Report
to/Rapport au:
Transportation and Transit Committee/
Comité des transport et des services de
transport en commun
and Council/et au Conseil
December 18, 2001/le 18 décembre
2001
Submitted by/Soumis par: R.T.
Leclair, General Manager/Directrice générale,
Transportation,
Utilities and Public Works/Transport, services et travaux publics
Contact/Personne-ressource: G.
Diamond, Director/Directeur,
Transit Services/Service du transport en commun
842-3636 ext. 2271, gordon.diamond@transpo.ottawa.on.ca
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Ref N°:
ACS2001-TUP-TRN-0020 |
SUBJECT: OC Transpo Fare Structure
OBJET: STRUCTURE
DES TARIFS D’OC TRANSPO
REPORT RECOMMENDATION(S)
That the
Transportation and Transit Committee recommend that Council:
1. endorse the OC Transpo Comprehensive Review recommendation to maintain fares in line with inflation and plan for increases each July at approximately the rate of the Consumer Price Index (CPI) for future years; and
2. approve a 2% fare increase to be implemented on July 1, 2002, consisting of $1 on monthly passes and $0.25 on the regular cash fare.
RECOMMANDATION(S)
DU RAPPORT
Que le Comité des transports et des
services de transport en commun recommande au Conseil municipal :
1. d’appuyer la recommandation issue
de l’examen global d’OC Transpo visant à maintenir les tarifs en fonction de
l’inflation et de prévoir des hausses annuelles, en juillet, qui soient
fonction de l’indice des prix à la consommation et ce, pour les années à
venir ;
2. d’approuver une hausse de 2 % du
tarif, qui sera mise en œuvre le 1er
juillet 2002, ce qui représente 1 $ pour le laissez-passer mensuel et 0,25 $
pour le tarif comptant régulier.
BACKGROUND
Transit fares were one of the subjects covered in the 1998 KPMG Comprehensive Review of OC Transpo operations, which was received by the Transit Commission in February 1999. The Comprehensive Review set out a number of targets, one of them being to achieve a rides per capita figure of 120 and annual ridership of 84 million passengers over a 5 year time horizon. This was a challenging goal considering that ridership had declined over the previous 10 year period. A major reason identified for this decrease was the fact that average fare levels had risen 22% faster than the rate of inflation. In order to achieve ridership of 84 million, a number of recommendations were made including “achieving fare revenue of $1.10 per passenger as measured in 1997 dollars”. This represented a slight decrease of fares from the level of $1.13 in 1997.
The Comprehensive Review also recognized that if the policy is to maintain fare levels at the same level in real terms, it is better in terms of ridership impact to have annual fare increases mirroring the level of inflation than to have less frequent, larger increases.
The figure of $1.10 was selected as it would be
“fiscally responsible while leaving room for creative marketing initiatives”.
This has been borne out by the high ridership levels achieved in the past three
years. Annual increases ranging from 6% to 7% have been realized. Much of this
increase is due to maintaining average fares at a constant level in 1997$. This
provided positive marketing opportunities and allowed for the introduction of
innovative pricing strategies such as deep discount ticket prices, the Ecopass,
annual student passes and the DayPass.
A major reason for maintaining fares in line with the CPI is that, like all commodities the increased costs of providing transit equals or exceeds the general inflation rate. This is inevitable in an industry that is heavily reliant on capital equipment and labour, with labour accounting for 59 % of the total cost of providing transit services. For this reason it is wise to adjust fares at least in line with the CPI.
OC Transpo’s fare system is relatively straightforward. Passengers can use cash or tickets, monthly passes, student annual passes, EcoPasses or DayPasses. Incentives are provided for prepaid fares over cash fares, and monthly passes are discounted more than ticket fares. The best values are the student annual pass and the EcoPass, which is a perpetual pass paid for by payroll deduction. Exhibit 1 shows, for each fare type, the price and the cost per ride.
Exhibit 2 shows the percentage of ridership by fare type and also the revenue by fare type for 2001. The total fare revenues projected for 2001 are $95M.
