In 1996, at the dawn of New York City’s Metrocard era, the MTA’s average fare tracked closely with the actual fare. A token cost $1.50, and the MTA, thanks to some bulk discounts, saw revenue of $1.38 per fare paid. These days, thanks to unlimited-ride cards and pay-per-ride discounts, the average fare in 1996 dollars is $1.07, far below the rate of inflation. As the MTA looks to keep its books in order, it has tried in recent years to combat this problem.
Last week at the Crain’s New York breakfast, MTA CEO and Chairman Joe Lhota spoke of this problem. The MTA, he said, quoting information available in the July MTA board materials, sees $1.63 per fare paid in 2012 dollars. With a base fare set at $2.25, it’s clear that New Yorkers are enjoyed some healthy discounts as they ride the subway every day. Now, on the one hand, we should enjoy those discounts. It encourages riders to use the system and promotes better transportation options. On the other hand, the MTA needs more money.
And so, Lhota last week mentioned that the MTA is considering doing away with the pay-per-ride bonus as part of the March 2013 fare hike. After a few years of sticking it to unlimited ride users, certain factions within the MTA believed the authority could better draw in money by dumping what has become a rather meager bonus of 7 percent on all purchases of $10 or more. “Do we really need to go to that level of a discount?” Lhota asked.
Now more details concerning the fare hike proposal are coming into view. Pete Donohue broke the news on Sunday evening concerning the details. Here’s how it looks for Metrocard users:
- l Eliminate the 7% MetroCard bonus. A rider who now puts $10 on a MetroCard gets an additional 70 cents of added value.
- Raise the base bus and subway fare to $2.50, from $2.25.
- Raise the price of an unlimited-ride MetroCard by 5%. A 7-Day MetroCard, now $29, would cost about $30. A monthly MetroCard, now $104, would cost about $109.
The MTA will also, Donohue notes, raise fares for Metro-North, the LIRR and its bridge and tunnel tolls while continuing to fight for the revenue it sorely needs from the payroll mobility tax.
With the discounts completely gone and the base fare going up, that’s a substantial hike for pay-per-ride users. With the current bonus, a swipe costs $2.10, and jacking it up by 40 cents would represent a hike of nearly 20 percent. Unlimited ride users who were shafted a few years ago would see a more modest increase, and the math would clearly favor unlimited riders. The breakeven point on a monthly card would drop from 50 rides to 44 and on a weekly card from 14 to 12. If this hike goes through, I wonder how long it will take riders to realize this shifting math of a subway fare.
Ultimately, this subway fare hike will be shaped by public input. We’ve seen proposals come and go in the face of public pressure, but the truth remains that the hike will happen. The MTA needs to bring in over $360 million next year, and without support from Albany, the only way to do so is through a fare increase. This one seems to make sense right now. Will we be able to say the same in 2015?
51 comments
Delaying the fare hike only delays the same inevitable outrage. The MTA will face the outrage one way or the other, so moving the fare hike back to January would be best. The MTA is losing two months of added revenue otherwise.
Also, just for decimals’ sake, might as well make the unlimited price $110 and not $109.
I don’t know if you’re forgetting but the reason for the delay is because the MTA has a fiscal surplus coming out of this year and is applying that money to the first two months of next year.
No one will care but it’s still a noble gesture none the less.
You mean it isn’t borrowing any money?
This is the sort of thing we’ve heard for years. If the MTA debt goes up more slowly than expected, the MTA has a surplus, and everyone jumps to grab it.
The good news for those cashing in and moving out is no matter how high the fare and tolls go in the future, a substantial share of revenue will go to pay interest on the debts run up to cut fares (and tolls) relative to inflation in the past.
Blowing a surplus on discounts considering the MTA’s long-term financial situation is not a great idea. The public *will* complain angrily regardless of when the fare hike happens.
The prices of just about everything are going up.
Why should this be an exception?
