Strategic Fare Development
Gerald Chang, Doug Strobl and Anita Wasiuta
Purpose of a Fare Strategy
1.
2.
To develop a fare structure that promotes long term
ridership growth
To optimize revenue and balance user contributions
with public funding
Outline
•
•
•
•
Fare Strategy Objectives
Fare Guidelines
TransitTown Case Study
Vendor Management Strategies
Payoff
•
By the end of this Workshop, you will:
•
Understand the fare strategy model
• Be able to apply it yourself
• Gain insight into upcoming collaboration on
vendor management strategies
Fare Strategy Objectives
Sample Objectives
1.
2.
3.
4.
5.
6.
7.
Promote long term ridership growth
Decrease reliance on public funding
Increase simplicity & understanding of fares
Increase sales of prepaid fare products
Reduce fare evasion
Reduce fare collection costs
Reduce transfer fraud
Breakout Session #1 (10 min.)
•
Discuss fare strategy objectives
• Some questions to think about:
•
•
•
•
What would I like to improve about my fare
structure?
Is it easy to understand for our passengers?
Does it promote ridership growth?
Choose spokesperson and share
your group’s top 3 objectives
Guideline
Sample Fare
Structure
Regular
Base Fare
$2.00
Discount
Equal to Base Fare
$2.00
Alternative
Discount
Base Fare less 15%
$1.75
handyDART
Equal to Base Fare
$2.00
Regular
9 times Base Fare
$18.00
Discount
9 times Base Fare less 15%
$15.50
Regular
20-30 times Base Fare
$50.00
Discount
20-30 times Base Fare less 15%
$42.50
Regular
2.5 times Base Fare
$5.00
Discount
2.5 times Base Fare less 15%
$4.25
Fare Type
CASH FARE
TICKETS (10)
MONTHLY PASS
DAY PASS
TRANSFERS
60 minutes in One Direction
1) Single Cash Fares
•
Key Benefits
•
Simplicity
• Reduce fare disputes
• Reward frequent customers
• Operational efficiencies
•
Gaining support across Canada
•
Edmonton, Saskatoon, Ontario, Salt Spring
2) Promote Prepaid Products
•
Key Benefits
•
Stable & predictable revenue
• Promotes more frequent ridership
• Customer conversion
•
Importance of a strong Vendor Network
JOIN A LIVE FARE STRATEGY
CASE STUDY IN PROGRESS
TransitTown needs a Fare Strategy
•
3 years since the last
strategy
• Growing population w/
150,000 people
• 10% transit mode
share
• They want and need
your help!
TransitTown Revenue
TransitTown Ridership
Revenue & Ridership Composition
dayPASS
1%
ProPASS
5%
dayPASS
1% ProPASS
8%
U-PASS
14%
Cash
29%
Revenue
Monthly
Passes
30%
Cash
20%
U-PASS
26%
Ridership
Tickets
18%
$3.6 million revenue
Tickets
14%
Monthly
Passes
34%
2.5 million passenger trips
Fare Comparison Highlights
TransitTo w n
Curre nt Fare s
A v e rag e o f 7
A v e rag e o f 3
Co m parable
Co m parable B C
S y ste m s
S y ste m s
A dult Cash
$ 2 .5 0
$ 2 .7 4
$ 2 .4 2
D isco unt Cash
$ 1 .7 5
$ 2 .5 3
$ 1 .8 0
$ 7 5 .0 0
$ 7 0 .2 9
$ 6 5 .3 3
$ 4 7 .0 0
$ 3 9 .6 4
$ 4 1 .8 3
A dult M o nthly
Pass
D isco unt
M o nthly Pass
4 Fare Options
Curre nt
Fare s
O ptio n 1
O ptio n 2
O ptio n 3
O ptio n 4
A dult Cash
$ 2 .5 0
$ 2 .7 5
$ 3 .0 0
$ 2 .5 0
$ 3 .0 0
D isco unt Cash
$ 1 .7 5
$ 2 .0 0
$ 2 .0 0
$ 2 .5 0
$ 3 .0 0
A dult M o nthly
$ 7 5 .0 0
$ 7 5 .0 0
$ 7 9 .0 0
$ 7 5 .0 0
$ 7 5 .0 0
(3 0 )
(2 7 )
(2 6 )
(3 0 )
(2 5 )
$ 4 7 .0 0
$ 5 0 .0 0
$ 5 0 .0 0
$ 3 7 .5 0
$ 4 0 .0 0
(2 7 )
(2 5 )
(2 5 )
(1 5 )
(1 3 )
Pass
D isco unt
M o nthly Pass
Revenue & Ridership Impacts
F ore caste d annual $
re ve nue incre ase
F ore caste d annual %
re ve nue incre ase
F ore caste d % de cre ase
in annual ride rship
O ptio n 1
O ptio n 2
O ptio n 3
O ptio n 4
$ 1 4 0 ,0 0 0
$ 2 5 0 ,0 0 0
$ 7 5 ,0 0 0
$ 2 3 0 ,0 0 0
3 .8 4 %
6 .8 5 %
2 .0 6 %
6 .3 0 %
-1 .7 5 %
-3 .1 0 %
-0 .6 5 %
-3 .2 0 %
Breakout Session #2 (15 min.)
•
Divide into groups
• Review background information
• Set & weigh objectives for TransitTown
• Choose your fare option!
