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Farebox recovery ratio

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Title: Farebox recovery ratio  
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Subject: Public transport, Fare, Rapid transit, SEPTA Route C, Santa Clara Valley Transportation Authority
Collection: Public Transport Fare Collection, Rail Transport-Related Lists, Transport Economics
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Farebox recovery ratio

The farebox recovery ratio (also called fare recovery ratio) of a passenger transportation system is the fraction of operating expenses which are met by the fares paid by passengers. It is computed by dividing the system's total fare revenue by its total operating expenses.


  • Fare structures 1
    • Variable vs. fixed fare models 1.1
  • Farebox ratios around the world 2
  • References 3

Fare structures

There are two schools of thought in fare collections: a simple, flat rate fare structure (pay a fixed fare regardless of time of day and/or travel distance) or a complex, variable rate fare structure (pay a variable fare depending on time of day and/or travel distance).

In North America, South America, and Africa, the majority of the cities use simple, flat rate fare structures due to budgetary constraints. With the majority of North America, most of South America, and almost all of Africa being heavily reliant on the automobile for both short and long distance travel, majority of the transit budgets are allocated toward construction and maintenance of freeways and roads, with very little funding making way to investments in new mass transit technologies. Inadvertently however, the reliance on simpler fare structures due to their cheaper costs ends up increasing the tax burden on the agencies as flat rate fare structures have lower farebox recovery ratios, placing more pressure to the transit agencies to increase taxes, pursue higher fare hikes, or to cut services to maintain the transit system.

In sharp contrast, majority of the cities in Europe and Asia are heavily dependent on mass transit. Therefore, the majority of their transit budgets are used extensively on mass transit technologies, which enables these countries to install and maintain self-supporting and profitable variable pricing structures. Transit agencies that have instituted a more variable fare structure depending on distances or zones traveled have higher farebox ratios over those that rely on a flat-rate model.[1] In addition, recent urban transit scholars agree that variable pricing methods on public transit would actually be a profitable business which can alleviate many municipal agencies' budget problems.[2] For example, transit riders will be discouraged to travel longer distance due to increasing price as one travels further, reducing human congestion of mass transit riders who ride lengthier trips. On the other hand, an increased number of riders will opt to frequently use the transit system for multiple short and quick hop-on and hop-off trips as prices would be cheaper for shorter trips, which mass transit is better suited for. The downside however is that institution of variable-rate fares requires a high value initial investment in fare ticketing technologies such as the use of contactless smart cards, turnstiles or fare gates, automated ticket machines, as well as the IT infrastructure in which the return on investment may take years depending on the expected transit ridership volumes.[3]

Variable vs. fixed fare models

Agenda Variable fare model Fixed fare model
FBR ratio with high ridership figures 100%+ 50%+
FBR ratio with low ridership figures 60%+ 9%+
Most common system used Post-pay; fares are paid at the destination or upon disembarking at the end of each trip Pre-pay; fares are paid at the start of each trip
Unlimited ride passes Uncommon, but usually available for tourists Daily, weekly, or monthly unlimited ride passes
Incentives over cash Cheaper rates may be provided when using paperless contactless passes loaded with cash value Unlimited ride passes
Concessions Discounted variable rates for seniors, youths, disabled, or other groups as needed Discounted fixed rates for seniors, youths, disabled, or other groups as needed
Implementation costs Expensive, as both entry and exit points have to be accounted for to calculate variable fares. Fare-adjustment and change machines need to be installed. Cheap, as fare is collected at entry only. Since each rider is expected to have exact change, no fare-adjustment or change machines are needed.
Reliance on subsidies Less dependent, as each rider pays their share of distance traveled equally Heavily dependent, as fixed fares do not cover operational costs without regard to how each rider contributed to their distance traveled
Benefits Fairer fare structure; cheaper for shorter riders, more for longer rides. Entry and exit processes can also be used for data collection to efficiently manage how transit riders travel, allowing transit agencies to coordinate transfer times, reduce or increase transit needs based on hard ridership data. Simplicity; everyone pays the same price regardless of distance traveled.
Risks Confusing for first-time riders. Knowledge of the system requires an "acquired" skill Prone to higher rates and service cuts depending on subsidies received

Farebox ratios around the world

The following table lists farebox ratios for some public transportation systems around the world.


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  41. ^ TriMet Funding Retrieved 2011-06-03
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  44. ^ Q4 2007 Financial Report
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  47. ^ Metropolitan Transit System General Information
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  57. ^ [13]
  58. ^ "The cost of transport and fare setting | Transport Sydney". Retrieved 2015-05-20. 
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