Appendix F: Fare Policy Recommendations

Transcription

1 Appendix F: Policy Recommendations i-67

2 Based upon a comprehensive review of fare usage and elasticity, the following recommendations can be implemented to increase fare revenue immediately and in the near term. Changes The proposed fare column includes changes to the Day Pass, 7 Day Pass, 10 Rise Pass and Pass. Type Current Price Recommended Price Discount Proposed Discount Day Pass $3.50 $ % 30.5% Day Pass Discount $2.50 $ % 0.9% 7 day Pass (no discount passes) $13.00 $ % 52.3% 10 Ride Pass (no discount passes) $13.00 $ % 5.0% Pass $26.00 $ % 67.4% Pass Usage Implemented in 2008, the Pass was meant to provide students with specific college travel needs a discounted pass. However, pass usage figures have shown a distinct increase in Pass sales combined with a commensurate decrease in Pass sales. This indicates a level of fraud and improper usage of the Pass, which is sold at $26.00 or half the price of a standard Pass. Month FY 2008 FY 2009 Difference Reduction Increase October 2, ,748 1, ,077 November 2, ,284 1, December 2, ,414 1, January 4, ,565 1,925 2, February 2, ,450 1,667 1, YTD Sales Difference 14,029 3,464 12,461 7,846 1,568 4,382 As shown on the preceding table, YTD sales for the pass have already doubled sales for all of FY Additionally when comparing FY 2008 and 2009, the difference between the reduction in pass usage for the and the increase in pass usage for the Pass is almost equal. To date, this change in pass purchases has resulted in reduction of over $100,000 and can result in revenue reduction of over $240,000 for the year 1. BCT currently sells this pass only at s and at its outlets; however, 1 Based upon the analysis, approximately 4,382 more passes have been sold to date when comparing FY 2008 and FY This increase is not as a result of a shift in BCT policy or implementation of new service to college campuses. Based upon this fact it can be assumed that the increase in pass sales and the corresponding decrease in Pass sales are intertwined. i-68

3 customers appear to have found a way to circumvent the process of identification. Agencies facing similar issues have implemented discount pass ID programs. As part of this program, discount pass holders are provided a BCT issued identification card. This card serves two purposes: First, it allows BCT to track pass purchase of discount passes, and second provides operators a uniform method of identification of discount pass users. At a minimum, the pass price should be increased as described in the next recommendation. Day Pass The Day Pass currently offers a substantial discount based upon its actual usage (3.8) compared to the pricing multiplier (2.3). The recommended fare for the Day Pass is $4.00. This will provide a pricing multiplier of 2.7, closer to the actual usage of 3.8 resulting in a discount of 30.5 percent compared to 39.2 percent as shown above. Similarly, the Discount Day Pass is recommended to increase to $2.75 instead of $2.50 resulting in a discount of less than one percent, compared to a projected discount of 10 percent under current pricing structure. Courtesy Day Pass It is recommended that BCT eliminate the Courtesy Day Pass due to a relatively high rate of operators distributing them to customers. While the courtesy day pass is a benefit from a customer service standpoint, this practice reduces potential revenue for BCT and possibly contributes to poor passenger behavior by encouraging people to attempt boarding without paying the fare. Knowing that an operator is likely to give them a free courtesy day pass if one claims they are unable to pay at the moment, this program is susceptible to fraud. 7 Day Pass Changes to the prices for the 7 Day Pass are also recommended. The current fare is $13.00, an increase of $1.00 over the previous fare. This pass is utilized 19.9 times per sale and is currently priced at 8.7 uses per sale resulting in a 57 percent discount for customers. Under the previous pricing structure, the multiplier was 9.6 uses per sale. The recommended price for this pass is $ While this price still offers a 52 percent discount over the one way fare for customers, it is a marked reduction in discount. 10 Ride Pass Likewise the 10 Ride Pass is currently $13.00 and is priced at $1.30 per use 2, offering a 13 percent discount. It is recommended this pass be increased to $14.25 resulting in a fare of $1.43 per use a discount of 5 percent. Pass The final recommended change is on the pass. As reviewed earlier, sales of this pass have increased dramatically in the past 12 months and based upon an analysis of pass usage it can be determined that non college students are using this pass. The resulting loss in revenue for the year to date is over $100,000. By increasing the pass price to $40, BCT can continue to offer a discount but can also curtail the misuse of the pass. 2 Current pass price is $13.00 or 10 rides at $1.30 per use i-69

