The Metro Fare Capping Proposal is Built on Two Fundamentally Flawed Assumptions, and the Board Should Reject It

Metro is proposing changes to its complex and complicated fare structure with a scheme called fare capping, an “equitable, pay-as-you-go fare payment model that ensures customers only pay for the rides they take and never overpay.” Fare capping, in theory, can result in a more equitable and “fairer” way to charge fares, according to research conducted by the National Academies Transportation Research Board and the experience of systems in London, Boston, Dallas, and other major metropolitan areas. And there are some good policies proposed in Metro’s proposal, such as capping the total cost a rider would pay per day/week, creating a simpler fare structure, improving the LIFE program, ending extra charges on Silver Line and Express routes, and removing the TAP card fee.

Despite this, Move LA asks the LA Metro Board to take a step back and direct Metro staff to restructure this proposal at their December 1st, 2022, meeting because the fare capping proposal is based on two assumptions that are fundamentally flawed and undermine the plan, resulting in unfair fares that are likely to drive customers off the system.

Let’s start with the example of a senior who takes two buses to see their doctor and pays $.35 for a one-way, off-peak fare. Under the proposed changes, the cost of their trip, one-way, would be more than five times more expensive ($.35 versus $2.00) and, with daily fare capping, still be 4 times as much ($.70 versus $3.00).

The second rider is the mother of two children who pay cash, gets off the bus to pick up their kids, and then continues on that same line to get home, sometimes paying for both kids to ride (because the bus operator knows her and will often let the kids ride for free). This family currently pays $1.75 on some days and as much as $4.75 on other days. Under the new system, this family would pay a minimum of $4.00 per day, but more likely as much as $8.00, and would not hit the cap if they continue to pay cash. Some weeks, the mother would be saving between $11 to $16 with the current fare structure.

Fatal Flaw #1
The fare capping scheme seems to be designed for the “ideal” rider—one who works a 9-5 desk job, earns a living wage and can take an hour (or more) for lunch to go see their doctor (see the graphic below from the Metro presentation). However, according to Metro’s own data, 1 in 3 Metro riders make less than $15,000 a year, nearly 9 in 10 riders live in households with annual earnings below $50,000, and 8 in 10 are people of color. What these stats don’t say is that many of Metro’s current riders are seniors, students, people with disabilities, and families that currently travel and pay the “off-peak” fare, subsidized by Measure M, which dedicated 2% to keep fares low for these riders. The fare-capping scheme would break the promise made to voters to keep fares affordable.

Fatal Flaw #2
The fare restructuring and capping scheme do not address the issue of the large number of Metro riders who pay, quite literally, with the change in their pocket. Cash riders represent approximately 1/4 of all riders and 38% of bus boardings. These will not benefit from a fare capping system because they won’t be tracked by the “closed loop” TAP system, a proprietary system that tracks your trips and charges you accordingly and will know when a rider has reached their “cap”.

Metro has very little information on these riders. For instance, what are their income? Are they casual riders who forgot their TAP card, or are they very low-income riders? Are they undocumented and/or unbanked and therefore can’t afford to or won’t purchase a card due to language or other barriers? The staff must work to better understand these riders to be able to propose alternative strategies to get these riders to use TAP before implementing fare capping.

One of the lessons from other transit systems is that they re-imagined fare payments BEFORE implementing fare capping by allowing people to “simply tap bank cards (or phones with Apple or Android Pay) to pay,” and implementing all-door boarding. This allowed for the elimination of cash payments, speeding up of buses, and a much more flexible system.

While Metro has promised all-door and bank card payments, implementation has not happened across the system. So rather than move forward with a fatally flawed program and try to twist the arms of cash riders to get a TAP card to make this fare-capping program work, Move LA makes these recommendations to Metro:

  1. Immediately identify the top 5 bus lines with the highest percentage of cash-paying riders and remove the fare box to make these lines completely free again. This will have immediate impacts of improving the speed and reliability of these lines, as people paying cash increase dwell times. It will also reduce cash payments across the system, reducing overall agency costs to process this paper and coin money. Boston successfully implemented this on three bus lines without a major deficit, and this policy would show that Metro is still committed to achieving a fully fare-less system in the future.
  2. Immediately invest remaining Federal funds, or apply for IIJA infrastructure dollars, to purchase the infrastructure for all-door boarding and the use of “open-loop” contactless debit or credit card payments for fares. Cubic, the same provider of Metro’s TAP cards, has successfully implemented this “pay as you go” system in London and New York.
  3. Metro could take one step further, combining its experience with the mobility wallet in its implementation of the Universal Basic Mobility pilot with the system of collecting and depositing cash fare payments to become a public bank in California that issues debit cards to riders. This would create a huge new customer base by helping hundreds of thousands of Angelenos become banked and make fare capping easier to implement, rather than force them onto a closed loop system to take advantage of fare capping.
  4. Consider split fares by type of transit rather than by type of rider. For instance, buses in London are less than Tube rides, with unlimited bus rides allowed within one hour. Metro should consider making buses more affordable by reducing the cost for anyone to ride the bus to $1 with unlimited rides within 2 hours (i.e. keep free bus transfers). Rail transit could see a modest rise considering its higher operating expense and anticipated future openings.
  5. Metro should publish the full Equity Framework review for the fare-capping proposal, addressing questions related to cash-paying riders, seniors, people with disabilities, students, and other equity-focused communities.

These policies would be fair, transparent, and improve customer service while making Metro an agency that both alleviate poverty while maintaining sustainable operations for the foreseeable future.

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