Transit Pricing

The following post is my analysis of the user fee for transit

I am arguing for a greater spread between the cost of using a monthly pass and single fares.


so like myth busters:

Warning Accounting content!

Facts:
a month transit pass is in Calgary, Alberta is $75.00
one fare is $2.25

So if you take 33 trips (75/2.25) in a month you break even.

if you take transit to work or school 2 trips a day * 5 days = 10 trips a week * 4 weeks = 40 trips

it would cost $90 to pay for individual fares, and you could save $15 dollar per month by buying a month transit pass.

Accounting Principles:
Marginal cost: this is a cost that increases with the quantity (materials, one fare)
fixed cost: this is a cost that remains the same and does not depend on quantity (also called sunk cost) an example is capital investments (the factory, the transit pass)

People will use transit more often if they have a monthly pass because there is no cost increase associated with taking one more trip if a person has a monthly pass.
note: this is great for the transit system because most "extra trips" are made during low demand times, utilizing unused capacity that has to be around anyway (a sunk/fixed cost). The benefit of this is that one less car is on the road.

But, people won't take that extra trip if they are using buss passes because it will increase the cost (marginal cost) of transit, so they will drive or get a ride, maybe driving beside the buss looking at their extra seat.

Now multiply that by the number of people that use single fares instead of a monthly pass and then think about the extra road maintenance and traffic. It just is not an efficient way of transporting people.

That is why I am arguing for a greater spread between the cost of using a monthly pass and single fares.