I remember buying a 32oz gatorade for $1.00 10 years ago. This week I payed 88 cents. Perhaps the subway system should follow the gatorade economy.
That’s deflation for you. Actually, gatorade will go up in price because water is going to go up in price. But anyway, the MTA’s costs will drop if the Depression lasts much longer, but we must hope it does not for other reasons!
Without the discount for spending more than $10 their might be longer lines to buy fare.
Also, their will be less “leftover” amounts on MetroCards.
Every time you quote the average fare per swipe rather than per trip, you’re buying into the notion that free transfers are a privilege.
There’s no nice way to say this, but the ultimate motivation behind getting rid of the discount entirely is it doesn’t look as much like a farehike as raising the base cost and increasing or preserving the discount. They hope to sell it this way to the bobbleheads who show up at these public hearings to dis the MTA before the inevitable happens.
I don’t completely agree. Last time, unlimited ride fares went up by $15 or 17 %. This time the pay-per-ride fare is going up by a similar amount. It’s just part of the plan to spread the pain, and it actually makes unlimited ride cards a much better deal.
I’m not that against the fares going up, but if they are going to raise them, I think they should preserve discounts. I think the reasons are it encourages fewer transactions and probably discourages beating.
Sunset the discounts. Reduce it to 4%, followed by 0%. Time the shift to 0% with introduction to rechargeable contactless RFID cards. Add a service for low income riders to layaway monthly and weekly cards.
Discounts make at least as much sense with the smartcards as they do with MCs. They should expand them, not sunset them. Adjust the base fare and discount ratio accordingly.
Stupid tangent question – you mention that the average fare of $1.63 in 2012 dollars is equivalent to $1.07 in 1996 dollars. Is there an online calculator somewhere that figures that stuff out? I’d rather not have to do the math myself.
Here is a BLS one. I got 1996USD1.07=2012USD1.57, which probably means “roughly equivalent” is right.
Thanks!
What would it take to convert the system to variable (distance-sensitive? time-sensitive?) fares, presumably when the Metrocard is phased out? Can the rachets on Iron Maidens be made two way requiring a signal from either side to operate? If the entrances for every station will have to be redone for contactless cards, how hard would it be to redo the exits at the same time?
Distance-sensitive sounds tricky.* Time-sensitive they already do, in a sense. A transfer between bus and subway or vice-versa or for an out-of-system transfer lasts two hours, IIRC.
I actually think they should just give you two hours/swipe to do whatever. There is nothing that makes a three-seat ride inherently more expensive than a one-seat ride.
* I heard the turnstiles are prepared to enforce two-way swiping, but it sounds like a nightmare from a crowding standpoint.
It would take a violent smashing of the protests in the outer half of the city. Probably a single volley of live fire into a crowd of protesters would convince people to stop raising hell over distance-based fares.
Bullshit. Provide express buses for the suburbanites and keep the bridges toll-free. Nobody important will even notice.
NYC’s fare structure on the subways is biased against Manhattan, particularly those living below 96th Street. That group (on average) rarely take subway rides out of their borough unless it’s to attend some sporting event (or, beginning in the near future, as concert at the Barclay’s Center). And based on median household income, it’s probably the most balanced system between what people have to pay and how much they can affort it within their budget (though obviously other than Mayor Mike’s well-publicized IRT rides, the majority of the mega-rich who skewer Manhattan’s income levels upward are unlikely to be frequent subway communters).
Change the formula so that people pay by distance traveled or pay higher rates in rush hours, and the professional activists who could teach Chuck Schumer a thing or two about getting his face in front of a TV camera will be out in force, savaging the MTA for hating the outer boroughs and folks in upper Manhattan. And since the outer boroughs and the north end of Manhattan contain roughly 75-80 percent of the city’s population, it’s not a fight any pol needing city-wide support to win current or future office is going to want to take on by showing any support for that type of change.
If it wasn’t clear, my response to Alon was facetious.
