When considering free-fare transit, conduct a thorough analysis

Posted on February 12, 2020 by By Mark Huffer and Chris Kopp

The biggest drivers of the free-fare movement are income disparity and the environment. MBTA

Faced with declining ridership in a time of transition for public transit, cities across the country are thinking about free fares.

Take more cars off the road. Put more people on the bus. No coins necessary.
The idea is a good one, and implementation could help to both reduce carbon emissions and income disparity. But before enacting an initiative as sweeping as free fares, transit operators must ask themselves if they have the capacity to absorb the revenue loss as well as support an increase in ridership and service.
While the notion of free fares is just now gaining widespread consideration at city halls and county courthouses, the decision-making process must rely on the tried-and-true basics of risk management. How do you realize the upside while offsetting the downside?  

Different answers for different systems
So far, operational and financial analyses have produced mixed results.
Free fares eliminate revenue while also potentially driving increases in ridership, which in turn increases demand for expanded service. That’s double jeopardy for the budget, and for many operators, that’s probably enough to kill a free-fare proposal. Just ask officials with the Metropolitan Transit Authority of Harris County (Houston METRO), where an initiative was recently scrapped. The agency determined that increased ridership on an already growing system would not offset the additional operational and capital costs of implementing free fares for a system the size of Houston’s.

Looking at the current landscape and into the future, it’s evident that transit agencies will need to be creative in order to continue to thrive. Bikes, scooters and ride-hailing services like Uber and Lyft have created a more competitive environment for urban mobility, and, in some markets, attracted riders away from transit. Free fares could be a way to increase market share, as a system without payment would be faster, easier to operate and account for, and would eliminate the transfer penalty — paying multiple fares to multiple operators on trips to work or the grocery store.      

Kansas City's City Council just voted to implement free fares for its bus service (KCATA shown) — making it the largest city in the country with free fares, when its program is implemented. KCATA
Kansas City's City Council just voted to implement free fares for its bus service (KCATA shown) — making it the largest city in the country with free fares, when its program is implemented. KCATA
Houston METRO won’t be the only public entity to decide that free fare isn’t feasible. But what might be an unattractive option in one place might be a great fit in another. In Kansas City, for example, the City Council just voted to implement free fares for its bus service — making it the largest city in the country with free fares, when its program is implemented. Its streetcar is already free. Transit officials there looked at the cost, as well as the expected benefit of increased economic activity, and decided the program was desirable.   

Economic and environmental considerations
The biggest drivers of the free-fare movement are income disparity and the environment. Eliminating the personal expense for transit gives low-income residents increased mobility, which can translate into enhanced opportunities for employment, healthcare, education and training. Remove the barrier to progress and those who need it the most will have extra cash in their pockets to spend on other aspects of their lives. That’s beneficial to everyone in any given community. In terms of the environment, a truly robust public transit system used by a wide demographic could take a lot of cars off the road and reduce emissions.

In some places, public transit might have problems with low ridership and revenue. If that’s the case, a free system could be the answer. There’s little to be lost and much to be gained. Increased utilization and enhanced mobility are extremely valuable, especially for a smaller urban area looking for a boost, like Lawrence, Massachusetts, which began a two-year program in September. Transit in Chapel Hill, N.C. has been fare free since 2002. For a large system like the one in New York City — one that moves millions of people with higher operating costs and has a high rate of farebox recovery — free fares might not make sense.

Consider the possibility
One way to test the waters of free-fare transit is to create a public-private partnership where a city’s largest employers, for example, may sponsor a short pilot program to see how it goes. What works and what doesn’t? Where are the opportunities and where are the obstacles? With new and relevant data, transit operators can make a better decision on free fares and determine if it’s a good fit for their community, before saying yes or no.

Chris Kopp, AICP CTP, and Mark Huffer are transit practice leaders at HNTB Corp.

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