Britannia Waives the Rules
April 29, 2015
American rail advocates frequently point to Europe and Asia for examples of what the United States’s future high-speed rail network can look like. This is for good reason: High-speed trains in France, Germany, Japan, South Korea and other countries offer travellers a welcome alternative to air and road travel.
The lessons from abroad, however, don’t stop with high-speed intercity trains. U.S. advocates and policymakers can also cite foreign metropolises’ mass transit systems as examples for our own to follow, particularly those that are confronted with perennial funding cuts. In the aftermath of the Great Recession, tighter government budgets have forced transit operators to find savings wherever possible.
Although smaller budgets have forced the cancellation or postponements of many projects, some cities, notably London, have risen to the challenge. Despite a cut in its operating subsidy this past year, Transportation for London (TfL) recovered a record 70 percent of its operating costs from ticket sales. This ratio stands in stark contrast to the 20 to 40 percent recovered by most U.S. operators, suggesting that they can do more to improve revenues.
TfL has used multiple approaches to improve revenues. First, by gradually phasing in an increase in fares as opposed to scheduling a larger fare increase in a given year, TfL ensured that riders would not feel as great an immediate impact on their wallets.
Additionally, TfL has invested in technologies that have decreased the agency’s fare collection costs, including allowing riders to use contactless debit and credit cards to pay fares. This one innovation alone has already cut fare collection expenses from 14 percent of total expenses to just 9 percent, and will produce more savings in the future.
Finally, TfL has announced intentions to run 24-hour service on the Underground. By doing so, the agency will generate higher profits both through increased ridership and decreased idling of equipment. In a capital-intensive industry such as transportation, increased usage of passenger-carrying equipment extracts further value.
So what lessons can U.S. operators learn from Britain? First, ready adoption of mobile and alternative ticketing can produce significant savings. Some commuter rail operators -- such as Boston’s MBTA -- have already adopted mobile ticketing, and others, including Virginia Railway Express and the Long Island Rail Road, are contemplating doing so in the future. Amtrak itself has had mobile ticketing across the system since July 2012, a move that it believes has saved tens of millions of dollars in fare collection costs.
But the most impressive lesson -- and perhaps the most counterintuitive -- is that greater savings can be had through expanding services. By expanding services, transit operators create both opportunities for new trips and reduce the amount of hours that trains sit idle in the yards. In Maryland, for example, introduction of weekend service on MARC’s Penn Line between Baltimore and Washington, D.C., has improved the service’s already respectable farebox recovery ratio, and ensured that the state maximizes the value of its investment in new passenger cars.
Similarly, Amtrak Virginia’s services between Washington, Lynchburg, and Norfolk both create more trip options for travellers along the Northeast Corridor while maximizing use of Amtrak’s existing equipment. Thus, by expanding services and making more efficient use of existing equipment, operators can realize significant cost savings while also responding to real public demand.
As federal and state policymakers contemplate the future of the Nation’s public transportation systems, they would do well to learn from London’s experience. More investment -- not less -- will propel the country’s transportation future forward, and will create cost savings for generations to come.