However, I really don’t think I buy that activists-would-stop-it argument. Activists with that kind of actual clout in NYC almost invariably are ones that defend NIMBYism, motorists, borough paraochialism, or the RFR (really fcuking rich). They’re indifferent to transit at best, and hostile at worst. The only silver lining about activists is Manhattan business interests would be annoyed too, since they depend on the subway for getting labor to them cheaply.
Sure, people would bitch about the change, but ultimately all that stops it is it’s kind of impractical right now. Well, that, and doesn’t seem to be wanted by anyone.
Well, in the past “outer borough” politicians HAVE fought to prevent distance based or zone fares on the subway.
Technically, I believe they could be implemented in about a month.
Technically, distance-based fares would require three things:
1. Software modifications.
2. Hardware modifications to the turnstiles.
3. Improvements to station exit capacity to handle large crowds getting off a train all at once, all needing to swipe out.
Item 1 might or might not take more than a month – I suspect it would take a lot more.
Item 2 would clearly take more than a month.
Item 3 would take many years and large capital expenditures. Stations don’t have nearly enough turnstiles to accommodate exit swipes.
I’d love to see it, but it isn’t happening in a month.
A Gothamist commentator with the nom d’internet “Angry Pickle” gave the following breakdown of the MTA finances:
“Some select numbers for 2011 (from MTA Consolidated Financials 2011)
—————————————–
fare revenue: $4999 million
vehicle toll: $1502 million
other operating revenue: $438 million
NYS tax subsidy: $2029 million
NYC tax subsidy: $597 million
——————————————
salary and wages: $4704 million
retirement (pension) and other employee benefits: $2044 million
postemployment benefits besides pension: $2103 million
——————————————
Traction and propulsion power: $345 million
Fuel for buses and trains: $247 million
Maintenance/operating contract: $583 million
Professional service: $183 million
So basically, salary and wages eat up the fares, pension and benefits eat up NYS subsidy and the rest of the MTA’s operating revenue.
So maybe fares need to be increased but how about they review their postemployment benefits first.”
This sort of problem with high costs of pension and benefits has been endemic and recurring.
The real answer is that “postemployment benefits” should not be a per-employer thing, they should be a national program. Same with healthcare. This is basically how it works in most of Europe.
Procrastinators will create ticket machine chaos if there is no discount. But New Yorkers get by cheap compared to the Tube.
Current London Tube rates in US dollars:
Zone 1 peak single-ride Cash ticket: $7.00
Zone 1 peak single-ride Oyster card: $3.25
Zones 1-4 peak single-ride Oyster card: $5.85
Zone 1 30-day unlimited card: $182
Zones 1-4 30-day unlimited card: $260
A very complex and EXPENSIVE ride compared to the MTA.
Raise taxes, provide services. The money should come from taxes not fares. Are there any other mass transit systems in the world that depend so heavily on fare prices?
Yes, some even run operating profits. Check it out:
Farebox recovery ratio:
http://en.wikipedia.org/wiki/F.....very_ratio
There are very, very few examples which run an operating profit, however. Singapore, Hong Kong, Tokyo, Osaka, and Taipei — period.
It’s also notable how few systems use a flat fare.
Wikipedia’s citation for SEPTA’s farebox recovery is dead, and SEPTA does not have flat fares. (Yes, some lines have flat fares, but the system as a whole doesn’t, and there’s no way to tell for which lines the reported number comes.) That leaves the Vegas Monorail (a special case), Toronto, and Montreal as the only *flat fare* systems with higher farebox recovery than the NYC subway. Chicago does about the same as NYC.
If you want higher farebox recovery, you ought to switch to a distance-based fare.
Very very off topic, but I just got a heads up from a coworker that the 4/5 has been temporarily been shut down at Fulton and Wall due to policy activity related to OWS. Is there anyone out there in the know who can confirm or refute that? There’s no mention of it on the MTA site.
‘police activity’, rather
From what I’ve heard, certain entrances in Lower Manhattan are closed but subways are running. It’s very tough to get any info about the situation with subways in the face of the OWS protests right now.
