Mar
31

How the Unlimited MetroCard revolutionized transit

By

When Tuesday dawned another cold, windy and rainy day, I pondered how New Yorkers ride the subway in those ugly conditions. On rainy days, the trains are damp and more crowded than usual. People who would otherwise walk or bike to their myriad destinations head underground for a ride free from rain.

Meanwhile, throughout the city, people running errands opt to duck underground as well. Instead of walking from, say, 50th St. to 40th St., the one-stop ride along the Sixth Ave. IND often calls out, and while 15 years ago, that ride would have cost $1.25, today, the Unlimited MetroCard urges you to take that one- or two-stop ride. Straphangers, in fact, get better deals on their weekly or monthly cards if they ride more frequently, and the MTA earns less per ride. In a way, it is a perverse incentive.

Today, the Unlimited MetroCard is a way of life. In January, over 50 percent of all non-student trips came from one of the four unlimited ride offerings. Yet, 12 years ago, few were aware of the looming debut of these cards that have changed the way we ride.

Gov. George Pataki first announced unlimited ride cards in early December 1997. Original plans called for a $63 30-day card, a $17 seven-day card and a $4 one-day fun pass. In a twist of history, the MTA could afford to offer these discount cards because of a surplus of tax revenue in 1997. The agency was expected to lose over $230 million on the per-ride discounts, and as riders today pay an inflation-adjusted fare that is 36 cents lower than the average fare was in 1996, this loss is still haunting the MTA today.

While the 30-day cards then — and still do today — require someone to ride at least 47 times to be a better deal than the pay-per-ride discounts, the new passes were designed to encourage use. Original MTA estimates projected 100 million more riders per year, an increase of six percent. ”The goal here,” Pataki said said to The Times, ”was very simply to empower the rider. Empower the person who takes the subway and the person who takes the bus by giving them the broadest possible range of options as to how they want to choose to use the mass transit system.”

When the unlimited cards debuted on July 4, 1998, they were an immediate hit. Even though plans for the one-day card were delayed, lines at the token booths snaked through stations, and New Yorkers were eager to take advantage of the potential savings. ”Maybe it would stop me from taking so many cabs,” one rider said at the time. ”It has to do with commitment. Once I’ve made that $17 investment up front, I see it as a free situation, rather than a $5 cab ride minus the dollar-and-a-half public transportation.”

The only down side riders could find was the original 18-minute use restriction. The unlimited ride cards could be used once system-wide every 18 minutes, and many straphangers taking short trips found themselves waiting for time to expire. Eventually, Transit agreed to reduce the limitations to their current form. Today, riders can swipe in at the same station only once every 18 minutes but can enter the system at other points before the time limit is up.

Immediately, the savings were apparent. As The Daily News noted, messenger services and frequent train riders were going to realize savings of hundreds of dollars annually. First day sales were very brisk and have continued to be for the past 12 years.

Today, the unlimited ride cards are still a great deal. As a student and frequent subway rider, my pay-per-ride cost off of the $89 monthly card is only just around $1.10 per ride. I can hop on and hop off the trains and buses as I please, and I don’t have to think twice about taking a trip we used to view as unnecessary 15 or 20 years ago. The Unlimited MetroCards changed the way we ride and interact with the system, and that was true transit innovation for New York City.



31 Responses to “How the Unlimited MetroCard revolutionized transit”

  1. John says:

    I’m sort of surprised that you’re in favor of this. I’m all for off-peak unlimited cards (there’s a lot of extra capacity off-hours that needs to be used), but from an economics perspective, unlimited ride cards create a textbook market distortion, contributing strongly to peak-time overcrowding by providing people with no disincentive to use the subway at peak times, which is part of why the Lexington Avenue line is practically unridable. I know because I myself have used overcrowded trains to take trips when I could have just walked: I should have been paying extra to defray the annoyance I caused to everyone else (or to incentivize the MTA to add capacity).

    When the MTA finally does roll out peak-time fares, they won’t have any impact on the choices of the majority of riders: this is a bad thing, not a good thing.

    • I can see why you say you’re surprised I’m favor of it, but I wouldn’t say that I’m behind only the Unlimited Ride card and nothing else. I can see the desire for variable-rate pricing based on time of day or distance, but I’ve always thought that, considering the socieconomic demographics of New York City, neither of those would be anything other than regressive.

      We can’t deny that the unlimited ride card changed the way New Yorkers travel. There may yet be a better way that can help the MTA economically as well.

      • Jonathan D. says:

        Charging based on distance is only regressive if the charge is higher for longer trips. If, in fact, we decided to charge more for shorter trips (to discourage them), it would not be particularly regressive. We could also charge more for shorter trips on the subway, but keep the price the same on the bus. Similarly, the fact that the bus and the subway are the same price, despite being significantly different products irks me. DC is not like this. Pushing for peak fares is also not particularly regressive. The people with jobs are the most likely to be able to afford the ride/have it subsidized by their employers. People who are unemployed/underemployed/retired are the people whose schedules are most conducive to shifting their trips by a half hour or hour to avoid peak fares.