4 Multipliers Structure Multipliers Day Pass Weekly Pass Monthly Pass Current Previous Current Previous Current Previous BCT By enacting the recommended increases in pass prices, BCT stands to earn an extra $700,000 in fare revenue. This potential pool of revenue is critical to enact recommended service changes for the BCT system in the near term. Revenue Projections A modified Simpson Curtin elasticity model was used to project revenue: Simpson Curtin states that for every 10 percent increase in fares, transit agencies can expect a reduction of 3 percent in ridership. This model was specifically modeled for BCT for each individual fare to determine K factors, or elasticity between fare types. Revenue projections were conservatively estimated and can increase up to six percent higher for both the October 2009 and Recommended fares. Current s Projected Revenue* Recommended Projected Revenue Cash adult $1.50 $6,267,600 $1.50 $6,267,600 Cashsenior/disabled $0.75 $414,000 $0.75 $414,000 Cash youth $0.75 $1,445,400 $0.75 $1,445,400 Day Pass adult $3.50 $4,929,400 $4.00 $5,291,600 Day Pass discount $2.50 $2,179,700 $2.75 $2,263,000 7 Day Pass $13.00 $2,189,700 $14.25 $2,296, Ride Pass $13.00 $109,300 $14.25 $114,300 Pass adult $52.00 $1,748,800 $52.00 $1,748,800 Pass $26.00 $451,000 $26.00 $451,000 discount Pass $26.00 $881,900 $26.00 $881,900 disabled Pass youth $26.00 $349,500 $26.00 $349,500 Pass $26.00 $618,200 $40.00 $775,600 Total Revenue $21,584,500 $22,299,500 *new revenue realized by the end of FY 2011 i-70

5 Two Year Model In addition to developing the recommendations above, a two year fare increase was also developed. This increase is based upon the recommended fares. The fares were developed based upon the peer review as well as an in depth review of discounting similarly used for the recommended changes to the October 2009 fare increases. Near term and Future Increases Pass adult $58.00 $1,882,200 Pass $29.00 $482,700 In order for BCT to be able to implement the discount recommended future service plan, it is imperative that Pass $29.00 $939,500 additional revenue be sought. The recent October 2009 disabled fare increase combined with proposed service changes will provide for enough revenue to implement Rapid Bus service immediately. However near term and long term service plans will require additional revenue to fund the proposed increases in service levels as well as several Pass youth Pass Total Revenue $29.00 $45.00 $373,500 $839,200 $25,043,900 Rapid Bus routes. Without the proposed future fare increases, BCT will not be able to improve upon current service levels or add any additional BRT lines. The additional costs for recommended future service changes would require over $3 million in additional revenues to pay for operations. Without an increase in revenue from fares, it is unlikely that BCT will be able to achieve its goals in improving service. While BCT s current fare is on par with its peers, the amount of fare revenue collected per passenger is below all but one of its peers. Currently, only VIA of the San Antonio, TX region collects less fare per passenger than BCT although its base fare is $1.10 compared to $1.50 for BCT. Compared to the peer agencies reviewed, BCT collected an average of $.31 less fare revenue per passenger. Without the proposed future fare increases or the identification of additional funding, BCT will not be able to improve upon current service levels or add new Rapid Bus routes. While fare increases help bring in more revenue, they can October Recommended 2009 also lead to a decrease in ridership. However, this potential untapped source of revenue is critical if BCT is to move forward with aspects of the PSP. Based upon the peer review and an analysis of multipliers, modifications to the recent October 2009 fare increase are recommended (changes in bold) FY 2012 s FY 2012 Revenue Cash adult $2.00 $7,186,200 Cashsenior/disabled $1.00 $487,600 Cash youth $1.00 $1,658,100 Day Pass adult $5.00 $6,003,100 Day Pass discount $3.50 $2,589,500 7 Day Pass $16.25 $2,472, Ride Pass $18.00 $130,000 Cash adult $1.50 $1.50 Cash discount $0.75 $0.75 Daypass adult $3.50 $4.00 Daypass discount $2.50 $ day pass $13.00 $ Ride Bus Pass $13.00 $ day pass adult $52.00 $ day pass discount $26.00 $ day pass college $26.00 $40.00 i-71