The last fare increase was in July 2001 when $1 was added to all monthly passes and $0.05 was added to the price of tickets. There was no change in cash fares or the price of the DayPass.
DISCUSSION
The current fare system is working well in terms of the relative levels of the fare instruments. Tickets and bus passes are widely used and the percentage of customers using cash has reduced from 17% in 1997 to 7% in 2001, following the introduction of the deep discount fare system.
The average fare paid by customers, both in 1997$ and in current dollars, is shown in Exhibit 3 for 1997 to 2001. The average fare in 1997$ is now below the $1.10 level recommended in the Comprehensive Review. This is largely due to the addition of Ottawa-Carleton District School Board High School students, when yellow busing was discontinued in 1999.
The prices of some of OC Transpo’s fare instruments are compared with those of other transit properties in Exhibit 5. In terms of average fare in 2000, OC Transpo average fare of $1.11 compares favourably with STO at $1.32, Toronto at $1.46 and Winnipeg at $1.18, is equal to Edmonton’s average fare and is higher than Montreal at $0.85 and Calgary at $0.91.
The fare changes recommended for implementation in July 2002 are shown in Exhibit 4. These changes would amount to an increase of approximately 2% overall and would maintain the average fare for 2002 at $1.06 in 1997$. A dollar would be added to all monthly passes, with the exception of the Senior’s pass to which $0.50 would be added. Ticket prices would be unchanged and regular cash would be increased to $2.50 from $2.25. Express and children’s cash fares, which are $3.50 and $1.25 respectively, would also remain unchanged.
Exhibit 4 shows the percentage change for each fare type and the amount of revenue the increase would generate from July to December 2002. The largest percentage increase would be for cash fares, at 11.1%. While this is large, it is important to remember that tickets are an alternative to cash and the price of these would not be increased. Also, the last time the cash fare was increased was in 1998. The total additional revenue in 2002 from the recommended fare increase is $860,000. This has been included in the revenue estimates for the 2002 budget process.
Like any other commodity, the price of transit has an impact on its use. Generally, as long as price increases are kept to about the level of inflation, their impact is minimal and felt only for a short time. For price increases above the CPI, the elasticity is in the order of –0.3 to –0.5 depending on the type and the size of the increase.
The Comprehensive Review recommended maintaining the average fare at approximately the rate of inflation. In future years, adjustments to fares to reflect CPI will be included in the Department’s annual budget submission.
CONSULTATION
Draft recommendations were sent out for review by the Mobility Issues Advisory Committee in December. Their comments will be submitted at the Transportation and Transit Committee meeting.
TRANSPORTATION MASTER PLAN
The Comprehensive Review, which supported the direction of the Transportation Master Plan to retain and attract transit ridership, recommended a fare level in 1997$ of $1.10 and endorsed the principle of maintaining fare levels at this level taking account of the effects of inflation.
FINANCIAL IMPLICATIONS
Additional revenue from the proposed fare increase of $860,000 has been assumed in the Transportation, Utilities and Public Works Department draft Budget estimates for 2002.
ATTACHMENTS
Exhibit 1 – Current Fares
Exhibit 2 – Percentage of Revenue and Ridership by Fare Type in 2001
Exhibit 3 – Average Fare and CPI Trend
Exhibit 4 – Recommended Fare Change in 2002
Exhibit 5 – Comparison of
Ottawa Fares with Other Transit Properties
DISPOSITION
Fare increases, if approved, will be implemented on July 1, 2002.
