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RTA Permanent Fare Change
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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 permanent changes to the Ridership Incentives which were implemented on July 1, 2021. These adjustments to the RTA Fare Structure included: (1) offering discounts to youth and senior passengers, (2) simplifying RTA’s existing fare structure, and (3) reducing the cost of monthly passes for all riders. The Ridership Incentives, implemented through a Temporary Fare Structure, have provided financial relief to RTA’s ridership, incented greater purchase of monthly passes, and resulted in operational efficiencies.
The Temporary Fare Structure expires on December 31, 2021. Staff recommends implementing a new Permanent Fare Structure which captures most of the changes associated with the Temporary Fare Structure. This new Permanent Fare Structure would become active on January 1, 2022.
The recommendation to implement the new Permanent Fare Structure is based on a review of the financial and operational impacts of the Temporary Fare Structure. Staff recommends additional changes be studied and potentially implemented after the delivery of new fare technology.
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ISSUE/BACKGROUND:
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RTA implemented the Temporary Fare Structure on July 1, 2021. This six-month pilot fare program included the following changes: (1) introduce senior and youth daily passes at a reduced cost; (2) introduce senior and youth monthly passes at a reduced cost; (3) introduce youth single-ride fares, (4) convert all Jazzy Passes to “multi-modal” to allow their use on the ferry system; (5) reduce the cost of the 31-day Jazzy Pass from $55 to $45; (6) eliminate the $0.25 upcharge for transfers; (7) eliminate the $0.25 upcharge for express service, and (8) temporarily suspend the 3-Day Jazzy Pass and the 5-Day Jazzy Pass.
The changes were implemented to achieve the following goals:
(1) Simply the Fare Structure: Reduce the total number of fare products to reduce the complexity of the fare structure, enable an easier ridership experience, and deliver operational efficiencies through simpler fare payment.
(2) Increase Youth and Senior Ridership: Introduce youth and senior daily and monthly passes to incent greater ridership by youth and seniors.
(3) Increase Monthly Pass Purchases: Drive greater monthly pass purchases and reduce the amount of single-ride fare purchases.
Staff analyzed the financial and operational impacts of each change associated with the Temporary Fare Structure to determine whether the changes should be transitioned into a new Permanent Fare Structure. Staff also utilized the ongoing Fare Study to determine whether additional changes should be made to the fare structure.
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DISCUSSION:
Temporary Fare Structure Adjustments Overview
Staff analyzed each of the Temporary Fare Structure changes based on the following criteria:
§ Financial Impacts: A determination of the financial impact of the change based on 2021 ridership and fare revenue (i.e., during a low ridership and revenue period), and a determination of the financial impact in a “normalized” year (i.e., during a normal ridership and revenue period). The financial impact was analyzed based on the gross financial impact and the percentage of the impact of total fare revenue and total operating budget.
§ Operational Impacts: A determination of the operational impacts associated with the fare change including an assessment of whether a change reduced the amount of time required to pay or whether a change reduced the amount of “wear and tear” on a farebox.
§ Other Impacts: A determination of any other impacts associated with the fare change such as the change’s impact on equitable outcomes for ridership, or whether the fare change is complimentary to other RTA initiatives.
Staff has summarized the assessment of the Temporary Fare Structure changes below:
Increased Monthly Pass Purchases: RTA has experienced a significant increase in fare revenue through the reduction in the cost of the 31-Day Jazzy Pass. RTA has experienced monthly double-digit increases in 31-Day Jazzy Pass revenue since implementation of the Temporary Fare Structure. Increased 31-Day Jazzy Pass adoption has also been a contributing factor to a 10% increase in the proportion of RTA fares purchased prior to boarding the bus and streetcar.
