Why Peak of the Peak Pricing Deserves a Chance

[WMATAGMOAGH]

I'm creating a new thread here so perhaps some other people can chime in on this issue.  Otherwise, I'm concerned it will just be buried in the long threads about flat fare versus distance based, etc.  (If a mod disagrees with my decision, please feel free to move to wherever you deem appropriate).

Jason argued in one of the fare increase threads that peak of the peak pricing is contrary to attempts to simplify fare structures and will just be confusing.  Perhaps it is, and I'll get to that eventually.  But in light of Metro's current financial situation and trends in transportation funding elsewhere, I think this idea deserves a chance.

I wrote my undergraduate honors thesis about road pricing schemes for highways.  While there are some aspects of highway pricing that don't apply perfectly to Metro, hopefully some amount of my 9 months of researching schemes from around the world can provide some insights in to my support of this "experiment."

Academics consider William Vickrey to be the "father of road pricing", but the reality is that his first proposal had to do with variable pricing for the New York City Subway!  (He actually wasn't the first to suggest that negative externalities should be
offset by a tax paid by the person who creates the negative externality, and that a positive
externality should be rewarded with a subsidy, but Vickrey was the first to apply the concept to a realistic situation.)  I won't go into all the specifics of Vickrey's analysis here, but here is my summary of his analysis of the situation on the NYC subway, lifted directly from my thesis:

Vickrey then examines the structure of subway costs by looking at the number of
train miles and car miles operated per year, the number of subway cars in use at the peak
of rush hour service, the number of passengers carried each year, the peak number of
passengers carried per hour, and the system layout, while also factoring in other variables
such as the cost of electricity to power the trains and the wages of the train crews
17
(Vickrey 1994a, 280). During off-peak periods, adjustments in service are easy to make
since there are many options for how the city could expand or reduce service as needed.
For example, in order to maintain the desired level of service, trains could be lengthened
or shortened to meet ridership demand (Vickrey 1994a, 281). During rush hour, making
adjustments to meet demand is more difficult if trains are already at their maximum
length or if a track is being used at its maximum capacity. However, the city can create
incentives to encourage off-peak ridership by giving passengers who do not use the
subway during rush hour a discounted fare (Vickrey 1994b, 308). Such a decision also
has the potential for the city to gain additional revenue as a result of people taking the
subway to make discretionary trips they might have not made had the fare not been
discounted. Rush hour ridership may decrease slightly as people seek to avoid the higher
fare (Vickrey 1994a, 285). At the same time however, other riders may be willing to pay
a higher fare to ride a train that is less crowded, offsetting any loss in revenue as a result
of lower ridership (Vickrey 1994a, 285).

WMATA faces the same situation essentially.  The system is at capacity at rush hour, with no extra trains available to be added and some stations that can't even handle additional passengers.  So why not make an attempt to get riders who don't need to be on the rails at the peak of the peak to shift their travel, even by just 30-40 minutes, to reduce congestion?

Now, there are several responses to Vickrey's (and by extension, my) arguments.  I'll try to address some of the standard ones, in no particular order, but feel free to add others and I'll try to address them as well.

1.  This is unfair to riders who can't change their schedule and to low income riders:  Both these points may be true, but this is often the first concern of the anti road pricing/congestion pricing camp, and in practice throughout the world (admittedly with road pricing), it has largely been proven to be an unfounded concern.  Things might be a bit diferrent on the rails than on the roads, but that remains to be seen.  Even so, many low income riders don't work standard 9-5 shifts, which the peak of the peak pricing scheme targets, so they won't pay the surcharge.  From a purely economic standpoint, riders who can't shift their schedules do have the advantage of having less congested trains if others who can change their schedules do so, which might be worth the 20 extra cents WMATA will be charging.  Also, riders who don't want to pay the surcharge who live closer in might be able to take buses instead of the train, so there are public transit alternatives available in many circumstances.  The most unfair aspect of this scheme as proposed might be the fact that all riders have to pay the surcharge, even though a rider who only goes from Tenleytown to White Flint in the morning doesn't really impact congestion in the core.  But what about a rider from White Flint to Tenleytown who rides inbound in the morning?  They don't make it to Metro Center, but they are riding with the peak flow and taking up space on the train.  What about a rider from Takoma to Tenleytown?  Balancing out these sorts of equity concerns is a challenge, and I'm not sure it was achieved here, but I do see the arguments for why everyone should pay.

