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Farebox recovery ratio

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Title: Farebox recovery ratio  
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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.

Contents

  • 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.

References

  1. ^ Teik-Soon Looi, Kim-Hong Tan , "Singapore’s case of institutional arrangement for fare affordability", 11th Conference on Competition and Ownership in Land Transport, 2009-08-27
  2. ^ Allison Yoh, Brian D. Taylor, and John Gahbauer, "Does Transit Mean Business? Reconciling academic, organizational, and political perspectives on Reforming Transit Fare Policies", UCLA Luskin School of Public Affairs, Institute of Transportation Studies , June 2012
  3. ^ Dr. Jean-Paul Rodrigue, "The Geography of Transport Systems, Third Edition, 2013
  4. ^ "2012 Annual Report - Key Figures" (PDF). MTR Corporation. Retrieved 2013-08-08. 
  5. ^ "2012 Annual Report - Consolidated Profit and Loss Account" (PDF). MTR Corporation. Retrieved 2013-08-08. 
  6. ^ a b c Dr. Kenichi Shoji, "Lessons from Japanese Experiences of Roles of Public and Private Sectors in Urban Transport", Japan Railway & Transport Review, December 2001
  7. ^ a b "2012 Annual Report" (PDF). Taipei Rapid Transit Corporation. Retrieved 2014-08-26. 
  8. ^ "Visions for a sustainable transport future – a comparative analysis of transport planning approaches in Singapore, Vienna and Brisbane" (PDF). Espace.library.uq.edu.au. Retrieved 2015-05-20. 
  9. ^ "杭州地铁拟定票价 “贵”为全国前三 市民喊吃不消" 钱江晚报 (in Chinese) 2012-07-20
  10. ^ "GVB year report". GVB. 2015. p. 11. 
  11. ^ "Fahrinfo". Bvg.de. Retrieved 20 November 2014. 
  12. ^ a b c d "Les transports ferroviaires régionaux en Ile-de-france" (PDF). Cour des Comptes. 2010. p. 128. 
  13. ^ a b c d e "Lessons from Japanese Experiences of Roles of Public and Private Sectors in Urban Transport" (PDF). Jrtr.net. Retrieved 2015-05-20. 
  14. ^ Transport for London, Windsor House, 42-50 Victoria Street, London SW1H 0TL, enquire@tfl.gov.uk. "Facts & figures". 
  15. ^ "BBC News - Tube passenger numbers reach record high of 3.5m a day". BBC News. 
  16. ^ "Annual Report and Statement of Accounts 2013/14" (PDF). TfL. pp. 75–78. Fares revenue in LU was £2,286m … Operating expenditure on the Underground increased by 10.4 per cent to £2,542m 
  17. ^ "Presentació de resultats 2014" [2014 Presentation of Results] (PDF) (in Catalan).  
  18. ^ "Výroční zpráva 2013" (PDF). DPP. pp. 124, 126. Total fares revenue 4 446 808 CZK ... Operating expenditure (excluding cost of transport path) 8 365 447 CZK 
  19. ^ Rapport d'activité, STIF (PDF), STIF, 2013, p. 4 
  20. ^ a b "HSL’s passenger numbers and ticket revenue increased in 2011". HSL. 2012-03-28. Retrieved 2015-06-30. 
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  28. ^ City of Edmonton
  29. ^ Calculation based on figures of "$159,000 needed daily to cover operating costs and debt service" and "falling as much as $70,000 a day short". Sofradzija, Omar (February 11, 2006). "Monorail rating, ridership go down: Bleak outlook puts bond sale at risk". Review Journal. Retrieved 2007-06-30. 
  30. ^ "Metro, Fares". Metro.net. Los Angeles County Metropolitan Transportation Authority (Metro). Retrieved March 10, 2015. 
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  33. ^ [5]
  34. ^ Metro-North Railroad Financial Ratios (March 2009)
  35. ^ CT Ridership Fare Revenue and Cost Database
  36. ^ 2012 Annual report Lynx
  37. ^ [6]
  38. ^ "SEPTA - Southeastern Pennsylvania Transportation Authority" (PDF). Septa.org. Retrieved 20 November 2014. 
  39. ^ Martin H. Duke. "Pierce Transit Service Cuts". Seattle Transit Blog. Retrieved 20 November 2014. 
  40. ^ [7]
  41. ^ TriMet Funding Retrieved 2011-06-03
  42. ^ TriMet Fare Charges Retrieved 2012-11-12
  43. ^ [8]
  44. ^ Q4 2007 Financial Report
  45. ^ [9]
  46. ^ "American Public Transportation Association (APTA) - Transit Ridership Report - Fourth Quarter 2013" (PDF).  
  47. ^ Metropolitan Transit System General Information
  48. ^ "Sustainable BART". 
  49. ^ "Error" (PDF). Caltrain.com. Retrieved 20 November 2014. 
  50. ^ TTC Annual Report, 2013
  51. ^ Metrolinx Annual Report 2012-2013
  52. ^ [10]
  53. ^ [11]
  54. ^ a b c d e "Transport volume : Public transport volumes". Transport.govt.nz. Retrieved 20 November 2014. 
  55. ^ a b c d e "Access to the transport system : Accessibility of public transport". Transport.govt.nz. Retrieved 20 November 2014. 
  56. ^ [12]
  57. ^ [13]
  58. ^ "The cost of transport and fare setting | Transport Sydney". Transportsydney.wordpress.com. Retrieved 2015-05-20. 
  59. ^ [14]
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