Wednesday, February 5, 2014

#Freetransit causes cost per rider to fall

Bus Riders Union of Austin, Texas: "The primary benefit of a fare-free system is maximum system efficiency. The cost per rider, or "Subsidy per Rider," is defined as an indicator of the effectiveness with which public monies are used in achieving the system's ridership. This figure is computed by subtracting the operating (farebox) revenue from the system operating cost, then dividing by the total boardings[18]. Under a fare-free system, the cost per rider will be reduced to an all time low and possibly a future national standard.

Both the Hodge Report and the 2000 Performance Plan identify the "farebox recovery ratio" as an outdated method for judging system efficiency:

"The most commonly used measure of system effectiveness is the fare box recovery rate, a measure that cannot be computed for a fare-free system. We conclude, however, that the measure's usefulness is limited in any case and that other measures, which are more appropriate (e.g., cost per rider), provide evidence that overall system effectiveness is improved with fare-free transit. An over-emphasis on fare box recovery rates is likely to be counterproductive. Focusing on fare policy is likely to decrease transit ridership and undermine efforts to meet other system goals related to mobility and environmental concerns that rely heavily on ridership totals."[19]
"For a transit system with a dedicated tax subsidy, however, the Farebox Recovery Ratio is simply a measure of the degree to which the system is maximizing revenue, and for any public agency, maximizing revenue is equivalent to maximizing cost. Note that unproductive increases in operating costs, as long as they are recovered from the farebox, will produce an increase in the Recovery Ratio but an increase in the Subsidy per Rider as well."[20]
During the fare-free period, the cost per rider substantially dropped[21]:

Cost per Rider, April-June: 1990 vs 1989 Cost per Rider, July-Sept: 1990 vs 1989"

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