Hot on the heels of yesterday’s joint Governor-Mayor MTA reform proposal and after delaying a vote on the topic last month for no clear reason, the MTA Board on Wednesday approved a fare hike that eliminates the pay-per-ride discount and keeps the break-even economics of an unlimited card in place. Due to the one-month delay, the agency will lose out on $30 million this year, and the new fares will go into effect on April 21.
Here’s a look at what we’ll all be paying in two months. The increases clock in between 3-5% depending upon the service.
For pay-per-ride cards, this move finally wipes out the MTA’s bulk discount, long a target of fare hike proposals. Currently, the MTA offers a 5% on purchases over $5.50, making the effective fare $2.62. But come late April, all riders who aren’t buying time-based cards will pay the same $2.75 per ride. The unlimited passes go up by a similar percentage, but the breakeven points for each card remains the same. As it is today, on the 47th swipe, a 30-day card is a better deal than paying as you go, and on the 13th swipe, a 7-day card saves you money. I’ll have more thoughts on the MTA’s approach to fare structure in the coming weeks.
In comments following the vote, Fernando, Ferrer, one-time Bronx borough president and the interim chairman of the MTA, had this to say: “It’s painful for a lot of reasons, for a lot of people, but we had to do it, and it is within inflation. So it wasn’t exactly a mugging.” You can take that line to the bank.
Meanwhile, the MTA also announced a new series of internal cost-cutting and performance measures to go with yesterday’s congestion pricing/reform proposal, including a promise that each MTA subagency will issue consolidation plans that identify $500 million in cost savings. I’ll have more on this soon, and you can read about it here in the agency’s own press release.
My theory is that when comparing singles vs monthlies, very, very, very few people did the math with the bonus. That is, I think the math people did was $121/$2.75 and the new math is $127/$2.75. In this case, getting a monthly is less attractive.
This of course builds on other changes that have moved people away from transit. More and more people have the flexibility to work from home occasionally, which again shifts the math in favor of pay-as-you-go. Throw in the L disruption, continuous weekend clusterfucks, and the continued popularity of Uber and friends, and I think we will see a notable transition away from monthly purchases and onto pay-as-you go because people are not taking those extra trips that make having an unlimited pass attractive.
The MTA needs to price their service as a competitive good, not as a utility. They continue to fail to do that (although to be fair, they’re in good company in the US in this matter)
Based on a few conversations I had with folks today, I think many were doing the math as you said (which is the wrong way to do the math). So they thought this fare hike affected monthlies more than it does. This is partly the MTA’s fault since they made the “true” $2.62 fare so opaque, but my guess is that approach was more a feature than a bug.
I stopped buying monthlies when I started traveling by bicycle. It certainly wouldn’t pay for 1-3 round trips per week.
My math is that the 30 day $127 pass requires 46 rides at $2.75 or 42 at $3.00. Those are equivalent to 23 and 21 days assuming one trip each way, which is what the majority of the people do. 30 consecutive days will have 22 non-weekend days, but typically one of them will be a holiday, so 21 is a better estimate. At this point it is clear that the pay-per-ride is better deal for the vast majority of the travelers. Unless they are certain to make the extra trips, the monthly is not worth it to them, but once they decide to not buy the monthly, but the pay-per-ride they are free to NOT use it on any given day making it much easier to justify opting for Uber, cabs or other alternatives. Once they opt for the other options those riders contribute the peakedness of the demand and the congestion on our streets. The MTA is failing to account for the behavioral bias that most people have. And in fact this might not be MTA’s fault, but politicians fault as they are the ones who appoint the MTA board which is under tremendous pressure to appear to not be rising fares by much and to do so they have eliminated the effective discount for passes making everyone effectively buy single rides. They are not called single rides, but that is what they effectively are. The single ride is $2.75, but there are no effective discounts for passes making practically everyone use the single rides. The side effect of this is making the marginal cost of a ride $2.75 as opposed to $0 as it would be if the ratio was, for example, 16. This makes it easy for the customers to make the decision to not use the subway off-peak and contributes to the peakedness of demand for rides and also to above surface congestion.