2.  It will be confusing as to what fare is in effect when:  Making sure the public understands the way the scheme works is a high priority for any scheme.  Let's wait and see to see how WMATA does things, but this may not be so bad if WMATA does things right.  My suggestion is to scrap the terms "Regular" and "Reduced" fares because the "Regular" fare is not only charged at rush hour anymore and isn't charged a majority of the time anyway, and to simply call the fares Tier I, Tier II, and Tier III.  Make it very clear which tier applies at which times on the fare charge in the stations.  The PIDS in each mezzanine could display in its regular rotation of messages that Tier I (or II or III) is in effect so non-regular riders only buying one fare know what kind of fare to buy.  Also, if it is possible, make the farecard machines show what tier is in effect at that time (perhaps with a warning of a tier change 5-7 minutes prior to the tier change, especially when a higher tier is about to come into effect).  It also might be possible to have the faregates display that info on their screens.

Does peak of the peak pricing have potential issues of a variety of sorts?  Absolutely.  Will it work?  It might, but it might not.  Should it be tried?  Yes.  It might crash and burn, but it might work out well too.  And there is only one way to find out if it does.

My thesis is online at www.orenstransitpage.com/thesis.  Although it focuses on roads, not subways, one of my concluding points is that we need to do more trials to see whether pricing roads (and transportation in general) is a worthy policy to adopt, and this peak of the peak scheme fits into that sort of model, even if it isn't officially just a test.  Sections that come to mind that might be worth reading in connection to the points above are Vickrey's initial work for pricing on the New York City Subway on pages 14-19, Equity Concerns in Road Pricing proposals on pages 69-78, and the established best practices for road pricing schemes in the US starting on page 86.  The Abstract also sums up the entire 100 page document in a single page.

[Antozilla]

It is designed to hose a captive audience. 

[Scrabbleship]

It is designed to hose a captive audience. 

It seems that the people who aren't poor and who don't get SmartBenefits seem to be forgotten children of WMATA.

[Tritransit Area]

What is peak of the peak, and how does that compare to peak and off peak time periods?  When I first started riding Metrorail by myself, it actually took me a while to realize that "regular" fares were actually peak fares and the "reduced fare" wasn't just for seniors, students, and the disabled.  I agree that proper signage and terminology would help, but the "peak-of-the-peak" is just confusing.

[WMATAGMOAGH]

Brandon:

Peak of the peak (for lack of a better term until WMATA comes up with an official one) is a 20 cent surcharge that will be imposed on all Metrorail rides where the rider enters the system between 7:30 AM and 9 AM and between 4:30 PM and 6 PM (I think I got the times right, they are two 90 minute windows during rush hours) on days when rush hours are in effect.  Although this is packaged in with the FY11 fare increases, they are not likely to be charged until August at the earliest, due to WMATA staff needing time to modify the fare equipment to be able to charge a third tier of pricing (it seems to me as if only two tiers are possible from what I understand, perhaps John knows more about this). 

[SchuminWeb]

This seems to me the exact reason why Metro needs to finally ditch their distance-based pricing once and for all, and go to a flat fare.  Fares have gotten altogether too complicated, and peak-of-the-peak is just the icing on the cake.

[Tritransit Area]

Brandon:

Peak of the peak (for lack of a better term until WMATA comes up with an official one) is a 20 cent surcharge that will be imposed on all Metrorail rides where the rider enters the system between 7:30 AM and 9 AM and between 4:30 PM and 6 PM (I think I got the times right, they are two 90 minute windows during rush hours) on days when rush hours are in effect.  Although this is packaged in with the FY11 fare increases, they are not likely to be charged until August at the earliest, due to WMATA staff needing time to modify the fare equipment to be able to charge a third tier of pricing (it seems to me as if only two tiers are possible from what I understand, perhaps John knows more about this).

See now, those times, to me, are just simple peak hours.  If those are peak of the peak, then what will be the regular peak hours?  Is that only going to be 6:30 to 7:30, and 3:30 to 4:30?

[Tritransit Area]

This seems to me the exact reason why Metro needs to finally ditch their distance-based pricing once and for all, and go to a flat fare.  Fares have gotten altogether too complicated, and peak-of-the-peak is just the icing on the cake.

