Bus price cap

[Sciolus]

This is worth a new thread.

At least Sunak gave us the progressive smoking ban to be his legacy. Oh, wait...

I mean, Cameron did a few creditable things to slightly offset his trashing the economy and everything else. I think we had a thread for it, but there's same-sex marriage, killing Blair's crazy ID card plan, stopping Heathrow expansion, increase overseas aid, probably a couple more things I've forgotten. But I really can't think of a single thing that May, Johnson, Sunak or the other one did that is to their credit. Nothing at all.

Ooh, ooh, thought of one: the £2 bus fare cap. I hope Labour will keep it on past the end of the year.

It's a rather crude instrument. Doesn't matter whether the fare would have been £2.10 or £7.40, that's now £2.

Oh yes, and what a surprise given what we know about the last government, the arrangements for paying for it are rather murky. It's what you'd expect in some tinpot corrupt country, not Britain. There's no standard scheme. The government doshed out some money to local authorities for buses, and told them to spend it on a package of measures including the fare cap. I think that some bus companies have remained outside the cap, if they didn't like what they were being offered. So we can't even say what the fare cap is costing us, as it is bundled in with some other stuff. Not even clear how the allocations to local authorities were calculated.

The bus companies rather suspect that the money that the government has been spending could be used rather effectively, for promoting bus usage and maintaining the range of services. I know that because they put out a research contract on it. It is kind of obvious it has to be true, as it is such a crude and chaotic measure.

So I would rather the present government has a quick look at what might be a more effective way of promoting the use of buses, rather than having a policy that is a good soundbite and then rather murkily arranged.

I wouldn't be in the least surprised if the implementation of the cap was cack-handed, wasteful and opaque. I also wouldn't be surprised if there were better ways (more effective and/or more cost-effective) for promoting bus usage and maintaining the range of services, though I wouldn't necessarily trust what the bus companies promote on that score.

But I must disagree with the implied criticism in your first para. What's wrong with a fixed price? There are plenty of well-regarded precedents (probably, I bet they do in Netherlands or Denmark or places like that).

There is no rational reason for fares to depend on distance. The marginal cost to the operator from carrying someone 10 miles vs 1 mile is insignificant. A person may occupy a seat for longer, but that is only a concern if you think pricing people off buses is a better idea than laying on more of them, which hopefully we don't. The benefit to the passenger is not 10 times higher for a 10 mile trip than a 1 mile one; in either case the need is binary, you either need to make the trip or you don't. I guess fares might also traditionally be more expensive for other reasons, probably because routes are little used; but in that case subsidy is essential to get people to use them at all.

Having a really simple fare structure adds a great deal of value to passengers (see all the criticism levied at the rail companies and other companies that obfuscate their prices in the hope of screwing their customers for a bit more profit), and actually makes the operation more efficient as well. So I conclude that a fixed, low price is an excellent idea. A price of zero would be even better, of course.

COI: My office has recently moved, and now bus is now the most practical way to get in for me. I don't know what the uncapped fare would be, but I guess around three times the £4 a day it currently costs. At that uncapped price I would either work from home much more often (which I find adversely affects my productivity), doing nobody any good, or work out ways to drive at least part of the way, with all the external costs that entails.

[Fishnut]

I love the bus price cap. Our local buses are doing free rides today and monday and I'm going into Bristol just for the hell of it. I got out of the habit of going during covid and the cheap buses have coaxed me back. I still don't go as much as I used to (it doesn't help that the city centre is dying and the only decent cinema closed last year) but I definitely go more than I would if it was still close of £7 to go in.

[IvanV]

But I must disagree with the implied criticism in your first para. What's wrong with a fixed price? There are plenty of well-regarded precedents (probably, I bet they do in Netherlands or Denmark or places like that).

There is no rational reason for fares to depend on distance. The marginal cost to the operator from carrying someone 10 miles vs 1 mile is insignificant. A person may occupy a seat for longer, but that is only a concern if you think pricing people off buses is a better idea than laying on more of them, which hopefully we don't. The benefit to the passenger is not 10 times higher for a 10 mile trip than a 1 mile one; in either case the need is binary, you either need to make the trip or you don't. I guess fares might also traditionally be more expensive for other reasons, probably because routes are little used; but in that case subsidy is essential to get people to use them at all.

Clearly many public transport operators use simple fare schemes, because they are cheaper to administer. Simplicity also attracts demand. Soundbite policies do have some effectiveness. In London, there has long been a flat fare for most buses, so it isn't necessarily stupid. Especially for city travel.

