over-committed to me, and can’t do his job properly as a result).

          Wayne Donnelly – Deputy Chair – is the former Chief Executive of Land Transport New Zealand.

          Mark Gilbert – has 30 years automotive industry experience.

          Raewyn Bleakley – prior … Raewyn was chief executive of the Bus and Coach Association and Rental Vehicle Association.

          and then there is also:

          Michael Cullen – former Minister of Finance,
          Paula Rebstock – (too many things to list – she also seems hugely over-committed).
          Mary-Jane Daly – (too many things to list – she also seems hugely over-committed).
          Kylie Clegg – corporate background and keen on sports – board observer on Auckland Transport.

          In my experience of Boards (I’m on a couple), the direction that the Board sets is crucial in guiding the CEO and the organisation on its path. The Boards I am on are full of people with intense interest in the subject of their organisation (ie architects, builders etc) and have immense knowledge of the core subjects, as well as being passionate about making sure their organisation succeeds.

          The Board of AT that I see here does none of that. Three of the four people listed at top have cars and buses running through their veins, the others have no experience at all in the subject. The Chair and a few of the others on the Board are being far too greedy and trying to do far too much, and as a result their energies are not fully at work on resolving AT issues. It is no wonder then that AT is rudderless except for the focus on roading.

          The only logical thing to do would be to make sure the existing board are sacked and expunged and replaced with more useful people at the next election.

          1. Yeah but look at that great diversity?? It should be making great decisions with that male/female ratio.

  11. The CRL will be transformative of public transport in Auckland; but adoption of the Vienna pricing model would magnify increased ridership by a factor of 10.

    Vienna issues more annual PT passes each years than there are cars!

    1. “Vienna issues more annual PT passes each years than there are cars!” – probably because even if you have a car, you’ll still use PT for a majority of journeys. Again – similar to London – friends of mine there have three cars – I know, crazy, huh? – but take the trains or tube every day and leave the cars behind. PT in a big city is the only way to go.

  12. I agree with other comments that the public good of encouraging greater PT use outweighs the need for 50% farebox recovery rates and thus high fares.

    It’s worth citing this earlier article which states that Auckland has the third highest PT fares in the world: https://www.greaterauckland.org.nz/2018/06/11/aucklands-expensive-pt-fares/

    And worth noting that London, as the most expensive in that article, feels like an absolute bargain when you are using it. Just look at the size, frequency, comfort and reliability of that network. You get your money’s worth there as you can use it to go anywhere, anytime, efficiently. So, it would be interesting to try to adjust the PT costs for service levels (as a measure of value for money of the service) and see where Auckland ranks.

      1. Because farebox recovery depends on infrastructure. Auckland can’t attempt to compete on farebox recovery rates with a compact city – we’ve had 60 years of investing in the wrong stuff.

        1. Heidi, you make a good point. A massive increase in PT use can’t be sustained by the current infrastructure. Maybe the high pricing is needed to keep the number of PT users down to something AT can handle with its infrastructure.

          1. Bus priority measures should be able to be implemented quickly. It may be that since train improvements are harder to implement, bus prices might have to come down more than train prices in the short term. Of course, this is all pissing in the wind stuff; the will isn’t there.

          2. There’s plenty of scope for reducing off-peak fares without straining existing infrastructure.

        1. “this is all pissing in the wind stuff; the will isn’t there.”
          Heidi, I suggest that we simply don’t know at the moment whether that is true. Phil Twyford has definitely signalled that he is looking at farebox recovery and James Shaw is looking at transport emissions. The current government is barely a year into the term so who knows what will develop.

          1. It’s a three year term. They’ve spent years talking about how serious they are about these things in opposition. Time to show your hand.

          2. Butwizard – it’s pretty standard for government’s to spread policy changes across a term for a couple of reasons.

            1. They want some stuff to be fresh in people’s minds as they approach the next election.
            2. There is a finite amount of resource for working on implementing policy, not every new policy can be implemented at once.

          3. Sorry, the additional fuel tax is being collected now. It’s time to deliver the meaningful change they spent nine years promising.

          4. The additional fuel tax is to fund a number of initiatives. If you also want to increase PT subsidies to lower fares you would either need to raise the fuel tax further or cut back on some of the other projects.

          5. Buttboy – “fuel tax is being collected now. It’s time to deliver the meaningful change…” well so far it has been going for less than a month, and so they will have collected half of bugger all. You want that measly amount to be immediately spent on chewing gum, or should they save up for a bigger piece of pie?