        • AK says:

          I think the vast majority of employers do not “subsidize” transit costs as you suggest. TransitChek offers tax-free transit, but that is the extent of the subsidy. That said, I don’t think raising peak fares is necessarily a bad economic move (although it would be disasterous politically, as people just wouldn’t understand what was going on).

          • Jonathan D. says:

            But that’s arguably a pretty reasonable subsidy, don’t you think? I mean, all of the people riding the subway who are in even the 25% tax bracket are getting for $89 what they otherwise would have had to earn $118 dollars to purchase. That’s a formidable discount. Ignoring the fact that employers DO subsidize transit (mine does). Employers need workers, and if it’s to their benefit, they WILL subsidize transit. Any change in NYC is disastrous because everyone here is convinced they are too busy to learn anything new. It’s a wonder anything ever happens in the city at all. That said, peak fares are common many other places, and in fact we already have them on NJT, MNR, and LIRR, so people will figure it out someway or another.

  2. AK says:

    Thanks for the old (1998) Times link Ben. Loved this gem in that piece:

    “”I am still going to buy tokens,” Kristine Olsen declared at the 36th Street station in the Sunset Park section of Brooklyn. Ms. Olsen, who has lived in the neighborhood for more than 60 years, ticked off situations in which she said a Metrocard would not work — power failures, bomb scares. “There are lots of complaints with them and little good,” she said.”

    We will ALWAYS be fighting against people who are completely irrational/illogical/protective of the status quo…such is life.

  3. Larry Littlefield says:

    The riders will pay for the reduction in the fare with a collapsed transit system. The deal needs to be evaluated post-collapse.

    • I definitely agree with that, Larry. As I’ve written before, the fares are far too low. The problem is that the MTA instituted unlimited ride cards at price points that were too low and deflated the average fare. They haven’t been aggressive enough in keeping pace with inflation or with prior revenue figures and are now paying the price.

      • John says:

        The funny part about that is the price of the 30-day unlimited metrocard has actually increased less since 1998 (41.3%) than the base fare (50%). Put another way, a 30-day card used to cost the same as 42 regular-fare rides. Now it costs the same as 39.5 rides.

        The 30-day card really should cost over $100 by now. The very least I think it should be today is $98. If it were $98 then nobody would be shocked when it went over $100 with the next fare increase. But now at $89, they probably won’t put it over $100 with the next increase.

        • Alon Levy says:

          On the contrary, John: to reduce overhead, you’d want the MTA to incentivize people to use the form of payment requiring the least processing per swipe, which is the unlimited monthly. In fact, you might also want the MTA to institute unlimited annual cards, which deduct money from your account automatically every month.

          The multiplier for an unlimited monthly over a pay-per-ride has been 46 for a number of years now, and that’s too high. Overhead-minimizing German systems make it much lower – for example, in Berlin, it’s less than 30: in-city pay-per-rides cost €2 per ride, monthly passes cost €57.50.

          • John says:

            Of course they should incentivize people to use the unlimited cards, but that doesn’t mean they should underprice them. I would agree that a 46 multiplier between monthly and pay-per-ride is too high, but I would argue that’s because the pay-per-ride price is too low, not because the monthly price is too high.

      • Scott E says:

        I disagree with this. I’d much rather see, in the next fare hike, something more like like a $3.00 base fare (33% increase), six rides for $12 (5% increase), and leave the monthly where it is. Reward the frequent users and penalize the tourists. I know the opposition would call this a regressive pricing scheme, but it’s the best way to encourage frequent use while putting less of a burden on the MVMs (they do require maintenance), incurring lower costs (not as much ticket stock, fewer credit-card transaction fees) and the fewer transactions would be less burdensome towards the shrinking number of station agents. It’s not much unlike E-ZPass tolls, which are almost always lower than cash tolls.

        It would also be nice to just have remaining fares, and not dollar amounts on the cards, but that would require some interagency cooperation (2 fares for JFK Airtrain and express buses, one fare for PATH) and isn’t very likely. I won’t hold my breath on that one.

        • SEAN says:

          Right on Scott. Removing the insentive for commuters to purchase fares in large quantities may result far fewer transit riders in the long term. If the fare must go up it would need to hit those riders who esentually buy the fewest rides at a given time.

          Here’s an example from Las Vegas over the past 15-years with there fare structure.

          ONE WAY ONE WAY STRIP MONTHLY YEAR
          $1 $1 $20 1994
          $1 $1.50 $30 1996
          $1.25 $2 $40 2001
          $1.75 $3 $65 2010

          Note there was a minor fare increase in 2008 only effecting multi-day & monthly passes.

          If you look at the chart, notice that riders who go on the Strip with a 30-day pass pay a lower moltible now then 1994, wwile non-Strip riders pay a much higher rate vs paying cash with those same passes.
          1994 a monthly pass was 20X a single ride, both on & off strip. Today the spred is only 18X on the Strip & a wopping 32X off the Strip. A barggin for sure either wa, even though tourests make up most of the ridership.

        • Jonathan D. says:

          Unless your plan is to drastically cut the unlimited prices, this isn’t how it works at all.

