Proposed Metro Fare Increase: Discussing The Options
Metro fares represent a significant portion of the revenues that the Bi- State Development Agency depends on to operate and expand the Metro transit system. Moreover, as these fees are imposed directly on passengers who benefit from the system, raising Metrobus and Metrolink fares are a reasonable and, depending on the elasticity of transit demand, often an effective method for increasing transit revenues. With increasing costs for fuel, materials, and labor, Metro fares must also rise if the revenues from fares continue to fund the same portion of transit expenses. For this reason, Metro is proposing to raise selected fares starting in 2015.1 If Metro targets these fare increases at those least likely to change their behavior based on that fare increase, the agency may receive more revenue while still attracting new riders to the system. However, Metro might also consider transforming its fare structure to incorporate time or distance variable rates as well as peak pricing. This option could allow more fare maximization in a way that draws greater revenue from those who use more transit, but also from those who use it sparingly but at very popular times, e.g., Cardinals baseball games. Metro also could allow greater flexibility in how it serves its least profitable routes, such as the increased use of van share programs, to alleviate the pressure to raise prices.
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