You are right when you say the marginal operating cost is low, assuming that the additional traffic does not require larger or additional buses to be put on. For concessionary fare reimbusement (something I dabble in), where there is an explicit scheme for the reimbursement - at least for England outside London - and the rather complicated principles of the calculation methods which can be used are set out in this document. Chapter 7, starting on 37, sets out information on additional costs of carrying passengers. You will find there that some research has established that the average marginal cost of carrying a passenger is, in pence, about 5.5p per boarding + 0.15p per mile travelled page 39). That is for historic reasons in 2009/10 prices, and you have to add inflation to that. The main reimbursement for concessionary fares is the loss of income from what the operators would have got if they were charging fares to passengers - taking into account that demand would be lower if they were charging fares. There can also be costs of putting on additional buses. Some bus routes don't serve schools/work very much, and would normally be used when concessionary fares are available, and this can present a requirement to put on more or larger buses from the demand increase.

What I don't like about a flat fare across the board is that many people aren't getting a discount at all, and some people are getting discounts. On the tube, for example, we have zonal fares. If the bus fare cap was more graduated, more people could have more even discounts, and we would get more demand growth for the same money.

In London, most bus trips are quite short. And that can be true in many cities. But there is also a substantial market for longer bus trips outside the larger cities. I'm not sure a flat fare is what we would come up with for that kind of market.

Some places in Europe do have free buses. Some other places in Europe tried free buses, and discovered that the fare was not the main reason people did or didn't travel by bus, at least in those places. Tallinn is the main example I know of that. So it was better to charge a fare and help fund the buses.

[dyqik]

Buses and the T (subway/underground) here in Boston use flat fares, which make up about a quarter of the operating revenue.

The bus fares are a little less than the T, but you get a transfer to and from a bus at each end of your T journey for free. And transfers between T lines are free.

The buses from the airport to downtown are part of the T. Boarding them at the airport is free, and puts you inside the T system, so you can take subways. This is because it's not worth dealing with visitors trying to figure out the fares at the airport. Having had to queue for 30 minutes to buy a rail ticket card at Tokyo Haneda airport (where there are two machines only), I can see why.

One other major advantage is that you don't need people to check tickets, tap passes etc. when leaving the system, to check how far they've gone, as you do with a zone system.

This system covers multiple towns and cities, up to 5-10 miles from Boston. Beyond that you are into the Commuter Rail, which is zoned.

[insignificant]

Buses here use a flat fare too, also £2

I use a similar-to-oyster card that I can top up online

Distance from my nearest stop to the town terminus / hub is less than 4 miles, but I don't care about subsidizing people for whom it's nearly double that if that's actually what I'm doing

They wouldn't use buses if it cost £3-4 per leg

(it's an island so the maximum possible distance for a leg is has a physical limit)

[monkey]

Buses and the T (subway/underground) here in Boston use flat fares, which make up about a quarter of the operating revenue.

The bus fares are a little less than the T, but you get a transfer to and from a bus at each end of your T journey for free. And transfers between T lines are free.

The buses from the airport to downtown are part of the T. Boarding them at the airport is free, and puts you inside the T system, so you can take subways. This is because it's not worth dealing with visitors trying to figure out the fares at the airport. Having had to queue for 30 minutes to buy a rail ticket card at Tokyo Haneda airport (where there are two machines only), I can see why.

One other major advantage is that you don't need people to check tickets, tap passes etc. when leaving the system, to check how far they've gone, as you do with a zone system.

This system covers multiple towns and cities, up to 5-10 miles from Boston. Beyond that you are into the Commuter Rail, which is zoned.

I've got the bus in many USian cities and not found one where they weren't flat fare.

USian busses will typically sell you a cheap transfer ticket if you have to make a change too.

[Sciolus]

What I don't like about a flat fare across the board is that many people aren't getting a discount at all, and some people are getting discounts. On the tube, for example, we have zonal fares. If the bus fare cap was more graduated, more people could have more even discounts, and we would get more demand growth for the same money.

In London, most bus trips are quite short. And that can be true in many cities. But there is also a substantial market for longer bus trips outside the larger cities. I'm not sure a flat fare is what we would come up with for that kind of market.

Thanks for the stats and informed commentary. However, I still don't get your objection here. Let's set aside London, which is a special case, not least because buses potentially compete against other public transport. In most of the country, buses compete against cars (predominantly), walking or cycling for certain trips, or not making the trip at all. For a 10-mile trip, say, charging £10 means most people will take the car or stay at home, especially if it's a daily cost for a regular commute. Most of the people taking the bus will be those who can't afford to run a car, and can't wfh.

[IvanV]

What I don't like about a flat fare across the board is that many people aren't getting a discount at all, and some people are getting discounts. On the tube, for example, we have zonal fares. If the bus fare cap was more graduated, more people could have more even discounts, and we would get more demand growth for the same money.

In London, most bus trips are quite short. And that can be true in many cities. But there is also a substantial market for longer bus trips outside the larger cities. I'm not sure a flat fare is what we would come up with for that kind of market.

