SmartPlanet: Should Bus Fares Go Away — What Is True Cost of Fares, and True Falue of Optimzing Public Transport Use?

Commercial Intelligence

smartplanet logoShould bus fares be free?

By | June 20, 2013

As bus fare hikes in Brazil helped spark the largest protests that the country has seen in 20 years (those fare hikes have since been reversed in Sao Paulo and Rio de Janeiro), The Economist has a provocative proposition: make buses free.

They come to this conclusion looking at the proof-of-payment fare-collection systems that many transit systems have adopted as a way to make transit systems more efficient. But The Economist says that making transit free would take that efficiency a step further. Here’s the argument:

Fares bring in a lot of money, but they cost money to collect—6% of the MTA’s budget, according to a 2007 report in New York magazine. Fare boxes and turnstiles have to be maintained; buses idle while waiting for passengers to pay up, wasting fuel; and everyone loses time. Proof-of-payment systems don’t solve the problem of fare-collection costs as they require inspectors and other staff to handle enforcement, paperwork and payment processing. Making buses and subways free, on the other hand, would increase passenger numbers, opening up space on the streets for essential traffic and saving time by reducing road congestion.

Transit systems aren’t cheap so, of course, the lost fare revenue would have to be made up somehow. That can be done in a number of ways: a congestion charge for cars entering dense downtowns; funneling money from downtown parking into transit; or getting private sponsorships.

Some cities, like Baltimore, have already tried this model — albeit on a smaller scale. The city’s Charm City Circulator has patched together various funding sources to build a free, efficient bus service that runs every 10 minutes, seven days a week along the city’s most popular corridors (it’s doesn’t go everywhere). After opening in 2010, ridership increased 83 percent in its second year of operation.

Transit systems can be the most efficient way to get around cities. At their best they pack a lot of people into a small space and move them throughout a city quickly, a good thing for productivity and the businesses that operate in cities. Unfortunately, transit systems don’t always take advantage of their abilities by not offering frequent, regular service and getting bogged down by fare collection (especially on buses). If cities can put together smart funding models, free transit could be a plausible option to get more people on board.

Maybe buses should be free [The Economist]