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RTA Ridership Incentives
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DESCRIPTION: Implement Changes to the Fare Structure |
AGENDA NO: Click or tap here to enter text. |
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ACTION REQUEST: ☐ Approval ☒ Review Comment ☐ Information Only ☐ Other |
RECOMMENDATION:
recommendation
Authorize the Chief Executive Officer to implement adjustments to the RTA Fare Structure which will (1) offer discounts to youth and senior passengers, (2) simplify RTA’s existing fare structure, and (3) reduce the cost of monthly passes for all riders.
Staff recommends implementing the changes beginning on July 1, 2021 to correspond with RTA’s return to full service. Changes to the Fare Structure which are labeled as temporary measures will sunset on December 31, 2021. Changes to the Fare Structure which are not labeled as temporary will have no sunset date.
The recommended changes are based on comprehensive peer analysis, and an assessment of the ability of RTA’s existing products to meet the needs of its ridership. The adjustments can be implemented utilizing existing fare collection technology.
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ISSUE/BACKGROUND:
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RTA currently offers 21 unique fare products. Passenger revenue data suggests that RTA may have too many products within its fare structure, as one-third of RTA’s fare products account for less than 5% of RTA’s annual fare revenue. Despite the plethora of fare options, passenger revenue data also suggests that RTA is not offering pricing or pass options which incent the purchase of monthly passes, as single-ride tickets still account for over 70% of RTA’s passenger fare revenue.
RTA staff analyzed whether easily implementable changes to the fare structure would yield qualitative and quantitative benefits to RTA and its ridership as the New Orleans Region continues to emerge from the COVID-19 pandemic. These adjustments would ultimately be implemented as a compliment to this summer’s return to full service and implementation of certain New Links recommendations.
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DISCUSSION:
Peer Analysis
In designing the changes to the fare structure, RTA staff first looked to its peers, conducting a thorough analysis of the fare structures of 15 peer agencies. The following 15 peer public transit properties were chosen for the study:
1. Capital Metropolitan Transportation Authority (Austin, TX)
2. Charlotte Area Transit System (Charlotte, NC)
3. Chicago Transit Authority (Chicago, IL)
4. Sun Metro (El Paso, TX)
5. Jacksonville Transportation Authority (Jacksonville, FL)
6. Nassau Inter County Express (Nassau, NY)
7. Central Florida Regional Transportation Authority (Orlando, FL)
8. Escambia County Area Transit (Pensacola, FL)
9. Valley Metro (Phoenix, AZ)
10. Prince George’s County Transit (Prince George, MD)
11. GoRaleigh! (Raleigh, NC)
12. Foothill Transit (West Covina, CA)
13. Memphis Area Transit Authority (Memphis, TN)
14. MAX Transit (Birmingham, AL)
15. Maryland Transportation Authority (Baltimore, MD)
RTA staff analyzed the products that these agencies offer to passengers, as well as the relative costs of the products they offered. RTA gave special attention to the discounts these agencies have offered to youth and senior riders, particularly during the COVID-19 pandemic.
The peer analysis revealed the following key findings:
§ Peer Agencies are moving towards simpler fare structures. Simpler structures reduce barriers to ridership and offer ease of access for passengers.
§ Most Peer Agencies offer discounted youth and senior passes. Particularly during the pandemic, peer agencies have focused on delivering reduced cost products to their passengers. Twelve of RTA’s fifteen peer agencies offer a senior monthly pass. Ten of RTA’s fifteen peer agencies offer a youth monthly pass.
§ Peer Agencies price their monthly passes at levels which incent pass purchase over single-ride purchase. RTA’s peer agencies have set their monthly pass costs at an average of 35x the cost of a single-ride fare. This cost profile incents regular passengers to purchase a monthly pass rather than single-ride fares.
Changes to RTA Fare Structure
After conducting this analysis, RTA staff is seeking to implement the following fare structure changes:
§ Elimination of Extra Costs for Transfers. RTA currently charges a $0.25 surcharge for all transfers. As a temporary measure, RTA staff is seeking to eliminate this extra charge to passengers for ease of system use.
