- This 2017 Fare Structure Review recommended a range of fare changes including for students, free transfers for buses and free buses for rail monthly pass holders outside Wellington City. These fare changes will lead to a $7.5M fare revenue loss.
- Therefore the review included compensatory a 3% fare increase to recover $2.1M in extra revenue
- The supporting spreadsheet contained the detailed modelling behind the new fares and confirmed the 3% fare increase was based on PT costs remaining the same as 2017/18 at $192.3M.
GWRC “Better Metlink Fares” Review
The Better Metlink Fares Review is currently described on the Greater Wellington Regional Council (GWRC) Web Site as follows:
In August/September 2017 we consulted with the public on proposed Metlink fare changes, and we are currently re-designing our fare products. This included a series of public meetings. We received over 700 submissions on the proposed changes.
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In July 2018, Wellington city’s new bus network becomes operative, and Snapper will become the sole interim travel card on all buses in the region. At the same time, we’re introducing a simplified fares system. This includes these changes:
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One of the supporting reports “Public Transport fares review – consultation” (dated 2/8/2017) included the following summary of the financial impact in 2018/19 of these proposed fare changes:
| Policy status | Fare policy initiative | RRevenue ($m excl GST) |
Patronage Change |
|---|---|---|---|
| Committed | Free transfers same mode | (2.4) | 0.4% |
| Current policy | 25% cash premium | 0.3 | (0.6)% |
| 50% child discount | (0.7) | 1.0% | |
| 25% off-peak discount | (3.1) | 2.6% | |
| -Adult | (2.8) | ||
| -Tertiary | (0.3) | ||
| -Disabled | (0.02) | ||
| New policy | 25% peak concession | (0.8) | 0.2% |
| -Tertiary | 90.7) | ||
| -Disabled | (0.1) | ||
| Porirua boundary adjustment | (0.4) | 0.2% | |
| Rail monthly passes to include regional bus travel | (0.4) | 0.9% | |
| Total | (7.5) | 3.7% |
This report stated new discount fares discounts will result in a reduction in fare revenue of $7.5m also proposed a compensatory 3% Fare Increase to generate an additional $2.3m:
A three per cent fare increase is proposed. The fare increase (if approved) will be the first increase since 2013 and is expected to recoup about $2.5 million of revenue. The fare increase, combined with discounts we plan to introduce, will mean the increase is largely confined to adult Snapper and rail 10-trip fares, and the rail monthly pass.
But even with the patronage increase from improved fares, the combined changes leave a shortfall of about $5 million of revenue. Any shortfall would need to be funded by GWRC ratepayers and through a subsidy from the NZ Transport Agency.
The fare review assumed that PT costs remained the same as in 2017/18 and that changes to public transport costs were not part of this review but would be considered in the Fare Review which is part of the 2018/19 Long Term Plan:
The amount of the funding shortfall and impact on “farebox recovery” also depends on changes in public transport costs. These changes and any other changes in fare revenue will be considered as part of the next long term plan and may require further increases in fares.
Public Transport fares review – consultation page 5
Calculations Supporting the Better Metlink Fares Review
The Farebox calculations for the “Better Metlink Fares” review were requested and, eventually, several modelling spreadsheets were provided by the GWRC with some data withheld. One spreadsheet included a summary of all the fare changes along with a calculation of the Farebox Recovery Ratio.
A version of the Better Metlink Fares Review Fare Calculation spreadsheet (with some edits in BLUE) is available here.
Below is a summary view of the 2017 Better Metlink Fare calculations of 2018/19 PT amounts used to support the recommendations of the Better Metlink Fares Review:
| Mode | Total revenue (excl. GST) |
PT Subsidy Operating Costs |
Operating costs excl. GST |
Farebox recovery |
|---|---|---|---|---|
| Bus | 103,066,919 | |||
| Train | 85,129,207 | |||
| Ferry | 1,760,404 | |||
| Cable car | 2,385,125 | |||
| Total fare revenue (excl. GST) |
112,036,471 | |||
| Total Cost of Fare Discounts (Remove 20% Contingency) |
(6,250,000) | |||
| Fare increases (3% 2018) | 0 | |||
| Total | 105,786,471 | 86,555,184 | 192,341,655 | 55.0% |
The following amounts should be noted as material to the issues in posts:
| Revenue | Notes on Revenue | Cell Reference | Cost | Notes on Cost | Cell Reference | |
|---|---|---|---|---|---|---|
| Bus | Unknown | 103.1m | same as the 2017 Annual Plan Farebox Review |
[Run_Forecasts!G93] | ||
| Rail | Unknown | $85.1m | same as the 2017 Annual Plan Farebox Review |
[Run_Forecasts!G94] | ||
| Total PT | $105.8m | Note [1] | [New Summary!F52] | $192.3m | same as the 2017 Annual Plan Farebox Review |
[New Summary!F53] |
| Fare Changes | 2.1M | 3% Fare Increase | [New Summary!F45] | $7.5M | New Discount Fares | [New Summary!F42] |
Note [1] 105.8M = 2017/18 Public Transport Fare Review revenue $112.0m [Run_Forecasts!G94] – $6.2m
where $6.2m is the reduced fare revenue amount which is the $7.5m [New Summary!F42] published figure with 20% [Run_Forecasts!C17] contingency removed
Conclusion
The overall farebox recovery ratio with the reduced fare revenue is 55.0% [New Summary!F54] which is the minimum required by GWRC Farebox Recovery Policy. However, the supporting calculations do not estimate the revenue loss at the mode level so the amounts of the revenue loss from these fare changes for the bus, rail and ferry fare revenue was not estimated in this review but in the GWRC 2018/19 Fare Review.