            While your comment is pretty facile, it does have a point: if you don’t want people to start saying stupid things like this, then the Government should have introduced a decrease in public transport ticket prices at the exact same time as introducing increased fuel prices. They’d still get flack from Buttman, but at least they could point to something and say – “Look – we done this”.

            If they wait for 3 years before starting to spend it, they will be on a hiding to nothing at the next election.

  13. Yup. Stopped my bike/train commute to the CBD because it got too expensive/inconvenient. Now I drive in and pay for parking. Now looking at getting an EV.

  14. When you look at Vienna the driver of the PT system has been the very significant capital investment in PT infrastructure year after year and this is increasing. Surely Auckland’s first step should be to reverse the current priority in the annual budget? If AT is serious about PT then reverse the order of the 2/3 to 1/3 split between roads and PT. As Heidi says this could immediately allow the purchase of more buses to “do the heavy lifting” as AT expresses it.

    High service levels in Vienna helps with public transport running from 5am to 1am with all night services on the weekend.

    1. It would be interesting to know how Vienna got there to its 55% farebox recovery – perhaps there was a period of building up the infrastructure where the farebox recovery was a lot lower. But once the infrastructure was there and you get the “completed network” jump in patronage, suddenly farebox recovery jumps up too. I suspect though that with Vienna they never lost their trams, they never put all their money into motorway building like we did in Auckland

  15. Passes are a bad idea. The people who buy them do so to use PT in the peak. But the pass means the marginal cost for use is now zero or unpriced. That encourages people to make more off peak trips or trips that don’t reflect the actual cost of that trip. It is better to charge the actual price (or in this case 50% of the actual as PT has external benefits) so people make better decisions about when and how to travel. Of course what is missing is we should apply this same logic to roads.

    1. I tend to agree with miffy on this, although note that well-targeted caps/passes may be worthwhile in terms of marginal benefits/costs.

      I think what earlier comments on farebox recovery have missed is that there’s always a pt opex budget constraint.

      Lets say the government decided to drop the FRR to 10%. You could afford to run more service for sure, but at the same time you still need to charge people something. Amd you want to do so in a way that maximises patronage. So the real question is who pays more/less than others?

      The whole debate about fares needs to be framed in that light. For example, cheaper annual passes will necessitate higher single trip fares for a given amount of revenue/service.

      There may be a case for such an approach, but it’s got to be more nuanced than simply “cheaper annual fares are good” because they have them in Vienna.

      I do recall a post on this topic on this very blog :).

  16. Building from my earlier comments:
    — Need to distinguish carefully between caps and passes, the former are applied automatically whereas the latter require pre-purchase.
    — I suggest farebox recovery is not the primary issue. Sure, higher subsidies = more service, but there is almost always fares that in turn define the PT opex budget.
    — Specifically, PT opex budget = fares plus subsidies. This constraint defines the quantum of service we can deliver. More revenue = more service, and vice versa.
    — Assuming AT continues to charge something for some journeys, and that aggregate demand is inelastic, then the real question is which journeys should cost more or less?
    — In this context, cheaper annual fares == more expensive single journey fares. That may be desirable, but it needs to be considered carefully.
    — This is especially true in the context of a PT system that is growing, probably by attracting non-users who purchase single journey fares, at least initially.
    — Personally, I’d support:
    1. A weekly cap set at 8 paid journeys; and
    2. An annual pass set at ~9 months, or about 40 weeks, to reflect low marginal costs of running PT in seasonal low-periods (e.g. summer hols).

    This earlier post expands on many of these concepts:
    https://www.greaterauckland.org.nz/2018/01/15/lend-me-some-sugar/

    1. OK, so Opex must be increased. And there is no reason this should be done with fares set at anything like the levels they are at, because that level is preventing PT uptake. Fares must be lowered, Opex must be increased, meaning that public investment into running costs must be increased. And in the process, the farebox recovery rate must plummet.

      I think this is what people are meaning anyway, isn’t it?

      1. Yes, that is what I am meaning anyway: Lower fares in general, rather than being specific about lower-priced annual passes.

        I’ve got a question here: Farebox recovery means getting back a percentage of the opex of the PT network…but, what’s included in those opex costs? I.e. are capex costs somehow amortised (if that’s the right word) into opex (e.g. repaying debts incurred during construction, over a period of years), or are the opex costs simply the costs of running the network currently in operation?

