Metro General Manager Paul J. Wiedefeld will not propose fare increases or more service cuts for the coming fiscal year, he said Tuesday, and will instead focus on improving customer service and workplace culture to help boost flagging ridership and revenue.
The announcement, contained in budget documents released Tuesday in advance of a presentation at Thursday’s board meeting, is significant because Metro protocol is to consider fare increases every two years and the move is usually accompanied by a review of service levels. Fares were increased in 2017; service also was cut.
“The parameters I gave the staff was ‘come back with a budget that does not impact the customer as much as we can’” Wiedefeld said in an interview Tuesday. “How do we start to generate revenue? And obviously it’s going to be by focusing on ridership and the ridership experience.”
In the interview, Wiedefeld acknowledged that service is one of the key factors impacting ridership, but he was unwilling to weigh in on whether the agency should add service ahead of the release of his budget proposal this fall. Increasing service is the most surefire way to grow ridership, according to internal and external analysis, and something riders and transit advocates have been pushing for.
“It’s all about service,” Wiedefeld said. “You could have a very clean station or bright station, but if you’re standing down there waiting for a train to come that doesn’t matter very much to you.”
According to Wiedefeld, boosting revenue is essential because the agency is constrained by a looming 3 percent cap in the growth of its operating subsidies. The agency won a hard-fought battle for $500 million a year in dedicated funding from the region, but the money is contingent on Metro containing its spending such that the District, Virginia and Maryland’s contributions to the agency’s operations do not exceed 3 percent of the prior year’s.
Metro is projected to exceed the $32-million cap because of projected revenue losses from capital projects and $27 million in added labor costs stemming from a recent arbitration-ordered wage increase, among other factors.
In the face of those constraints, Wiedefeld said, “The more revenue we generate, the more we can do.”
A fare increase and further service cuts would be an uncertain prospect for an agency that is hemorrhaging riders because of frequent and disruptive maintenance work. Next year, Metro plans to shutter the Blue and Yellow lines south of Reagan National Airport for 98 days to construct new station platforms as part of a major rebuilding effort.
“Obviously we know we’re going to impact the customer with the major capital projects, but there’s no way around those because we have to do those platforms,” Wiedefeld said.
There was no one reason Metro decided to forgo a fare increase, officials said. The agency has however indicated in recent financial reports that its 10-cent rail and 25-cent bus fare increase that went into effect in July 2017 helped stabilize revenue.
“Revenue is higher than prior year despite lower ridership due to the higher per-passenger fare resulting from the 2017 fare increases,” Metro said in its third-quarter financial report for the previous fiscal year.
Still, the budget guidelines prepared for the board presentation do not lay out any specific plans to grow ridership, which has fallen more than 10 percent since 2015. Metro has lost 125,000 average daily trips over the past decade — and ridership has fallen from 712,000 average daily trips to 626,000 since 2015. Off-peak service has driven two-thirds of the declines since 2016, the agency says.
Instead of adding trains, however, the budget document focuses on increasing ridership by improving customer service. The agency says it wants to prioritize the development and accountability of its workers through a number of avenues: improving labor relations, providing newer employee facilities, better recruiting and performance management programs, and focusing on its front-line workers who interact with customers.
Wiedefeld said Metro wants to adopt a Southwest Airlines-like workplace culture, focused on customer service and belief in the mission and product. He said that process begins with recruitment, but also by offering attractive facilities, valuing workers and taking an interest in their success.
“And the reason we’re doing this is because the payoff, the return of investment is on the product and the customer experience,” said Wiedefeld, the former chief executive of Baltimore-Washington Marshall International Airport. “That’s what Southwest has done.”
That focus translates into a better rider experience, he said.
'We want to be the employers of choice, but also the provider of choice,” he said.
David Stephen, a spokesman for Amalgamated Transit Union 689, which represents most of Metro’s workforce, was skeptical. He cited Wiedefeld’s efforts to privatize aspects of Silver Line operations, the agency’s increasing reliance on private contractors and what the union says are repeated breaches of its collective bargaining agreement.
“We’d like to think that his efforts are genuine but it just doesn’t feel that way,” Stephen said. “His actions reflect something different . . . You can’t say you want to make a relationship better with employees when you’re giving away their jobs.”
Metro’s own internal ridership rescue plan said the customer experience is essential to stabilizing ridership — including providing real-time information, helping riders who have difficulty with farebox machines and better interacting with passengers. But its road map to growing ridership included service increases, among them: running peak service all day, implementing all eight-car trains and extending the Yellow Line to Greenbelt.
Wiedefeld said it was too early to weigh in on those proposals. He conceded, however, that for some ridership growth strategies, the revenue generated would exceed the cost of implementation.
“There’s a possibility you could do some things now that the return is high enough you could do it,” he said, turning to a hypothetical. “Say we come up with larger energy savings — $10 [million], $20 million, well then you could plow that into something from a customer service perspective.”
(Though Wiedefeld’s example was a hypothetical, it is notable that the most ambitious strategy in Metro’s internal ridership rescue plan would be running peak service all day at an annual cost of $10 million to $30 million.)
Regional officials also could elect to fund a service increase, he said.
Metro’s 2020 budget outlook includes one modest increase to service at the urging of Maryland board members and officials: doubling Red Line service at Shady Grove through the elimination of a practice known as the “Grosvenor Turnback,” approved by the board earlier this year following a commitment to Maryland officials when the practice was instituted.
One slide in the presentation, labeled “Increase Ridership,” points to areas of focus as the agency looks to grow ridership: the “Rush-Hour Promise” ride credit initiative, pass programs, hours of service, marketing, speeding up buses and frequency of service.
The board will have to review some of those options regardless, because the Rush-Hour Promise and late-night service authorizations expire at the end of the year.
Still, Wiedefeld made clear that Metro faces a changing reality in transit service and must respond accordingly.
“It’s no longer a utility,” he said. “If you’re coming at it [like] ‘all we have to do is put it out there and people are going to use it as any other option, it’s ridiculous.’"
Still, he said, “there are some things that we can do better than Uber or anyone else and there are some things that other people can do better than us. 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. But maybe Uber, Lyft is a better solution for late-night service.”