I agree about "peak of the peak".  Just charge a higher peak fare (which I'm sure would be quite unpopular regardless...

I must ask, though, how does the mileage system work?  Are there ranges in miles for additional charges to the base fare?  In fact, how many possible fares are there in the Metrorail system?

Maybe a reduction is in order?

[WMATAGMOAGH]

Brandon:

Peak of the peak (for lack of a better term until WMATA comes up with an official one) is a 20 cent surcharge that will be imposed on all Metrorail rides where the rider enters the system between 7:30 AM and 9 AM and between 4:30 PM and 6 PM (I think I got the times right, they are two 90 minute windows during rush hours) on days when rush hours are in effect.  Although this is packaged in with the FY11 fare increases, they are not likely to be charged until August at the earliest, due to WMATA staff needing time to modify the fare equipment to be able to charge a third tier of pricing (it seems to me as if only two tiers are possible from what I understand, perhaps John knows more about this).

See now, those times, to me, are just simple peak hours.  If those are peak of the peak, then what will be the regular peak hours?  Is that only going to be 6:30 to 7:30, and 3:30 to 4:30?

Regular peak hours remain the same during the conventional times: 5 AM to 9:30 AM and 3 PM to 7 PM.  However, "rush hour" fares will now also be charged between midnight at 3 AM on Fridays and Saturdays, whereas they used to only be charged from 2 AM to 3 AM.

[WMATAGMOAGH]

This seems to me the exact reason why Metro needs to finally ditch their distance-based pricing once and for all, and go to a flat fare.  Fares have gotten altogether too complicated, and peak-of-the-peak is just the icing on the cake.

I agree about "peak of the peak".  Just charge a higher peak fare (which I'm sure would be quite unpopular regardless...

I must ask, though, how does the mileage system work?  Are there ranges in miles for additional charges to the base fare?  In fact, how many possible fares are there in the Metrorail system?

Maybe a reduction is in order?

During peak times, the first 3 miles are currently $1.60.  After that, each additional mile from miles 3 through 6 is $0.26, rounded up to the nearest nickel.  After mile 6, each additional mile is $0.23, rounded up to the nearest nickel, with the maximum fare being $4.50.  In FY11, the base will go up to $1.95 for Smartrip and $2.20 for paper farecards, the charge for miles 3-6 will be $0.299, and the charge for miles 6 and beyond will be $0.265, with the new maximum being $5.00 for Smartrip and $5.25 for paper cards.  These values do not reflect the current 10 cent surcharge or the 20 cent peak of the peak surcharge that will be included in FY11.

During off peak times at present, any trip that is less than 7 miles is $1.35, a trip that is 7-10 miles is $1.85, and a trip that is over 10 miles is $2.35.  In FY11, trips less than 7 miles will be $1.60 for Smartrip and $1.85 for paper cards, 7-10 miles will be $2.15 for Smartrip and $2.40 for paper cards, and more than 10 miles will be $2.75 for Smartrip and $3.00 for paper cards.  Again the current fares do not include the 10 cent surcharge currently in effect.

All the fare info with comparisons from current to FY11 is available at http://www.wmata.com/about_metro/news/pressroom/attachments/2011_budget_proposal_May27_v9.pdf. 

[Sand Box John]

WMATAGMOAGH
. . . due to WMATA staff needing time to modify the fare equipment to be able to charge a third tier of pricing (it seems to me as if only two tiers are possible from what I understand, perhaps John knows more about this).

Sense day one the fare collection system has used software to calculate fares. The first generation equipment stored the software code and fare tables on EPROMs in the faregates. The hardware in the fare gates did the calculation of the fare. Today's equipment is several generation newer so I don't know if they are still using EPROMs. Also today's equipment has a greater amount of network functionality then did the first generation equipment. The modifications that needs to be done is likely mostly modification to the software code and testing before deployment.

Tritransit Area link
I must ask, though, how does the mileage system work? Are there ranges in miles for additional charges to the base fare?

The fare is calculated based on a composite mile. Composite mile = straight line miles between 2 points + route miles between same 2 points / 2.

In fact, how many possible fares are there in the Metrorail system?

There are as many fares as there are combinations of station pairs.