        I mean, it seems obvious that the answer should be opex and capex are totally different and farebox recovery relates only to opex…but I just wanted to double check that.

        1. I’ve been trying to answer to my question above. The NZTA policy document on their website (https://www.nzta.govt.nz/assets/resources/national-farebox-recovery-policy/docs/national-farebox-recovery-policy.pdf) has a formula on the fifth page. It looks like capex isn’t included …but it’s a bit hard for me to understand what the formula is really calculating.

          I did also discover that Greater Auckland ran an article on farebox recovery: https://www.greaterauckland.org.nz/2010/06/11/50-farebox-recovery-policy-a-joke-and-nzta-know-it/

          1. That is an incredible post and some incredible OIA results. The difference in activities that need higher priority and those that need medium priority is enlightening, particularly when contrasted with this government’s GPS.

            What does this mean?:

            “the Planning, Programming and Funding Manual defines optimisation of existing public transport services and infrastructure as:
            • Maintaining patronage with reduced resources, or
            • Increasing patronage within existing resources, or
            • Reducing government costs while maintaining or increasing patronage.
            The last bullet point is likely to result from the first two bullet points and we do not think it is helpful, at this stage, to define what is meant by ‘reducing government costs’ as there could be unintended impacts where the benefits of investing more in Public Transport, through a reallocation of funding, contributes more to the government’s desired impacts than could be achieved by greater efficiencies or other priorities.”

      2. Maybe? It seems to me that the post is arguing for lower annual PT passes in particular. I’m suggesting there’s a need to balance such calls with the apprciation that lower fares for annual PT passes necessitates higher single trip fares, holding service constant. Provided people habe that trade-off in mind when they call for specific reductions in fares, then I’m happy!

          1. from memory the average journey fare in Auckland is ~$2. Whether single journey fares are more/less than this average is hard to know due to the interactions between HOP/cash and adult/concession mix. I wouldn’t be surprised if Vienna’s single journey fares are approximately 1.5 — 2.0 times Auckland’s. Whether that qualifies as hellishly expensive or not depends on your point of view.

            Personally, I don’t think Vienna’s a good example for Auckland from a fares perspective because:
            (1) Vienna already has a butt-tonne of high-capacity rapid transit infrastructure that has low marginal costs, especially but not limited to the short run;
            (2) Vienna has relatively evenly-distributed demand patterns, avoiding the large, tidal CBD-oriented flows that we see in Auckland;
            (3) Vienna is a more mature system where most people already use PT to some degree (I.e. they are less concerned with attracting new riders); and
            (4) Vienna probably has a better welfare system than NZ, such that low-income households aren’t stung so much by high single journey fares.

            I’d argue that Auckland is an entirely different situation: Marginal costs on our PT network are arguably much higher, especially at peak times to the city centre. Moreover, the price of single journey fares are relatively more important because of the immature welfare and PT systems.

            This will of course change over time (as patronage grows post-CRL and LRT), but I wouldn’t expect Vienna-level prices for annual passes to be efficient in Auckland for years if not decades. Instead, I suspect we’d be better-off charging more for passes (especially where they hit journeys for commuters) and less for single journey fares, especially via HOP.

            Let me put it this way: I’d support discounts for annual passes to the degree that they encourage off-peak travel. That leads me to think that pricing them at about 9 months
            is about right.

    2. I think there should be a cap, set at 8 journeys and then a discount of 50% for all other journeys in the week. This answers some of the opposing arguments around not pricing the marginal costs of those journeys after the cap is reached.

      The other option I’d like to see is flat fares for the day at a significant discount on a Saturday or Sunday to encourage families to leave the car at home, or to provide an incentive to reduce the number of cars in a household.

      1. Journey caps just result in people taking a cheaper short journey at lunch time to ensure their more expensive regular journeys are free later in the week.

        1. Really, is that a measured consequence, or an anecdotal one? If measured, what did the people do? Did they manage to get an errand done they didn’t have to do at peak hour on the way home? Interesting… I wonder what the psychological effects on lunchtime relaxation are? Is sitting in a bus a trigger for happy feelings because it’s associated with going home? Is there more social interaction required than just going to sit on a park bench? Do people get a buzz by gaming the system? Or is the opposite of all that true? 🙂 Fascinating.

