ATLANTA TRANSIT PRICING STUDY: MODERATING IMPACT OF FARE INCREASES ON POOR

Abstract

Alternative methods for moderating the impact of fare increases on low-income groups in Atlanta are described and evaluated. The study, sponsored by the Transportation Systems Center under the Service and Methods Demonstration Program, considers five alternatives to a flat fare increase: direct user subsidies, quality-based fares, reduced fares on designated routes, peak/off-peak fare differentials, and distance-based fares. We evaluate these fare strategies according to a set of standardized criteria that considers the target efficiency, coverage of the target group, administrative cost, total cost, and degree of relief offered by each option. The study finds that a direct user subsidy provides the highest degree of relief to low-income patrons with the lowest revenue loss. This is because user subsidies are more efficient in reaching the target population and offer a higher level of coverage of the poor than do other alternatives. The results of the analysis also suggest that fare strategies that increase pricing efficiency by relating fares to cost, such as peak/off-peak fare differentials and distance-based fares, may not aid low-income riders. The analysis indicates that the equity implications of such pricing strategies must be assessed on a city-by-city basis. The desirability of direct user subsidies as a means of offering fare assistance appears to be more universal, however, primarily because it is distributed directly to the poor. With many transit properties facing court challenges to flat fare increases, these results may be of interest to operators throughout the United States.

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