Why fare hikes in New York are never, ever out of the question
The M.T.A. is raising the subway fare next year, just like it did in 2010, and just like it will do yet again in 2015.
Logic tells us that at some point such hikes become unsustainable; excessively high prices deter customers and end up hurting the bottom line, as everyone knows.
Except not when it comes to transit.
“The answer is, that never happens," said Jeffrey Zupan, a senior fellow at the Regional Plan Association, in response to a question about the point of diminishing returns for fare hikes. “Obviously if you charged $100 a ride for using the subway, no one would use it and you’d have no revenue. There’d be millionaires on it ... if they wanted to use the subway.”
“It’s sort of like talking about the far reaches of the solar system,” said Charles Komanoff, a transport economist. “We are not remotely close to that. You could just as easily say, ‘If people had to swim to get down the staircases to the stations, then they’re not going to ride the trains.’ OK, that’s true, but so what?”
These are people, mind you, who are vigorous advocates of publicly subsidized transit.
But with one exception (Robert Paaswell, director of the CUNY Institute for Urban Systems, who said that "if you even mentioned $4, people would panic") none of the transportation experts I spoke to believed fares could ever realistically get high enough to repel riders in big enough numbers to cost the M.T.A. money.
That's actually the problem, politically: other than the complaints of straphanger advocates, there's nothing to discourage the M.T.A. (or the governor, who controls the authority) from making up revenue shortfalls with fare hikes. In terms of what the market will bear, the price of a ride can always go up.
When I emailed Joseph Schofer, the director of the Infrastructure Technology Institute at Northwestern's engineering school about it, he responded by quoting from a report called "Transit Cooperative Research Program 95," which he described as "perhaps the definitive collection of experience with changes in transit prices."
The passage he cited says: "Practically all the known observed values of fare elasticities fall in the range between zero and −1.0, which in economic terms, means rider response to fare changes is inelastic."
By some standards, particularly compared to the customer costs of other major systems around the world, the fares in New York are quite cheap. In January, for example, London's transit authority raised the average Underground fare in some zones to £2.70, which converts to $4.33. In the United States, the picture is somewhat more complicated. New York's subway fares are slightly lower than in Washington, D.C., where the cost varies by distance and time. There, the average subway fare for this fiscal year is projected to be $2.87. The D.C. bus fare, however, is substantially lower, projected to an average of $1.07. Taking one ride on the Chicago "El" costs $2.25, a quarter less than our single-ride fare but the same as our base fare. In Los Angeles, straphangers pay $1.50 per ride.
On the other hand, as NYPIRG Straphangers Campaign spokesman Gene Russianoff recently noted, New York transit users bear an unusually high share of the system's costs, with a "fare box operating ratio" of 53 percent, as opposed to percentages of 38 in Boston, 44 in Chicago, 27 in Los Angeles, 37 in Philadelphia and 42 in Washington.
Last Monday, the M.T.A. released four fare hike proposals, subject to a board vote in December. The base fare on the subway could increase from $2.25 to $2.50, while the cost of a 30-day MetroCard could jump from $104 to $125.
The advocates responded promptly.
"Enough already!" emailed Russianoff, in a statement. "If there's a fare hike in 2013, this will be the fourth subway, bus and commuter rail fare increase in five years."
"While New Yorkers have suffered fare hike after fare hike, our State government raided hundreds of millions of dollars in transit funds," said Paul Steely-White, executive director of Transportation Alternatives, in a separate email blast.
But the fare hikes are certain to happen and regular increases will continue to be necessary, absent substantial service cuts, or a substantial new source of revenue for the M.T.A., like congestion pricing. Riders will complain, and then they will get on with it.
“People will grumble," said Zupan. "But almost all of them will wind up paying for it."