          1. Anecdotal from Brisbane. I suspect it is people’s joy of finding a way of keeping their costs down, even if the hassle far outweighs any benefits.

            Either way it shows that the number of journeys probably isn’t the best decider of when to put a cap in place. The amount of money spent, or if you wanted to be a bit more nuanced, the amount of money you have spent and the number of zones travelled through.

          2. it’s very anecdotal. The data analysis I’ve done shows this is a negligible problem, and that’s assuming that people everyone does it consciously, when in fact some people do need to take a trip during the middle of the day.

            Always remember that fares are only one component of the cost of using PT. So even if fares are free, using PT still incurs non-monetary costs (walk-time, wait-time, in-vehicle time etc).

            In Brisbane’s case this means that most people won’t benefit from the sorts of behaviour Jezza is talking about.

          3. no worries — and I should say that you raise a very important general point about how fare policy can unintentionally lead to revenue leakage.

            Despite what economists say, people’s behaviour is hard to predict :).

        2. The Sydney experience was seen as a loss leader, where someone would walk between two short distance stops and complete the weekly cap in a morning, with a bunch of cards. this was achieved by having 3 transfers before a new journey started, its now 7 transfers.

          I think of it as a loss leader as the original plan was that travel was free after 8 journeys, now it’s half price. The actual impact for me is small as our family doesn’t have a car, so our transport cost went up, but not by the cost of getting a car and running it, so we’re still ahead.

          I recognise that it isn’t always possible to not have a car and rely on PT, especially out of the core of the isthmus in Auckland.

      2. Nik, I guess at the end of the day it depends what you want to achieve with the fare structure. Vienna has a very strong target in terms of mode share and they won’t achieve that without making sure that people who travel at peak use public transport.

        If NZ adopts strong carbon emission targets then AT may need to ensure that most trips are by non carbon emitting methods.

        On the Shore there are many places where congestion is just as bad if not worse on the weekend. Albany Mall, Link Drive, Lake Road and Takapuna on a Sunday are some that come to mind. A cap may not work to ease any of those issues as many motorists simply compare the PT cost against the amount that they will spend on petrol, regarding all other costs as sunk costs. With a yearly pass at Vienna levels, many might see that by the weekend travel is free and so why not take advantage of it?

        1. “What sort of a weekend PT discount can compete with that, for a family? ”

          Heidi, what indeed? The AT Parking Strategy (and most of these car parks are AT parks) is not fit for purpose. What commercial operation would “charge the lowest rates possible to achieve occupancy targets?” It is just madness. Eden Park with admission prices at $5 to fill it for Blues games? Countdown with bananas for 5 cents a kilo to fill the car park on Sunday mornings?

          AT is a huge part of the problem when it comes to growing PT ridership. In Takapuna on a Sunday cars are parked on berms and over drive ways because parking is free. The Parking Strategy says AT should manage this demand – this time not a fault of the Strategy, but the implementation of it. Takapuna would be a much nicer environment without cars everywhere.

          And the city? One of the world’s most populous cities, Sao Paulo turns part of their main street, the iconic Paulista Avenue into a cycle way on Sunday, possible by the reduction in car numbers. Can we look forward to biking across the Skypath to a bike friendly city on a Sunday?

          1. The cbd needs a serious car space tax. Crazy levels of expensive land given over to storing cars there.

            “In Takapuna on a Sunday cars are parked on berms and over drive ways” because AT is not enforcing the Road User Rule 2004 which states clearly that this is illegal. And I guess because people are, or feel they are, dependent on their cars to get around.

            The AT Parking Strategy has some good bits in it. 🙂 Am I being too cheeky to point out that those are the bits AT doesn’t follow?

          2. That is not just a feeling, just wait until you actually try to get around here without a car (or you watch someone trying). It’s unbelievable how limiting that is. I live 10 km from Takapuna, and I can barely make it there and back on PT during an entire afternoon.

            And parking, you can find free parking in the CBD in weekends if you know where to look. While on PT, that’s $13.2 for a return fare if you’re 2 people.

            Interestingly, Wilson goes to the other extreme, their prices go up from $15 or so for an entire weekday, to something silly like $8 per half hour in the weekends. That’s why you see both cars circling around for parking, and many hundreds of empty parking spaces in the area around Karangahape Road in weekends.

            (also good luck arguing that driving itself actually costs money. To most people any non-zero estimate will be completely baffling. Many don’t even estimate their fuel costs. And even if you want to know, that information doesn’t exist anywhere)

          3. free travel for children on weekends with a HOP card? That’s what we implemented in Brisbane.