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EXHIBIT 1- Current Fares |
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FARE |
PRICE |
COST/TRIP |
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ADULT |
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$3.50 |
$3.50 |
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Regular Cash |
$2.25 |
$2.25 |
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Express Ticket |
$2.55 |
$2.55 |
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$1.70 |
$1.70 |
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Express Pass |
$73.50 |
$1.50 |
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Regular Pass |
$59.50 |
$1.09 |
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Ecopass+ |
$62.48 |
$1.27 |
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Ecopass |
$50.58 |
$0.93 |
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STUDENT |
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$57.75 |
$0.93 |
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Regular Pass |
$48.75 |
$0.79 |
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Student Annual+ |
$46.20 |
$0.75 |
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Student Annual |
$39.00 |
$0.63 |
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SENIOR |
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$25.00 |
$0.54 |
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Senior Ecopass |
$21.25 |
$0.46 |
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CHILD |
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$1.25 |
$1.25 |
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Ticket |
$0.85 |
$0.85 |
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DAYPASS |
$5.00 |
$1.00 |
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FAMILY PASS |
$5.00 |
$0.82 |
EXHIBIT 2
– Percentage of Revenue and Ridership by Fare Type in 2001
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Fare Type |
Price in July 2001 |
Price in July 2002 |
Change |
% Change |
Increase in Revenue |
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Regular pass |
$59.50 |
$60.50 |
$1.00 |
1.7% |
$ 171,000 |
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Express pass |
$73.50 |
$74.50 |
$1.00 |
1.4% |
$ 49,000 |
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Student Reg. pass |
$48.75 |
$49.75 |
$1.00 |
2.1% |
$ 153,000 |
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Student Exp. pass |
$57.75 |
$58.75 |
$1.00 |
1.7% |
$ 10,000 |
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Seniors Pass |
$25.00 |
$25.50 |
$0.50 |
2.0% |
$ 20,000 |
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Cash |
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$2.25 |
$2.50 |
$0.25 |
11.1% |
$ 460,000 |
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Express |
$3.50 |
$3.50 |
$0.00 |
0.0% |
$ - |
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Child |
$1.25 |
$1.25 |
$0.00 |
0.0% |
$ - |
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Ticket |
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$ - |
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$1.70 |
$1.70 |
$0.00 |
0.0% |
$ - |
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Express |
$2.55 |
$2.55 |
$0.00 |
0.0% |
$ - |
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Child |
$0.85 |
$0.85 |
$0.00 |
0.0% |
$ - |
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DayPass |
$5.00 |
$5.00 |
$0.00 |
0.0% |
$ -
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Total= |
$ 863,000 |
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EXHIBIT 5- Comparison of Ottawa Fares with Other
Transit Properties (2001) |
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FARE STRUCTURE: |
OC Transpo |
STO |
Toronto |
Montreal |
Calgary |
Edmonton |
Winnipeg |
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ADULT |
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$3.50 |
$3.10 |
n/a |
n/a |
n/a |
n/a |
n/a |
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Regular Cash |
$2.25 |
$2.60 |
$2.25 |
$2.00 |
$1.75 |
$1.75 |
$1.65 |
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Express Ticket |
$2.55 |
$2.60 |
n/a |
n/a |
n/a |
n/a |
n/a |
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Regular Ticket |
$1.70 |
$2.10 |
$1.80 |
$1.42 |
$1.55 |
$1.50 |
$1.60 |
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Express Pass |
$73.50 |
$74.00 |
n/a |
n/a |
n/a |
n/a |
n/a |
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Regular Pass |
$59.50 |
$59.00 |
$93.50 |
$48.50 |
$52.50 |
$54.00 |
$61.60 |
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STUDENT |
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$57.75 |
$55.00 |
n/a |
n/a |
n/a |
n/a |
n/a |
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Regular Pass |
$48.75 |
$43.00 |
$80.00 |
$22.50 |
$37.50 |
$38.00 |
$38.50 |
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Post-Secondary Pass |
$48.75 |
$43.00 |
$93.50 |
$48.50 |
$47.00 |
$49.00 |
$49.30 |
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SENIOR |
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$25.00 |
$27.00 |
$80.00 |
$22.50 |
n/a |
n/a |
$38.50 |
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Senior Annual |
n/a |
n/a |
$73.25 |
n/a |
$3.00 |
$6.65 |
n/a |
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CHILD |
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$1.25 |
$2.60 |
$0.50 |
$1.00 |
$1.10 |
$1.25 |
$1.35 |
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Ticket |
$0.85 |
$1.60 |
$0.40 |
$0.71 |
$0.90 |
$1.00 |
$1.00 |
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DAYPASS |
$5.00 |
n/a |
$7.50 |
$7.00 |
$5.00 |
$6.00 |
n/a |