Finance:Fare capping

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Short description: Public transport fare policy

Fare capping is a feature of public transport fare collection systems. Fare capping credits the cost of fares for individual trips towards the cost of an unlimited pass, limiting the cost of fares that passengers pay.

Some trials and proposals of fare capping were conducted in the early 2000s, with the first large implementation in London in 2005. Limited numbers of large transport operators began introducing fare capping in the 2010s, using proprietary technologies. As of 2023, fare capping is being implemented by smaller transport operators, using widely-available technology, with back-end systems in the cloud.

Concept

Literature on the New York City Subway promoting fare capping with OMNY, making a humorous comparison between fare capping users and "commitment phobes"

Fare capping enables public transport passengers to pay the lowest possible fare for their trips over a period of time. Passengers pay a single-ride fare for each trip they make within a certain period, such as a day or a week, until a certain threshold is met. This threshold may be a certain number of trips, or a monetary value. After the threshold is met, all rides for the rest of the period are free or discounted.[1](p5) This cap is often equivalent to the price of the comparable unlimited pass.[2](p380)

Fare capping is often presented in contrast to unlimited-ride passes, which are offered by many transport operators. Passes are favored by commuters and other frequent public transport users for their convenience and cost savings, but they must be purchased in advance at a significant upfront cost. Fare capping eliminates the need to purchase passes in advance, which may be a significant burden for both passengers and transport operators.[1][3](p8)

History

Card reader for the short-lived Tripperpas system in Groningen

An early implementation of fare capping was launched in 2000 in Groningen, the Netherlands, on Arriva buses. The Tripperpas used contactless smart card technology from Motorola and ERG Group, and introduced a number of new features. The Tripperpas was set up as a line of credit, where passengers were billed for the rides they took at the end of every month. Fare capping on the Tripperpas was advertised as the "best price guarantee," billing passengers for only up to the cost of the equivalent Sterabonnement season ticket.[4][5]

At the conclusion of its 2-year trial, the Tripperpas system was shut down, with only 4,000 cards in use, of the 11,000 cards planned to be issued.[5] The fare capping feature was not advertised well, and some passengers believed that fares would actually be higher than the single-ride Strippenkaart tickets that the system sought to replace.[4] The successor to the Strippenkaart and Sterabonnement tickets, the OV-chipkaart, was introduced in 2005 without fare capping.[6]

The Washington Metropolitan Area Transit Authority in Washington, D.C. proposed a fare capping program in 2003, shortly after the introduction of the SmarTrip fare card. WMATA found that its back-office systems could not make the necessary calculations for fare capping for the complex fares of the Washington Metro, and the proposal was abandoned.[3](p11)

The first large-scale implementation of fare capping was in 2005, by Transport for London.[2](p377) At its introduction, fare capping in London was available for Oyster card users only, and was valid on local services including the Underground and buses. The price cap for Oyster card users was set at the price of an equivalent one-day, unlimited-ride Travelcard.[7] TfL has expanded its fare capping system since its introduction, adding 7-day caps and contactless bank card support in 2014.[3](p11)

Another early implementation of fare capping in Europe is in Dublin, starting in 2012. The Dublin fare capping system, using the TFI Leap Card, was expanded to the entire Dublin transport network beginning in 2013. Trips on Dublin Bus, Luas, and Iarnród Éireann services are covered.[8][3](p11)

Advertisement for fare capping on the Los Angeles Metro system, beginning in July 2023

In the United States, two early examples are AC Transit and the Santa Clara Valley Transportation Authority, both in the San Francisco Bay Area, in 2012 and 2014 respectively.[2](p379) AC Transit and VTA operate in the same region, and both use the Clipper card, but their fares and fare caps are separate.[9]

More recently, fare capping was introduced by the two largest transit agencies in the United States,[10] the New York MTA and Los Angeles Metro, in 2022 and 2023 respectively. In New York, a weekly fare cap is available for OMNY and contactless bank card users, for trips on the Subway and most MTA buses.[11][12] Los Angeles' daily and weekly fare cap is available exclusively for TAP card users, on Metro Bus and Metro Rail services.[13]

Technology

Fare capping takes advantage of the advanced capabilites of automated fare collection systems. Since the first major implementation of fare capping in London in 2005, technology has matured significantly, leading to reduced costs.[2](p377) This maturity has allowed the expansion of fare capping to smaller operators, using mobile apps in addition to contactless smart cards.[14]

The Oyster card, the first major implementation of fare capping, uses MIFARE smart cards with proprietary programming, with equipment connected to proprietary back-office systems. Its 2005 launch of fare capping was 7 years after the system's initial design began in 1998.[15]

In contrast, contemporary payment systems supporting fare capping are available as commercial off-the-shelf systems, integrating white-label mobile apps, smart cards, card readers, and back-office systems. Examples of such systems include Umo by Cubic Transportation Systems,[16] Justride by Masabi,[17] and MOBILEvario by INIT.[18] An example of this technology's maturity is the installation of a new fare system on the Milwaukee County Transit System, supporting fare capping. The WisGo payment system, powered by Cubic's Umo, was implemented in under two years, despite delays.[19]

Impacts

Fare capping is frequently cited as a method to improve the social equity of transport fares.[3](p9) A 2022 poll of United States transport operators concluded that in addition to improving equity in transit fares, fare capping can also reduce transport operators' expenses in handling cash, and can contribute to an easier experience for passengers.[3](p42)

Fares, and fare capping, can be used by transport operators to influence their passengers' behavior, and therefore the ridership of their services. A 2020 behavioral economics analysis in Vancouver argued that transport operators must carefully consider their messaging around fare capping, as it can have significant positive or negative impacts on behavior.[20]

