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EXECUTIVE INSIGHTS

Post-COVID-19 Transit Ridership Recovery: Does Fare

Capping and Subscription Pricing Have a Role?

As the demand for public transit continues to recover following the end of the pandemic,

attention has been directed at the range of policy levers available to support ridership

growth.

In an earlier Executives Insights we addressed the role of free and at fares as potential

strategies to grow transit ridership — but fare capping and subscription-based pricing are

Before the emergence of the e-purse, with rst-generation smart-card fare collection

systems, such products were commonplace in the fares product suite. The e-purse

provided the opportunity to mimic the periodical product by deducting a fare until the

price cap was reached.

A daily cap is typically designed to provide free travel at the margin over and above the

daily commute (e.g. inter-peak or o-peak travel) in selected cities. The table in Figure 1

below sets out the daily fare cap multiple (i.e. the number of equivalent-peak single fares). It

shows that, with the exception of Toronto and Paris, a customer making at least three trips

will reach the daily cap; that increases to at least four in Toronto and at least ve in Paris.

oering unlimited travel at any time on bus, Tube, Tram, DLR, London Overground,

Elizabeth line and National Rail services for the zones determined by the customer.

The traditional value proposition of a weekly periodical pass or capped fare is to charge

the customer for the ve days of commuting and provide weekend travel for free —

this change to is a rational economic position to take, given the availability of excess

system capacity on weekends. But in some cases, both lower and higher thresholds are

established. For example, in Chicago, the weekly cap is less than nine times the cost of a

single (peak) ticket. In contrast, in both New York and Amsterdam, the weekly cap is 12

times the cost of a single trip ticket.

Evolving fare capping

week commuter moving to a dierent public transit fare product — they may well use their

old weekly commuting budget to pay for parking two or three days per week.

There could be scope for some jurisdictions to reduce their weekly fare caps to a multiple

more like (say) six to seven times the cost of a single trip or three to four times the price

of a daily product (or daily cap) to ensure that existing customers with a choice of mode

Amsterdam

Los Angeles

Edinburgh

Toronto

Paris

2.65

2.86

2.40

4.03

are retained and that public transit is priced attractively for potential customers. It is of

course acknowledged that demand in some markets, where exible working and working

from home are not as prevalent, may be able to retain a conventional 5+2 pricing model or

There is an additional challenge of the relationship of a single weekly cap to customer

travel patterns, not just trip intensity. Other factors, such as trip patterns, particularly

where jurisdictions use distance-based pricing and time of travel (i.e. peak versus o-

peak), also determine the likelihood of individual customers reaching the weekly cap

compared to the cost of single tickets.

taking a return trip each day. As such, the third and subsequent trips, on days 1 and 2,

trip home on day 3 would be free at the margin. It would of course be possible to make

this model even more attractive, for example by enabling use of the three-day pass over

non-consecutive days in a ve- or seven-day period. Further analysis of eective discounts

provided by the current CTtransit nested caps according to travel intensity is provided in

Fare capping schemes also oer potential to protect the transport disadvantaged,

who are oen highly dependent on public transit. Low-income groups are oen over-

represented in terms of their use of periodical products or capped fares. In many cases

a standard discount (say 50%) is applicable to all concession products relative to adult

products, including periodical and capped products. An argument could be made to apply

a deeper discount to the capped fare for concession products to support greater levels

of mobility amongst those who are essentially captive to public transit (i.e. lower the

eective threshold where travel is eectively free at the margin).

ongoing and trials that have been completed or discontinued.

Figure 3 below summarises three subscription models to demonstrate how modes and

In our view, customer acquisition and retention are both signicant challenges to

subscription-based mobility pricing.

The challenge of oering subscription-based pricing on a commercial basis is that typically

a bundle or even a series of bundles cannot be designed at a price point that is attractive

to all but ‘super users’.

Subscription models that target specic market segments with broadly similar mobility

needs oer greater potential in the near term. The Queensland ODIN Pass, which is

specically targeted at the mobility needs of university sta and students, is an example

Both fare capping and subscription pricing oer substantial potential to help support the

post-COVID recovery of public transit demand. A challenge in both cases is the need to

pivot pricing to align with post-COVID travel. A further issue for subscription-based pricing

is to overcome the challenges of oering a product suite, which might contain a mix of

unlimited travel, discounted modes or services, and pay-as-you-go modes and services,

that supports both customer acquisition and retention.

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