          Look, we regularly use the tourist as the example of the person using pay per rides. This isn’t true people! Stop! Most of the pay per rides are used by people who do not have enough money at any one time to buy a monthly. It may also be cheaper based on a person’s usage pattern (just commuting to and from work each day is cheaper with pay-per-ride than an unlimited – you’re not doing commuters any favors here. You are favoring people who live in the city over non-residents).

          Tourists WAY over plan these things (we’re talking about people who own an SUV just to move their one 3 year old around here!). They frequently purchase the daily/weekly passes whether they use them or not. It’s just easier. The only thing that the tourists DO use more of than just people in NYC are single ride tickets.

          A better option for some interesting new fare structure would be the expansion of a CityTicket style product to the subway. Many people in the outer boroughs only ride the subway once in a while. Creating a cheap way to ride unlimited on weekends, where there is plenty of spare capacity, would be an interesting experiment.

  4. Think twice says:

    Democratization is one of the great pluses of transit in New York, from the flat-fare of a hundred years ago to unlimited ride cards today. Without them, real estate prices near the CBD would be even more obscene, possibly even unsustainable. Historian Kenneth Jackson once said described the flat fare as a “subsidy” for the de-congestion of Lower Manhattan and the development of the outer boroughs. If the city or state ever imposed a London style fare system here, there would be an uproar that would make teabaggers look like Emily Post.

  5. I know the mother/daughter who live upstairs in my building share an unlimited MetroCard, to the point where sometimes Ma will go to the station ahead of time, and pass the MetroCard back through the gate after the 18-minute time limit has expired. I wonder how widespread that is. Think that was included in the recent study on fare dodging? Going back to a pay-per-ride system would solve that. I’m not necessarily saying that’s a good idea (it probably isn’t), but it’s another side of the argument.

    • It’s not really widespread simply because it’s impractical. Who really has the luxury of 20 minutes every time they want to go somewhere? I don’t think the MTA counted that in their fare-dodging scenario, and I don’t think it’s really worth it to count.

    • Alon Levy says:

      This is called price discrimination. The current system allows people who are unable or unwilling to pay full price to pay half price; the alternative is that they would not use the system, and pay nothing. It’s the same principle that underlies coupons.

  6. Kid Twist says:

    I wonder if anyone’s studied the effect of the unlimited MetroCard on New Yorkers’ weight and fitness.

  7. J:Lai says:

    Interesting topic, as it brings a “free rider” problem to a public service with “zero marginal cost” (not really, but some pols seem to think so.)

    Unlimited passes do reduce the average fare paid per ride, but they also increase the total number of rides, so the real question for the MTA should be what is the impact on total revenue? The person who would have paid full fare anyway is lost revenue, but the person who would have taken a cab or some other mode is revenue gained.

    Also, as others have pointed out, there is always an advantage in lower transaction costs to sell one large ticket instead of many small ones.

    For every anecdote about people taking one-stop or two-stop trips because they have the unlimited card, there are examples of people buying a monthly pass and then not using it for a week while they are out of town.

    Ultimately, we as a society need to balance the idea that everyone should pay the same price for the same good or service with the fact that some things (like public transit) create positive externalities and we should encourage people to use them.

    • Andrew says:

      How much it costs to provide a subway ride depends on where and when it’s taken.

      If it doesn’t pass through the most crowded point on the line, then it costs virtually nothing. The level of service provided is based on loading at the most crowded point; an additional rider elsewhere doesn’t trigger additional service. The marginal cost is practically zero.

      If it passes through the most crowded point on the line, but it takes place during off-peak hours, then it potentially comes with an additional operational cost, as service is increased to accommodate the increased ridership. (Of course, one additional rider isn’t going to trigger an extra train, but several hundred people making similar trips at the same time might.)

      If it passes through the most crowded point on the line during peak hours, then it potentially comes with additional operational and capital costs. Not only does service need to be increased, but more cars need to be purchased, and if there are already capacity constraints on the line (signal constraints, etc.), other capital upgrades might be necessary.

      My guess is that most trips incentivized by unlimited cards fall into the first and second categories. Most people traveling during rush hours are going to or from work or making other necessary trips; they’d take those trips with or without the unlimited card option.

      • Scott E says:

        I’ll add one more category…. those unlimited Metrocard holders (myself included, on some rare occasions) who swipe in at one end of a station, then exit at the other end of the station without hopping on a train, just to avoid heavy rain or other bad weather. It works well for the in-system transfers that span multiple blocks: Fulton St/Broadway-Nassau, 14th St (123)/6th Av (L), Bryant Park (BDFV)/5th Av (7).

        • Alon Levy says:

          I didn’t think about it, but you’re right. I was sort of one of those people, for one specific trip, involving walking 20 blocks along St. Nicholas Avenue. I’d usually swipe in at the southern end of 125th, walk along the platform, and get out; if a local train came in, I’d hop on it and save myself a few minutes of walking.

  8. JebO says:

    How could the unlimited cards have debuted six months before Governor Pataki’s announcement? (Actually, they debuted on July 4, 1998, not 1997.)

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