§ Elimination of Extra Costs for Express Service. RTA currently charges a $0.25 surcharge for “Express Service.” As a temporary measure, RTA staff is seeking to eliminate this extra charge to passengers.
§ Elimination of the 3- and 5-Day Jazzy Pass Options. As a temporary measure, RTA Staff is seeking to suspend these products to simplify the fare structure and incent the purchase of Monthly Passes.
§ Introduction of a Single-Ride Youth Fare: RTA does not currently offer a discounted youth single-ride fare. RTA staff is proposing the development of this product, at a cost of $0.50.
§ Introduction of Youth and Senior Daily and Monthly Passes: RTA does not currently offer youth or senior daily or monthly passes. RTA staff is proposing the development of these products, with the Senior and Youth Day Passes priced at $0.80 and $1.00, respectively, and the Senior and Youth Monthly Passes priced at $14.00 and $18.00, respectively.
§ Reduce Monthly Pass Cost: As a temporary measure, RTA staff is proposing to reduce the price of the 31-Day Jazzy Pass from $55.00 to $45.00 to incent pass purchases.
§ Convert Jazzy Pass to Multi-Modal: RTA currently offers a Jazzy Pass for bus and streetcar, a Ferry Pass, and an Integrated Pass for bus, streetcar, and ferry. As a temporary measure, RTA staff is proposing to convert the Jazzy Pass into a single, multi-modal pass, for simplicity.
Qualitative Benefits
The implementation of these adjustments to the Fare Structure will offer the following benefits to RTA and its ridership:
§ Reduction of Fare Complexity: Reducing the amount of fare products, and eliminating costs for transfers and express fares, will result in a simpler fare structure, easing access and burden on RTA’s ridership.
§ Incent Youth and Senior Ridership: RTA will join its peers in offering fare products which drive youth and senior ridership. Monthly passes for youth and seniors have been priced to incent monthly pass purchases.
§ Ease the COVID-19 Economic Burden: By offering discounted fares and reducing single-ride costs through the elimination of transfer and express surcharges, RTA is providing economic relief to its ridership as it returns to full service.
Title VI Review
All changes to fares are governed by RTA’s Title VI and Environmental Justice Policy and the Federal Transit Administration’s FTA Circular 4702.1B, “Title VI Requirements and Guidelines for Federal Transit Administration Recipients.” These policy documents provide guidance for permanent fare changes and “promotional fare reductions.” All temporary changes to the fare structure recommended by RTA are valid until December 31, 2021, and as such meet the requirement for “promotional fare reductions.” To the extent RTA seeks to implement the temporary measures beyond December 31, 2021, such measures will require a Title VI review. All permanent adjustments to the fare structure recommended by RTA staff are the creation of new products, rather than fare changes.
FINANCIAL IMPACT:
RTA staff have constructed a financial model to evaluate the impact of the changes to passenger fares. In the table below, RTA staff have provided a summary of annual passenger fare revenues across a number of scenarios.
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Scenario |
Summary |
Revenue |
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Pre-COVID Fare Revenue |
Annual fare revenue during 2019 (i.e., passenger fares prior to the COVID-19 Pandemic) |
$17.1M |
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COVID Fare Revenue |
Annual fare revenue during 2020 (i.e., passenger fares impacted by the COVID-19 Pandemic). |
$6.9M |
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Base Case |
Projected annual fare revenue during 2021, without a return to full service and without an introduction of the adjustments to the fare structure. |
$8.0M |
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Fare Structure Adjustment |
Projected annual fare revenue after return to service and implementation of adjustments to the fare structure. |
$8.7M |
Based on this financial model, RTA staff anticipate an increase in passenger fare revenues of approximately $670k during 2021 through return to full service and adjustments to the fare structure.
NEXT STEPS:
Upon Board approval, staff will begin the process of implementing operational changes associated with the changes to the fare structure.
ATTACHMENTS:
Click or tap here to enter text.
Prepared By: Chase Haislip
Title: Director of Internal Audit and Compliance
Reviewed By: Gizelle Banks
Title: Chief Financial Officer
Reviewed By: Mark Major
Title: Deputy Chief Financial Officer
5/20/2021
Alex Wiggins Date
Chief Executive Officer