The discussion followed a budget preview from General Manager Paul J. Wiedefeld that outlined Metro’s intention to keep fares and service at their current levels — though he has not ruled out a service increase. Projections show the agency risks exceeding a new 3 percent cap in growth of the subsidy it receives for operations by millions of dollars.
“This is not a business where every customer represents more profit for the organization. It’s the opposite,” said board member Steve McMillin, an appointee of the federal government. “It would be crazy for this authority to simply run more trains in off-peak times chasing additional passengers.”
Metro estimates that two-thirds of its ridership losses over the past two years have come during off-peak periods. Internal and external analyses have determined that service is the best predictor of ridership changes, other than outside factors beyond Metro’s control, such as population and jobs. A recent report from Metro staff recommended several proposals ranging from all-day peak service, to all eight-car trains, to extending Yellow Line service to Greenbelt and overhauling the Metrobus system.
McMillin’s comments, then, raised questions about what the agency’s mission should be.
Metro said it is examining several areas, from customer service to hours of operation to rail and bus frequency to address the ridership problem. Comments by Chief Financial Officer Dennis Anosike shed light on the agency’s thinking at this point; he said Metro “will seek to rebuild ridership through better customer engagement,” echoing Wiedefeld’s budget talking points that prioritized customer service and workplace culture to win back riders. Wiedefeld said in an interview Monday that Metro needs to recognize the competitive landscape in which it operates.
“We can move thousands and thousands of people in a very short period of time through very congested roadways — that’s what we can do,” Wiedefeld said. “But maybe Uber, Lyft is a better solution for late-night service.”
Still, Wiedefeld disagreed that the bottom line should trump other considerations when it comes to the service the agency provides.
“We have a public mission, which is to provide service for lots of other reasons: whether it’s congestion relief, whether it’s environmental, whether it’s for dealing with people that don’t have [other] opportunities — that’s also our mission, so it can’t just be a dollars-and-cents equation.”
Board member Michael Goldman agreed with McMillin that the agency should not look at significantly increasing service, given its financial outlook.
Rather than add service, Metro should instead accept that ride-hailing companies have gained ground, Goldman said. He proposed a marketing program that would provide first-mile, last-mile access to Metro through a partnership with Uber and Lyft.
“I’d much rather spend money trying to encourage people to use Uber and Lyft to get to the trains,” said Goldman, who represents Maryland. “I think that’s a better use of money than to try and spend a lot of money just to run trains empty throughout the day.”
Metro predicts it will exceed the 3 percent cap on annual increases in the subsidy it receives from jurisdictions — mandated by the landmark dedicated funding law — just through inflation and revenue losses from planned service outages, such as next spring’s 98-day shutdown on the Blue and Yellow lines south of Reagan National Airport for platform rebuilding.
It was unclear how Metro planned to accommodate those costs — estimated at $40 million — without raising fares. Metro officials said Thursday they believe costs associated with phase two of the Silver Line and obligations such as the Occupational Safety and Health Administration and Americans With Disabilities Act requirements are exempt from the cap, though they add up to $90 million in additional spending. The same goes for arbitrator-mandated increases in labor costs of $27 million.
A staff analysis found that all-day peak service would cost $10 million to $30 million and add 10,000 to 20,000 additional trips every weekday. Extending Yellow Line service to Greenbelt would add an average 3,000 daily trips at a cost of $1.5 million to $3 million. The report recommended running all eight-car trains, but Metro would not be ready to do so on the Red Line, for example, until at least 2025, according to a staff presentation Thursday.
On social media, reaction to McMillin’s pronouncement was swift, as Twitter users concluded that his perspective constituted a “failure of vision,” and “sums up what it wrong with WMATA”.
“Basically anybody other than the board: “We’re begging you, please run more trains,” tweeted @Evan52314.
McMillin further explained his point after the meeting.
“At a certain point, some level of new service we would add would cause us to exceed that 3 percent cap because the marginal cost of running the additional service exceeds the marginal revenue of the new people we’re getting,” he said. “That’s all I’m getting at there.”
So what should Metro’s goal be in his view? Increasing ridership? Increasing the return at the farebox?
“I think those are important metrics, but they’re not the only metrics,” he said. “Right now the only binding metric we have is growth of the net subsidy. And there’s lots of other ways we should measure how well we’re doing, but that’s the one that dedicated funding was conditioned on.”
The District, Maryland and Virginia provide about $1 billion in operating subsidies to support Metro’s $1.9 billion operating budget. The rest of the budget is largely supported by fares and other revenue such as parking, though those sources make up less than half of Metro’s operating need. The federal government does not provide an operating subsidy for Metro, McMillin noted, adding that the jurisdictions are free to contribute what they wish.
Wiedefeld made the same point about potentially adding service, “if they want to provide the local subsidy to do it.”
Metro board Chairman Jack Evans said he disagreed with his colleague’s contention that it would be “crazy” to add service under the circumstances.
“I think all the studies prove that if you have more trains, you can have more customers,” he said. “Steve [McMillin] was talking about when you add trains and riders, doesn’t mean necessarily we’re going to make more money. . . . That’s not the point. The point is you want to move people. This isn’t a business. This is a necessity for public transportation.”
Wiedefeld, who will present his formal budget proposal later this fall, said the 3 percent cap forces the agency to “think creatively” about ways to improve its financial position. Nina Albert, Metro’s managing director of real estate, said the agency has received requests to host farmers markets outside stations, and concluded a key time to do so is on weekdays when foot traffic from surrounding offices is highest.
One avenue officials are pursuing is allowing food and drink sales on Metro property — though outside of fare gates — which is prohibited aside from weekends and holidays.
The measure — likely to be approved by the full board in two weeks — would shift the ability to authorize commercial retail opportunities to Wiedefeld. Such authority had been restricted to the board, an arrangement board member Corbett A. Price said left him “somewhat appalled” because of the restraint it put on the general manager.
Price said Metro should look to New York’s Columbus Circle, which has a bustling underground food hall, as a model for how mobility and retail can complement each other.