What other business allows its services to be "pay if you want"? Translink moves toward Smart Cards for the Vancouver area

Earlier this month, I blogged about Translink, HST and growing demand for public transit, noting that just as demand for public transit is on the rise, Translink is losing a big source of revenue as a result of the new harmonized sales tax, which could limit its ability to provide service for all those eager commuters.

A reader asked the very obvious (though no less intelligent) question of why our fares can’t cover the cost to operate the system, offering Toronto as an example of a system that pays for 80 percent of its costs through fares and advertising, compared with Translink's measley 38 percent [PDF] (not 55 percent as the reader stated), and asking why the discrepancy. I know one reason.

Every year, Translink loses $6 million in revenue from fare evaders, with the highest percentage of no-pay trips occurring on the SkyTrain (5.4 percent of all trips). That's nuts. But easy to understand considering how little incentive there is to pay. What other business allows its services to be "pay if you want"?

The fact of the matter is the system allows us to be subjective about the value of the service provided on a case-by-case basis. "Will I get $3.25's worth from this trip? Nah, I'm only going one stop past the zone boundary; I'll pay one zone only..." Is this okay? No. But as long as there's no fare enforcement, there's little incentive for riders to pay full fare (or, really, any fare at all). Sorry, we haven't been able to change human nature much in the last 10,000 years so why would we expect an honour system would be effective?

And… while $6 million isn’t a huge amount when put into context of Translink’s entire operating budget of around $1.3 billion, there are other correlative costs to consider, including the money we pay to staff—however frugally—the lines with trained law enforcement to selectively check transit tickets. Their hourly wages are likely better put to what they’re trained to do, like deterring costly vandalism and providing a sense of security on non-rush hour trains especially.

The good news is we may see this change in the near-ish future, as $100 million has been made available from the provincial and federal governments for fare gates and Smart Cards. The province is putting up $40 million and Ottawa $30 million, leaving $30 million for Translink to raise. Installation is set to begin in spring 2010.

Smart Cards are an interesting addition to the equation, as they provide excellent information about transit use and service needs, and would allow the system to respond to real time and broader inefficiencies. It will be some years before we see the infrastructure pay for itself (many, many years probably), and the result could mean both higher fares and higher ridership. But it's only going to get more expensive to install such infrastructure later on, as we're bleeding money every day.

And, yes, some of the cost will necessarily have to go back to the user, but it's hoped that the province can figure out low-income subsidies and that Translink can provide better, more efficient service that follows an accurate time schedule as a result. Like in Japan.

Japan has one of the more expensive transit systems in the world and yet, I'll tell ya, everyone is happy to pay it because they know they can trust every link in the system to operate on time, be clean and have knowledgeable, helpful staff on hand to help the process along.

Their pay system? You pay in proportion to the distance you will travel: one stop, two stops, 17 stops, etc., with turnstiles on both ends. And everybody uses it because it is, hands down, the best transportation option in the country and has effectively gotten everyone out of their cars for the majority of commuter trips.

(And the less cars on the road, the lower the cost for road infrastructure, meaning it could be possible for the province to allocate some of that money toward rider subsidies.)

Similarly, Translink CEO Tom Prendergast noted in April, when the funding was announced, that an important culture change may result from a more effective pay system, saying:

The public firmly believes that fare evasion on SkyTrain is higher than has been measured in past audits. The belief that the system is losing revenue due to fare evasion is very often cited as a reason not to support additional revenue measures needed to sustain and expand the transportation system.

The decision by the federal and provincial governments to fund fare gates on SkyTrain will assure the public that revenue losses will be minimized in the future. In addition, people will have confidence that their current and future contributions through fares and taxes will generate the maximum in service and improvements.

A tad overly romantic about how the new system would affect rider and potential rider sentiment? Perhaps. But what do you think?