Increased Youth/Senior Ridership: RTA has experienced heavy adoption of the Youth and Senior Fare Products. In fact, as of September 2021, 10% of RTA’s fare revenue is now attributable to Youth and Senior fare products, compared to less than 4% prior to the implementation of the Temporary Fare Structure. The introduction of Senior 1-Day Passes has resulted in operational efficiencies for the fixed-route bus and streetcar, as less passengers are utilizing change to pay on a ride-by-ride basis. The introduction of the Youth 31-Day Jazzy Pass has also allowed RTA to engage in discussions with charter schools and local universities to enhance bulk pass sales for students.
Simplified Fare Structure: Certain changes associated with the Temporary Fare Structure have resulted in a reduction in RTA’s revenue per rider but have offered benefits in the form of operational efficiencies or simplification. The elimination of the transfer upcharge is critical to RTA as it implements New Links, particularly given New Links’ emphasis on the utilization of transfers to reduce travel time. The elimination of the express service upcharge is consistent with RTA’s recently-adopted Fixed Route Service Standards, which indicate that none of RTA’s currently offered service should be classified as “express.” The conversion of the Jazzy Pass to multi-modal allows for seamless transition between the ferries and the bus/streetcar. All of these changes result in a reduction in fare revenue but are critical investments by RTA given changes in service through New Links, and the adoption of Service Standards, as RTA seeks to deliver a more streamlined, simpler system.
RTA temporarily suspended the 3-Day Jazzy Pass and the 5-Day Jazzy Pass as an attempt to further consolidate the fare structure. RTA also sought to utilize this suspension analyze rider behavior to determine whether passengers would convert to a 31-Day Pass or a 1-Day Pass. Largely, passengers who preferred the 3-Day and 5-Day Jazzy Pass converted to a 1-Day Pass rather than engaging with the 31-Day Pass, resulting in lost fare revenue. Focus groups and data analysis revealed that this attempt to further simplify the fare structure resulted in fewer multi-day pass purchases by tourists and locals.
RTA Fare Study
Prior to implementation of the Temporary Fare Structure on July 1, 2021, Staff conducted an analysis of fifteen peer agencies. This analysis was focused solely on fare pricing and fare structure. Staff analyzed the products that these peer agencies offer to passengers, as well as the relative costs of the products they offered. Staff gave special attention to the discounts these agencies have offered to youth and senior riders, particularly during the COVID-19 pandemic. This peer study formed the basis for all recommended changes within the Temporary Fare Study, including rightsizing pass costs, simplifying the fare structure, and adding youth/senior fare products.
Over the past several months, RTA Staff have been conducting a more thorough, in-depth Fare Study. This Fare Study is a much broader analysis of all fare elements - marketing, sales, collection, validation, and enforcement. The Fare Study goes beyond simply fare pricing and fare structure and analyzes enhancements to RTA’s fare policy and fare technology. RTA plans to present the full findings of the Fare Study - which includes a 5-Year Fare Strategic Plan - in 1Q 2021.
Recommended Permanent Fare Structure
In the context of the above analyses, Staff recommend RTA implement the changes below. A summary of RTA’s former fare structure, the Temporary Fare Structure, and the recommended new Permanent Fare structure can be found in the table on the next page.
§ Retain Elimination of $0.25 Upcharge for Transfers.
§ Retain Elimination of $0.25 Upcharge for Express Service.
§ Retain the Single-Ride Youth Fare for $0.50.
