Management & Operations

U.S. transit agencies propose fare hikes to offset fuel costs

Posted on May 1, 2005

Metrolink, Southern California’s regional rail service, is one of many U.S. transit agencies proposing fare increases to offset skyrocketing fuel costs. The agency is asking for an average increase between 4.5% and 9.25%, which will go into effect on July 1 if approved by its board. Currently, a basic three-zone fare is $6.50. “It’s an unfortunate situation that we find ourselves in,” said Metrolink spokeswoman Denise Tyrrell. “We’ve had to endure rising fuel costs beyond what was in our annual budget.” The cost of ultra-low sulfur diesel fuel used by Metrolink trains increased 30% in the past year. With fuel prices predicted to remain high, the additional cost could be nearly $1.7 million over the next year. Every five-cent increase in the price of diesel fuel translates into an additional expense totaling $280,000 annually for the system. The commuter railroad had previously approved a plan for an average annual increase of 3.5% along with a restructuring of its fare policy. “If the lowest fare increase goes through, that would be an additional 1%,” Tyrrell said. In addition to rising fuel costs, insurance for the commuter railroad will triple during the next fiscal year. “We’d really love to reassure people who rely upon us for transportation that we’ve done everything in our power to cut costs that we can control.” St. Louis’ Metro, which operates light rail, fixed-route bus and paratransit services, is another system that is struggling to balance its budget. During a meeting with the agency’s governing board, Metro President and CEO Larry E. Salci said that in lieu of cutting service, the system would need a fare increase to offset the escalating multi-million-dollar impact of fuel prices. In addition to fuel costs for the system, which have risen 82.2%, he cited a number of financial pressures affecting Metro’s budget, including flat or declining revenue from local sources and rising medical costs for employees. The agency has already made a number of cost-cutting moves, including improvements in unscheduled absenteeism and workers’ compensation claims, maximized use of part-time operators and improved financial, purchasing and inventory systems. Other cost-cutting measures slated for FY 2006 include a management salary freeze and increasing the retirement age for non-union employees from 60 to 65. Wisconsin’s Madison Metro has given a proposal to its policy-making board to raise fares to $1.65 in August — up from $1.50 — to reduce the expected deficit resulting from fuel hikes. “It’s something we are giving [the board] to consider,” said Madison Metro spokeswoman Julie Maryott-Walsh. Before it resorts to the fare increase, the system will look into increasing advertising revenues. “Anecdotally, our riders are saying they would rather have us increase fares than decrease service,” Maryott-Walsh said.

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