Thanks for the stats and informed commentary. However, I still don't get your objection here. Let's set aside London, which is a special case, not least because buses potentially compete against other public transport. In most of the country, buses compete against cars (predominantly), walking or cycling for certain trips, or not making the trip at all. For a 10-mile trip, say, charging £10 means most people will take the car or stay at home, especially if it's a daily cost for a regular commute. Most of the people taking the bus will be those who can't afford to run a car, and can't wfh.

I thought my objection was spelled out pretty clearly in what you quote, but evidently not.

Suppose we have a town of some 20k to 50k people. There is traffic within town, which mostly costs, say, £1.50 to £2.00. There is traffic to surrounding smaller places costing, say, typically £4 to £6. The former people get no discount. The latter people get large discounts. I'm just saying, spread the discounts around a bit, to get greater encouragement to travel. Is there some reason we are only trying to encourage the latter people to travel more by bus, by giving them large discounts, while making no encouragement to the former?

[Fishnut]

Our council are doing free buses today and last Friday. I'm not working today so I'm going into Bristol which I wouldn't have done otherwise. It looks like I'm not the only one as the bus is pretty packed.

[Tessa K]

London doesn't just have a flat bus fare, there is also a daily cap and you can get as many buses as you want within an hour for one fare which benefits people who have to take more than one bus to work and makes multiple buses cheaper than the over crowded tube.

[Gfamily]

London doesn't just have a flat bus fare, there is also a daily cap and you can get as many buses as you want within an hour for one fare which benefits people who have to take more than one bus to work and makes multiple buses cheaper than the over crowded tube.

London has it right. When I was working in Manchester, I had a season ticket for 35m train journey in that passed through 7 stations. £200/month (Appx £2200 per year - if I timed it to avoid holidays etc).
Our daughter lived in London Zone 6 and had an annual travel pass costing about £2500 per year, that covered 250odd stations (under/overground) busses, trams, cable car (I think), and gave 1/3 off Southern Rail tickets to the South Coast.

[Brightonian]

London doesn't just have a flat bus fare, there is also a daily cap and you can get as many buses as you want within an hour for one fare which benefits people who have to take more than one bus to work and makes multiple buses cheaper than the over crowded tube.

This. And there was a remark earlier (Ivan?) that most London bus journeys are short. When I'm in London and have reached the daily cap I will often hop on a bus if it happens to be there, and only go one or two stops as they're now free.

[Sciolus]

I thought my objection was spelled out pretty clearly in what you quote, but evidently not.

Suppose we have a town of some 20k to 50k people. There is traffic within town, which mostly costs, say, £1.50 to £2.00. There is traffic to surrounding smaller places costing, say, typically £4 to £6. The former people get no discount. The latter people get large discounts. I'm just saying, spread the discounts around a bit, to get greater encouragement to travel. Is there some reason we are only trying to encourage the latter people to travel more by bus, by giving them large discounts, while making no encouragement to the former?

Sure, I get that. My counter-argument is that the latter group have a greater incentive to take the car, so it may well be that reducing fares increases revenue (or doesn't much reduce) in this price range. Also my previous point that the value of the trip to the latter group isn't generally three times greater than the value to the former group: you either need to take the trip or you don't. But I don't know so I'll shut up now.

[IvanV]

I thought my objection was spelled out pretty clearly in what you quote, but evidently not.

Suppose we have a town of some 20k to 50k people. There is traffic within town, which mostly costs, say, £1.50 to £2.00. There is traffic to surrounding smaller places costing, say, typically £4 to £6. The former people get no discount. The latter people get large discounts. I'm just saying, spread the discounts around a bit, to get greater encouragement to travel. Is there some reason we are only trying to encourage the latter people to travel more by bus, by giving them large discounts, while making no encouragement to the former?

Sure, I get that. My counter-argument is that the latter group have a greater incentive to take the car, so it may well be that reducing fares increases revenue (or doesn't much reduce) in this price range. Also my previous point that the value of the trip to the latter group isn't generally three times greater than the value to the former group: you either need to take the trip or you don't. But I don't know so I'll shut up now.

You don' t need to be embarrassed, I think your comment is very reasonable. We do need to think about what effect the discount has on different categories of potential passenger. If the effect is as you say, then you are right. Without detailed data, etc, it is unclear. My instinct is that it goes the other way, because the proportion of car trips in the 0-2 miles range is distressingly high. But I'm prepared to allow the data might prove me wrong. I'm less happy with "you either need to take the trip or you don't." It is a common thought, but in practice a lot of trips are optional. Leisure travel is mostly optional, and a high fraction of travel is for what is commonly categorised as "leisure" purposes in the literature. Shopping trips, for example, can be varied in frequency by choice of what you buy/eat/use, or avoided entirely by use of a delivery service. So shopping is usually classified as "leisure" in the literature, counter-intuitive as that may seem.