      3. Stu, we are in complete agreement that Auckland could not currently adopt Vienna prices as our network would just be swamped by patrons.

        I don’t know whether Vienna has more evenly distributed demand patterns than Auckland or not. I suspect that it must have because of the low car mode share. If only 26% of trips are by car then there must be a significant proportion of people who seldom use their car. If we think of service and tradespeople the proportion of trips by car is likely to approach 100%. To reach the average of 3/13, or approximately 26% (say 10 trips to and from work and three non work trips) then at least some of those three trips are by public transport, and therefore demand is spread.

        What has been ignored in this discussion is that although there are about 650,000 annual passes sold in Vienna there are a myriad of other passes.

        Annual Passes
        You can purchase an annual pass (Jahreskarte) in one of our ticket offices or in our online ticket shop. The Wiener Linien annual pass is valid for exactly 365 days starting on the first day of the next full calendar month and can be used for travel on all public transport lines within Vienna’s Zone 100. A reduced-fare annual pass is available for seniors.

        A direct debit authorization (SEPA direct debit) placed with your bank lets you conveniently pay for your annual pass in advance, either monthly or annually. Alternatively, a one-time payment in full can be made in any Wiener Linien ticket office or in our online ticket shop. Online banking and credit card are acceptable forms of payment in the online shop.

        Youth and Semester Passes
        Youth and semester passes are valid for an entire school year or semester. To be eligible for a semester pass, higher education students must show a valid student identification card (ID) or authorization card issued by the Wiener Linien. A student or apprentice ID (Lehrlingsausweis) is required to purchase a youth pass.

        .
        Weekly and Monthly Passes
        Weekly and monthly passes are valid for one calendar week or one calendar month, respectively. A weekly pass can be used for unlimited travel on Vienna’s public transport network during the selected week, from 12:00 am (midnight) Monday until 9:00 am the following Monday. A monthly pass is valid from the first day of the chosen calendar month until the second day of the following month.

        Short-Term Passes
        A short-term pass is good for unlimited travel by tram, bus and rail inside Vienna’s core zone for as long as the ticket is valid. Prior to use, you must validate your pass by punching it in a ticket validating machine (conveniently located in underground stations and on buses and trams).

        .
        Single Tickets
        Single tickets (Einzelfahrscheine) can be used to travel once in one direction and are valid from the time they are punched in a validating machine. You may change between tram, bus and underground as often as you like, but without interrupting travel.

        A cheap ticket for absolutely everyone? Probably not.

        I disagree that a single cheap ticket is the way to entice people to PT and ensure the best growth. The normal marketing approach to grow your business is to provide add on sales to what your existing customers are already buying. If the 40 odd thousand who travel to the city each day can be persuaded to take an extra trip to the movies, city or beach then it is growing PT use. Some will take the view that riders are paying nothing for these extra trips; but you can equally take the view that by buying an annual pass you are paying so much per day.

        Whatever direction AT takes regarding pricing, currently it is just simply too expensive. The options seem clear if AT genuinely wants to achieve reduction in congestion and carbon emissions:
        1) significantly lower prices
        2) perhaps lower prices and introduce road user charges

          1. Oh, I was thinking about all the criteria you have to meet before a new carpark could be considered… 🙂

        1. “The cbd needs a serious car space tax. Crazy levels of expensive land given over to storing cars there.”

          Heidi, why just the city? If your business is contributing to carbon emissions why shouldn’t you bear the cost of this?

          1. 🙂 OK, twisted my arm far enough. Crazy levels of land given over to storing cars throughout the city.

        2. “I disagree that a single cheap ticket is the way to entice people to PT and ensure the best growth. The normal marketing approach to grow your business is to provide add on sales to what your existing customers are already buying.”

          — Yes, but my point is that Auckland has relatively few “existing customers”. You have to attract customers first and provide add on services second.

          “If the 40 odd thousand who travel to the city each day can be persuaded to take an extra trip to the movies, city or beach then it is growing PT use.”

          — Yes, and the question is how to persuade tjese people to take an extra trip? I’d suggest that convincing people to buy a HOP card and take a coupe of journeys is a more probable path to behaviour change initially than passes.

          I don’t agree that PT in Auckland is necessarily too expensive overall, even if I’d support some targeted fare reductions.