When you look at the big picture, the MTA fare increases were both modest and necessary to deal with this years operating deficits of several hundred million. The capital side shortfall is in billions. Long term MTA debt exceeds $40 billion. This results in debt service payments eating up 17% of the annual budget. Yearly debt service payments will grow to 20% under the next MTA Five Year 2020 – 2024 Capital Plan. The MTA has no available surplus operating dollars to delay any fare increase let alone offer any reductions. Governor Cuomo and Mayor de Blasio’s current and upcoming budgets include no funding to do either. Both the MTA and elected officials have never been serious about combating fare evasion. Every year, the MTA losses over $200 million for those who refuse to pay their way. NYC District Attorneys will not prosecute fare evaders. This encourages more riders not to pay. NYC Transit police have their hands tied, thus giving up enforcing fare payments.
For those public officials, MTA board members and others who opposed any fare increases and were quick to demagogue on this issue (for political purposes to win upcoming elections), just how would the MTA balance financial shortfalls? Which capital improvement projects should the MTA cancel to help balance the budget and avoid fare increases? Which route(s) would you support service reductions to save operating dollars? Would you volunteer to reduce service, cancel or delay any capital projects benefiting constituents in your district? What future union contracts would you ask for more flexible work assignments, hire part time employees, contract out more work to the private sector and reduce salary increases. Will you ask employees to increase their contributions toward medical coverage and retirement pensions?
Contrary to the heated rhetoric of elected officials and so called transit advocate, MTA services continue to be one of the best bargains in town. Since the 1950s, the average cost of riding either the bus, subway or commuter rail when you buy a weekly or monthly ticket has gone up at a lower rate than either the consumer price index or inflation. The Metro Card introduced in 1996 affords a free transfer between bus and subway. Prior to this, riders had to pay two full fares.
A majority of residents purchase weekly or monthly NYC Transit bus/subway Metro Card, LIRR or Metro North ticket which reduces the cost per ride significantly below the base fare.
In the end, quality and frequency of service is dependent upon secure revenue streams. We all will have to contribute — be it at the fare box or tax revenues generated by different levels of government redistributed back to the MTA.
TANSTAFFL or “there ain’t no such thing as a free lunch” or in this case a free ride. Someone has to pay for it.
(Larry Penner is a transportation historian, advocate and writer who previously worked 31 years for the US Department of Transportation Federal Transit Administration Region 2 NY Office.)
To say it’s a bargain, one would have to include all the money paid, not just the fare. It sure as hell is less of a bargain that it was in the late 1990s, after those massive fare cuts and before:
The 1/4 percent payroll tax.
The 1/8 cent sales tax increase.
The service cuts.
The maintenance cuts.
“TANSTAFFL or “there ain’t no such thing as a free lunch” or in this case a free ride. Someone has to pay for it.”
In the Generation Greed era there had been a free lunch for all and sundry, and that’s what we have to pay for.
The real losers here are the working poor, who don’t have a choice. Most of them don’t get transit chex or pre-tax metrocards, and most of them have to make several trips a day. They just get worse service for more money. The winners remain the bloated MTA workforce and supervisory staff, the ridiculously well-compensated and feather-bedded MTA contractors, and Gov. Cuomo, who is yet again not held accountable for allowing the mismanaged MTA to remain as is. I hate the word privatization, but with the TWU and construction unions and contractors holding the MTA for ransom, and the MTA Board unwilling to fight, it’s time to let the unions and contractors know the game has to change.
With the elimination of the bonus, time to start the equivalent of token hoarding, one of my favorite activities back in the day when tokens remained the same when fares were hiked. Fill up those MetroCards to the max before April 21 to get a lot of free rides.
Or, use the service gate or jump the turnstile a couple of times a month to offset the loss of the bonus.
Great idea! What could possibly go wrong?
Some perspective. It doesn’t pay to use cash in London. Wonder if we’ll see anything like this kind of discounting with OMNY?
London Transport Zone 1-4 single ride fares
I’ll not be surprised that there will be much higher fare and toll hikes in the not too distant future, assuming if congestion pricing is not included in the state budget this year.