Weighing Objectives
F a re O p tio n s
W e ig h t
(o u t o f 100)
C rite ria /O b je ctive
1
P rom ote riders hip retention and grow th
D ec reas e relianc e on public funding
P rom ote us e of prepaid fare produc ts (m aintain or reduc e
m ultiples of c as h pric es )
R educ e fare c ollec tion c onflic ts on board bus es
Inc reas e s im plic ity and unders tanding of fares
100 p o in ts
T o ta l S co re
2
3
4
Weighing Objectives Example
F a re O p tio n s
W e ig h t
(o u t o f 100)
C rite ria /O b je ctive
20
P rom ote riders hip retention and grow th
60
D ec reas e relianc e on public funding
0
0
20
100 p o in ts
1
2
3
4
20
60
P rom ote us e of prepaid fare produc ts (m aintain or reduc e
m ultiples of c as h pric es )
R educ e fare c ollec tion c onflic ts on board bus es
Inc reas e s im plic ity and unders tanding of fares
T o ta l S co re
60
10
10
30
10
Something Missing?
RECORD PUBLIC CONSULTATION
RESULTS – over 1100 people
Option 2
Option 3
Option 1
Option 4 Option 1
Option 3
Option 4
Record Number of Responses
•
Fare Option Survey Results (1166 people)
81% of votes
Current Option
Fares
1
Option 1 Public Feedback
•
For: (35% of votes)
•
•
•
•
Adult
Cash
Discount
Cash
Adult
Monthly
Pass
Discount
Monthly
Pass
$2.75
$1.75
$2.00
$75.00 $75.00
(30)
(27)
$47.00 $50.00
Keeps traditional fare structure
(27)
(25)
No increase to Adult Monthly Pass & U-Pass prices
Good balance between fare revenues and public
funding
Against:
•
$2.50
Does not promote prepaid products as much as
other fare options
Curre nt O ptio n
Option 3 Public Feedback
A dult
Cash
D isco unt
Cash
A dult
•
For: (45% of votes)
M o nthly
•
•
•
3
$ 2 .5 0
$ 2 .5 0
$ 1 .7 5
$ 2 .5 0
$ 7 5 .0 0 $ 7 5 .0 0
(3 0 )
Pass
D isco unt
•
Fare s
$ 4 7 .0 0 $ 3 7 .5 0
Lowest price increase of all options
Youth/Seniors get sizeable discounts on Tickets &
Monthly Passes
Keeps Adult Cash fares at $2.50 and lowers prices
for discount passes
M o nthly
Pass
Against:
•
(3 0 )
Lowest revenue increase and highest impact on
public funding
(2 7 )
(1 5 )
Knowing this Information…
•
•
Does your fare option choice change at
all?
If so, how and why?
UPDATED SURVEY RESULTS
Youth & Senior Responses
•
Responses by Age Group
17 &
65 plus under
3%
7%
50 to 64
18%
30 to 49
33%
18 to 29
39%
Option 3 - $2.50 single cash fare
•
•
Pros:
» 20% reduction in monthly pass
price
» 33% discount for tickets
Cons:
» Cash price increase from $1.75
Youth & Senior Responses
•
Preferred Option for Youth & Seniors
Option 4
14%
Option 1
13%
Option 2
3%
Responses appear to
indicate Pros > Cons for
70% voting Option 3
Option 3
70%
Youth & Seniors
All Ages
Final Objectives
Criteria/Objectives
Measured by
Provides a balance between
Forecasted annual
1 user contributions and
revenue increase
public funding
Forecasted potential
Promotes ridership
2
decrease in annual
retention and growth
ridership
3
Viewed favourably by the
public
Increased operational
4 efficiency & less fare
disputes for drivers
Option 1
Option 2
Option 3
Option 4
$140,000 $250,000
$75,000
$230,000
-1.75%
-3.10%
-0.65%
-3.20%
Support through
public consultation
36%
4%
45%
15%
Use of a single cash
fare
No
No
Yes
Yes
Recommendation:
Option 1 or Option 3
Criteria/Objectives
Measured by
Provides a balance between
Forecasted annual
1 user contributions and public
revenue increase
funding
Promotes the highest
2
ridership retention
3
Viewed most favourably by
the public
Forecasted potential
decrease in annual
ridership
Support through public
consultation
Increased operational
4 efficiency & less disputes for Use of a single cash fare
drivers
Option 1
Option 3
$140,000
$75,000
-1.75%
-0.65%
36%
45%
No
Yes
Where is TransitTown?
C u rre n t
Ap p ro v e d
F are s
O p tio n 3
Adult C as h
2.50
2.50
C onc es s ion C as h
1.65
2.50
Adult T ic kets (10)
22.50
22.50
C onc es s ion T ic kets (10)
15.00
15.00
Adult Monthly
85.00
85.00
C onc es s ion Monthly
52.00
45.00
U-P as s es
21.25
21.25
Youth P as s es
35.00
35.00
E m ployer P as s es
72.96
72.96
Adult D ay P as s es
7.75
5.00
C onc es s ion D ay P as s es
5.50
5.00
F are P ro d u ct C ate g o ry
Key Lessons Learned
Setting Clear Objectives
Power of Public Consultation
Evolving Guidelines
Vendor Management Strategies - Outline
•
•
•
•
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Introduction
Vendor partnerships
Components of management
Forward looking
Closing remarks
Vendors as Partners
•
•
•
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They provide an essential service
They are another face of BC Transit
They service our most loyal users
Under our current model, their
importance will only continue to grow
Vendors are Essential
•
•
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Influence user decisions
Influence access to products
Involved with consumer’s changing
preferences
http://www.bankofcanada.ca/wpcontent/uploads/2012/09/dp2012-06.pdf
Vendors as Partners
• “Best Practices” are needed to
guide future direction
Vendor Management Process
• Composed of a series of tasks and
relationships that end with the purchase
of a fare product.
Components
Distribution
Sale
Reporting
Relationship
Our Goal is Best Practices
• Online
Fluid Survey reviewing your
current practice
http://fluidsurveys.com/surveys/bctransit/investigating-best-practices-vendor-management/
• Investigating
industries
practices in other
Concept for the future? BCLC