Metro’s money managers wary of a ridership growing more sensitive to fare hikes

Robert Thomson
Columnist December 14, 2013

Metro has a whole set of social and economic goals governing its fare increases. They include satisfying the customers, being fair about sharing costs and limiting the confusion about the varying rates. But a key goal is self-preservation: The transit authority must make enough money to cover expenses.

Asking riders to pay more will raise revenue, but if Metro asks them to pay too much more, some will stop riding. And that’s counterproductive.

Robert Thomson is The Washington Post’s “Dr. Gridlock.” He answers travelers’ questions, listens to their complaints and shares their pain on the roads, trains and buses in the Washington region. View Archive

For many years, Metro had better luck than other businesses in raising prices without losing customers. Those days may be done. This was one of the considerations behind Metro’s relatively modest proposal for a 2014 fare increase.

In 2010, Metro imposed a fare increase of about 18 percent for rail and 20 percent for bus. That was huge.

Two years later, Metro raised rail fares by 5 to 7 percent for peak trips and up to 27 percent for off-peak trips.

Looking back on these previous rounds of fare increases, Metro managers said they could see that the environment for transit travel was changing. A long period of solid growth in ridership was coming to an end.

Between fiscal years 1994 and 2009, annual ridership on Metrobus and Metrorail grew from about 290 million trips to 360 million trips, or about 24 percent.

Since the 2009 fiscal year — July 2008 to June 2009, a period of economic decline — total Metro ridership dropped about 6 percent to 340 million annual trips. Both Metrorail and Metrobus use declined in fiscal 2010, but Metrobus has regained some if its lost ridership while Metrorail ridership has stagnated.

“There was a greater response to the July 2012 fare increase than past experience would have predicted,” according to a staff report delivered to the Metro board’s finance committee in October, while the new budget was in preparation.

Some riders attribute this response to a decline in service, but it’s probably not the root cause.

In a Washington Post poll this year, a strong majority continued to approve of Metro’s performance on such measures as comfort, safety, operating hours, reliability and general convenience.

What may be bothering them more than the service itself is the price. In the latest poll, 67 percent of riders rated Metrorail as a “good value,” down from 75 percent in The Post’s 2005 poll.

As Metro managers ponder the impact of a proposed 3 percent increase in rail fares for 2014, they are dealing with a set of uncertainties about how riders will react.

“There are a lot of short-term negatives,” Metro budget official Mark Schofield told Metro’s board members in October.

The federal transit benefit, which has gone up and down and up again in the past few years, is set to be reduced in 2014. A federal worker getting a $245 monthly benefit to ride Metrorail might take a fare increase in stride. Cut the benefit to $130 a month and other forms of commuting might start to look more attractive.

The state of the economy and the state of the transit benefit apparently have made riders more sensitive to fare increases than they were before 2008.

“This may constrain Metro’s flexibility in changing fares and trying to balance the funding burden between riders and local jurisdictions,” the transit authority’s report said.

Meanwhile, telework has increased in popularity, particularly among federal employees. “If telework continues to grow, it has the potential to impact commuting patterns across the region on all modes,” the Metro report said.

There are bright spots for those trying to balance the transit budget. Notice all those townhouses and apartments that have been rising around stations? Such transit-oriented development creates a Metrorail market just as well as building more commuter parking garages.

Metro officials also see plenty of potential for bus ridership growth along commuter corridors.

And taking a really long view, Metro’s financial team sees that many millennials want to live in neighborhoods with good access to transit. Meanwhile, some of the baby boomers reaching retirement age are looking for smaller, closer-in residences where they won’t need their cars as much to get around.

While the long-run view may be rosy, the present uncertainties have Metro planners wondering how much to trust their old models on rail ridership. Look for that concern to be a key factor in the upcoming battle over sharing the revenue burden among rail, bus and paratransit riders — and among the local governments that make up the difference when fares fall short.

Dr. Gridlock also appears Thursday
in Local Living. Comments and questions are welcome and may be used in a column, along with the writer’s name and home community. Write Dr. Gridlock at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071, or e-mail drgridlock@washpost.com.

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