References

  1. ↑ 1.0 1.1 Chalabianlou, Reza; Lawrence, Adam; Baxter, Brian (2015). "A review and assessment of fare capping as a passenger incentive mechanism for Australia and New Zealand". Australasian Transport Research Forum. https://australasiantransportresearchforum.org.au/wp-content/uploads/2022/03/ATRF2015_Resubmission_253.pdf. 
  2. ↑ 2.0 2.1 2.2 2.3 Hightower, Ashley; Ziedan, Abubakr; Crossland, Cassidy; Brakewood, Candace (2022-10-01). "Current Practices and Potential Rider Benefits of Fare Capping Policies in the U.S.A.". Transportation Research Record 2676 (10): 376–390. doi:10.1177/03611981221089572. ISSN 0361-1981. https://doi.org/10.1177/03611981221089572. Retrieved 2023-12-24. 
  3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 Pettine, Amy; Rosenblum, Eryn; Manford, Brian (2022-02-25). Fare Capping: Balancing Revenue and Equity Impacts. Washington, D.C.: Transportation Research Board. doi:10.17226/26510. https://www.nap.edu/catalog/26510. Retrieved 2023-12-24. 
  4. ↑ 4.0 4.1 Cheung, Francis (2004-01-01). "Tripperpas Smart Card Project: Lessons from the Netherlands". Transportation Research Record 1887 (1): 147–152. doi:10.3141/1887-17. ISSN 0361-1981. https://doi.org/10.3141/1887-17. Retrieved 2023-12-27. 
  5. ↑ 5.0 5.1 "Motorola to test smart card in Netherlands". ATM Marketplace. 1999-07-12. https://www.atmmarketplace.com/news/motorola-to-test-smart-card-in-netherlands/. 
  6. ↑ Balaban, Dan (2023-01-27). "Dutch National Rail Operator to Launch Open-Loop Payments as Part of Nationwide Rollout in Netherlands". Mobility Payments. https://www.mobility-payments.com/2023/01/27/dutch-national-rail-operator-to-launch-open-loop-payments-as-part-of-nationwide-rollout-in-netherlands/. 
  7. ↑ "World first as daily price capping on Oyster Pre Pay brings benefits to passengers" (Press release). Transport for London. 2005-02-16. Retrieved 2023-12-24.
  8. ↑ "Determination order for the introduction of Leap card multi-operator (Dublin Bus, Iarnród Éireann and Luas) daily and weekly capping rates". National Transport Authority. 2013. https://www.nationaltransport.ie/wp-content/uploads/2012/03/Leap-Card-Multi-Operator-Capping1.pdf. 
  9. ↑ Fleisher, Arielle (2019-05-07). "Solving the Bay Area’s Fare Policy Problem". SPUR. p. 35. https://www.spur.org/sites/default/files/2019-11/SPUR_Solving_the_Bay_Area%27s_Fare_Policy_Problem.pdf. 
  10. ↑ "2022 Public Transportation Fact Book". January 2023. p. 32. https://www.apta.com/wp-content/uploads/APTA-2022-Public-Transportation-Fact-Book.pdf. 
  11. ↑ "Frequently Asked Questions: Fare cap". https://omny.info/faq/fare-cap. 
  12. ↑ Nessen, Stephen (2023-09-07). "MTA eases rules for ‘fare capping’ on NYC subways, buses". Gothamist. https://gothamist.com/news/mta-eases-rules-for-fare-capping-on-nyc-subways-buses. 
  13. ↑ "Our new simpler fares began July 1". The Source. Los Angeles Metro. 2023-06-01. https://thesource.metro.net/2023/06/01/our-new-simpler-fares-begin-on-saturday-july-1/. 
  14. ↑ Descant, Skip (2023-08-07). "Fare Capping Is Being Adopted by Transit Agencies of All Sizes". Governing. https://www.govtech.com/fs/fare-capping-is-being-adopted-by-transit-agencies-of-all-sizes. 
  15. ↑ Balaban, Dan (2020-01-01). "Oyster Card Here to Stay Despite Strong Growth of Contactless Fare Payments in London" (in en-US). https://www.mobility-payments.com/2020/01/01/oyster-card-here-to-stay-despite-strong-growth-of-contactless-fare-payments-in-london/. 
  16. ↑ "About Umo Fare Capping". Umo Rider Help Center. Cubic Transportation Systems. 2023-11-27. https://support.umomobility.com/hc/en-us/articles/360060059854-About-Umo-Fare-Capping-. 
  17. ↑ "Justride: The Platform Your Riders Will Love". Masabi. https://www.masabi.com/justride-the-platform-riders-love/. 
  18. ↑ Scharff, Julie (2022-08-15). "Fare Capping Is Ushering in the Future of Commuting". https://www.metro-magazine.com/10178668/fare-capping-is-ushering-in-the-future-of-commuting. 
  19. ↑ Bentley, Drake (2023-04-01). "Here is how the new MCTS fare system works — called WisGo". Milwaukee Journal Sentinel. https://www.jsonline.com/story/news/2023/04/01/new-mcts-fare-system-wisgo-milwaukee-buses/70054299007/. 
  20. ↑ Byfuglien, Andrea (2020). "Encouraging sustainable transportation through behavioural insights". UBC Sustainability Scholars Reports. https://sustain.ubc.ca/about/resources/encouraging-sustainable-transportation-through-behavioural-insights-study-assess. Retrieved 2023-12-26. 



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