Thanks Ben, I think I’ll just take the M15 SBS, then.
I had a very interesting commute this morning where I ended up being trapped in the hallway between the Wall St. 4/5 and the Broad St. J/Z for about 10 minutes, as the gates behind me were closed and I was faced with closed gates in front of me and locked doors into the Equitable and Chase buildings… too much excitement for 6:45 am.
I don’t understand why, absent a discount, people will suddenly clog the vending machines. If they had $10 before, they’ll still put $10 on the card, not just start buying single rides because they don’t get $0.70 free.
I 100% agree.
There is a small group of low income riders who scrape and scrounge to take advantage of the small discount. Without the discount, many in this demographic will now not buy and refill in $10 intervals, but in $5 or whatever they can scrape up.
As a college student with a meager cash flow I can confirm this. I put mostly put $8 or on my card but never less than $8 to get the bonus. It also serves a psychological purpose by making you feel good that you still get a discount even though you don’t ride as often as unlimited riders. Raising the fare is fine and probably necessary, but the cost of clogging up the fare machines does not justify the cost of getting rid of the bonus.
That’s probably only a concern at rush hour.
Cash is a lot more flexible than metrocard balance, and if either your use of the subway or your other costs are significantly unpredictable you’ll want to preserve this flexibility by only adding to your metrocard when necessary.
Even with the bonus, look how many people pay for buses in cash, wasting more than a fare worth of other passengers’ aggregated time in the process.
i do think that $10 is too low a pricepoint for the discount to kick in, people going to the machines every four rides still leads to too many machines required. It would be better to have a larger bonus kicking in only for loads over $100 or so.
I’m a bit disappointed that the MTA doesn’t do a better job of gouging tourists. (As taxi fares just went up there is even less danger than usual of driving them away.) A large metrocard bonus combined with a high single ride fare would be a good way to do this. Will the planned $1 “green” surcharge on new metrocards apply to single ride tickets? That would help too.
Bull crap, MTA already gouging tourists when they eliminate the fun pass.
The MTA cant find a program to put $1 surcharge, its beyond pathetic and a scared tactic.
I agree with Anon256 here, the discount should be larger. Let’s assume the MTA wants the revenue per swipe to be $2.50. Make the base fare $3 and offer a 20% bonus for putting $10 on the metro card. $10 will give you $12 which will be 4 rides. The math is simpler for everyone to follow and the tourists that don’t know any better or will only take 2 trips are left paying the full $3/trip.
I buy my 30 day unlimited through my employer and save an additional 25% on the taxes. $1.63 *(-25%) = $1.22. Only the tourists and the poor pay the full fare. Give me better service, I will by glad to pay more.
Well, there would be no multi-ride discount for the next fare increase. Let’s hope they do the right thing and put in the reverse — a surcharge to reflect the cost of the past — rather than raise the fare.
Once again we are arguing for more revenue while cost are the real issue. Once the fare raise goes in the TWU 100 will just get some judge to award it the money. IF you look back the new tax was the justification for the 11% raise. The good news is the mta is about to hire 120 new cunductors. It is the perfect time to expand OPTO on the L and overnights on other lines. It can be done with zero layoffs and save riders hundreds of millions. IT needs to be done. All on this board who say they can not afford a fare raise should be protesting in the streets for work rule changes.
MTA’s debt is way to high so we need a fare raise regardless
FYI vote obama if you want the mta fiasco nationwide. That is obama’s america
FYI: Please no unrelated politics. #RedvsBlueTroll
Come now. Sharon’s financial literacy exceeds her diction! Besides, who wouldn’t want the foxes to watch the henhouse?
I cant for the Smartcards to replace metrocards.
[…] it seemed as monthly cards would largely be spared while the base fare would see a big jump and all pay-per-ride discounts would be eliminated. Now, in the face of an outcry over that proposal, a second plan has seemingly emerged that would […]