§ Retain the Youth and Senior 1-Day Jazzy Pass for $1.00 and $0.80, respectively
§ Retain the Youth and Senior 31-Day Jazzy Pass for $18.00 and $14.00, respectively
§ Bring Back the 3-Day Jazzy Pass and Reduce Cost from $9.00 to $8.00
§ Bring Back the 5-Day Jazzy Pass as a 7-Day Jazzy Pass at a Cost of $15.00
§ Retain the Reduction in the 31-Day Jazzy Pass Cost from $55.00 to $45.00
§ Retain the Conversion of all Jazzy Passes to Multi-Modal
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Scenario Description |
Original Fare Structure |
Temporary Fare Structure |
Permanent Fare Structure |
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Single-Fare Rides (Bus and Streetcar) |
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Single-Ride Fare |
1.25 |
1.25 |
1.25 |
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Single-Ride Fare w/Transfer |
1.50 |
1.25 |
1.25 |
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Single-Ride Express Fare |
1.50 |
- |
- |
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Single-Ride Express Fare w/Transfer |
1.75 |
- |
- |
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Single-Ride Senior/Disabled Fare |
0.40 |
0.40 |
0.40 |
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Single-Ride (Youth / K-12) |
- |
0.50 |
0.50 |
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Single-Fare Rides (Ferry) |
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Single-Ride Ferry Only Fare |
2.00 |
2.00 |
2.00 |
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Single-Ride Senior/Disabled Ferry Only Fare |
1.00 |
1.00 |
1.00 |
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Single-Ride Ferry Only Vehicle Driver Fare |
2.00 |
2.00 |
2.00 |
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Single-Ride Ferry Only Vehicle Driver Plus Trailer Fare |
5.00 |
5.00 |
5.00 |
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Single-Ride Senior/Disabled Ferry Only Vehicle Driver Fare |
1.00 |
1.00 |
1.00 |
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Single-Ride Senior/Disabled Ferry Only Vehicle Driver Plus Trailer |
4.00 |
4.00 |
4.00 |
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Single-Ride Ferry Only Vehicle Additional Passenger Fare |
1.00 |
1.00 |
1.00 |
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1-Day Pass |
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1-Day Jazzy Pass (Revised Structure Usable on All Modes) |
3.00 |
3.00 |
3.00 |
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1-Day Jazzy Pass (Senior/Disabled) |
- |
0.80 |
0.80 |
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1-Day Jazzy Pass (Youth / K-12) |
- |
1.00 |
1.00 |
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Regional Ride |
6.00 |
6.00 |
6.00 |
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3-Day Pass |
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3-Day Jazzy Pass (Revised Structure Usable on All Modes) |
9.00 |
- |
8.00 |
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5-Day Pass |
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5-Day Jazzy Pass (Revised Structure Usable on All Modes) |
15.00 |
- |
- |
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7-Day Pass |
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7-Day Jazzy Pass (Revised Structure Usable on All Modes) |
- |
- |
15.00 |
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31-Day Pass |
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31-Day Jazzy Pass (Revised Structure Usable on All Modes) |
55.00 |
45.00 |
45.00 |
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31-Day Jazzy Pass (Senior/Disabled) |
- |
14.00 |
14.00 |
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31-Day Jazzy Pass (Youth / K-12) |
- |
18.00 |
18.00 |
FINANCIAL IMPACT:
RTA staff have constructed a financial model to evaluate the impact of the changes to passenger fares. Staff have noted that although ridership has been heavily impacted by (1) the emergence of the COVID-19 Delta Variant, (2) Hurricane Ida, and (3) service changes across all modes, RTA’s passenger revenue per rider has remained constant. In fact, revenue per rider has only declined by approximately 2.0% since the implementation of the Temporary Fare Structure, despite the loss of higher revenue per passenger riders due to the events noted above. A 2.0% decline in fare revenue would correspond to an approximately 0.5% reduction in the operating budget in a “normal” year, without considering increases in ridership associated with the fare simplification and incentives through better fare pricing.
As noted above, the reduction in monthly pass costs has led to a double-digit percentage increase in monthly pass purchases. Applying such growth to a “normal” year, absent a COVID resurgence, would conservatively result in a fare revenue increase of approximately $300,000 per year.
NEXT STEPS:
Upon Board approval, Staff will begin the process of implementing operational changes associated with the new Permanent Fare Structure.
ATTACHMENTS:
Resolution - RTA Permanent Fare Change
Prepared By: Chase Haislip
Title: Internal Audit and Compliance
Reviewed By: Mark Major
Title: Deputy CEO Administration & Finance
Reviewed By: Gizelle Johnson-Banks
Title: Chief Financial Officer
12/3/2021
Alex Wiggins Date
Chief Executive Officer