          The real problem is that driving is too cheap, which skews people’s “baseline” perceptions about the costs of using PT.

        3. A yearly pass would certainly solve the issue of it costing too much for families especially larger ones using PT for extra SMALLER trips in Auckland. With the new central bus network out we have been trying out different routes almost for the novelty of it (one day because the car was in getting a WOF), and wife + several kiddies all within one zone is ridiculous $ for the distance compared to a car…most would choose to drive…especially in more outer suburb type areas when parking is often available & free. Even with child concession applied not suitable really.

          To get around big outlay of yearly pass for some then the addition of monthly, weekly, & daily caps would work fine with our current HOP system.

          Just think all the mum & kids car activity before & after school around the city could have a huge shift to HOP PT users.

          Real life example – 4min drive + parking (free parking, if you can find one, easy weekday – harder weekend), 20 min walk, 4 min cycle or 8 min bus; ~1.5km to Sylvia Park Shopping Ctr, 1 adult & 3 children. HOP there & return on the bus costs $9.64. Yet it’s right past our house & often empty or 1 or 2 people on it. Bus is good for carrying a bit of shopping or in the weather compared to walking or cycling…& cycling with the kids a bit too hard for that small trip.

          Side note: I also think the max 30 min transfer time is a bit mean for Auckland if you have 30 min or hourly routes running, 45-60 mins would be better….sure we might quickly do an errand and return for the price of one way, but so what.

  17. Intuitively to me, it’s always a bad idea to make the marginal cost of a peak-time trip zero. In order to maximise the useful capacity of the transit system, there needs to be an incentive to move travel away from the peak.

    How about an annual pass that provides unlimited free off-peak travel and discounted peak travel?

    1. Switzerland have that with their ‘half fare’ and ‘gleis 7’ (free after 7pm for under 25 yo) combination passes. It’s only for the under 25s, but nationwide free evening travel (and half price during the day) for $440 kiwi per year is good.

      Many (if not most) over 25s would have a work-paid annual pass that would given them unlimited nationwide travel anytime of day too, so it gets even better.

    2. Very few people would buy a pass unless they were already traveling at peak times. Or to put it another way, passes charge people full fare for their peak/priority/high willingness to pay travel, and give them free trips for the rest of the time.

      1. the other advantage of offering somewhat discounted annual passes is they act as a kind of “tourist tax”, by targeting discounts towards longer-term residents who (1) are not on holiday and (2) are actually bearing the costs of building/funding PT.

  18. It is a false economy to make money by increasing off peak fares – in fact the reverse is true.

    More money is made if more people use the discounted offpeak travel than leaving the bus empty with expensive fare.

  19. It was interesting going to see a presentation on the new network at the library the other week. It seemed clear that it was all about reducing car trips/congestion at peak times rather than getting rid of cars completely as most trips not on the way in or out of the CBD involved a change and would take three times as long as it would in a car. On the one hand this seemed sensible to maximise the system for the most gain, but I wonder whether it has made it easier for families in the low density suburbs to get by without a car and still get involved in local/cross-city sports/ shopping/ cultural events etc. It may be quite hard on people, particularly families, who have to use both systems and pay more for both of them. I would love to know if there is a gap left by removing scores of routes and if so whether there are any innovative local solutions being put in place to fill it.

    1. I’m not sure the old routes exactly catered for families in low density suburbs without a car. They just offered low frequency, meandering trips to the CBD, with often poor or non-existent coverage on weekends.

      It’s not easy providing good PT to low density neighbourhoods, the better approach is to make it easier for more neighbourhoods to become higher density.

      1. Jezza, you are not wrong about meandering trips and you are absolutely right about the difficulties but there were more routes and it was easier in that once you were on the bus, you just stayed on. Changing buses with kids in tow is not fun, particularly when the bus stops aren’t even that near each other. But say that allowing non-car families to participate in Auckland life is a goal, there are gaps to fill.

  20. I won’t read all the comments, but I have never seen one shred of evidence that passes are a good idea. I think that’s because it doesn’t exist.

    The OP shows the problem. There will always be a user who needs to analyse their pass needs which is highly annoying.

    In fact, if a small number of non pass trips need to be increased in price to subsidise the presumably larger number of pass trips (which is surely what such a policy is heading towards), you have to argue that the price elasticity of the non pass trips is much lower. This doesn’t appear very likely at all.

    I don’t expect this post to convince you. I’m not going to argue the point further.

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