Should public transport fares to the airport be subsidised?

Yesterday’s discussion of an airport-CBD rail link prompts me to look further at the idea that airport users have a “right” to public transport priced at the standard Metlink tariff.

My first reaction is that the idea makes sense. After all, everywhere else in Melbourne is provided with public transport subsidised by the Government (no matter how inadequate it might be). Melbourne Airport is also one of the largest suburban activity centres in the metropolitan area, with around 12,000 workers.

If travel to and from the Airport were charged in accordance with the Metlink tariff, the fare to the CBD would be the standard Zone 1-2 fare of $5.80 one-way. But while it might be the equitable solution it doesn’t follow that it’s the sensible one, the necessary one, or the one that’s in the best interests of all Melburnians.

Subsidising all those air travellers would be expensive. Skybus carries two million passengers per annum between the airport and the CBD at $16 per one-way trip and requires no subsidy. No doubt demand would rise if fares fell to $5.80, leading to a higher level of subsidy. There would also be added costs if users demanded that stops be provided at intermediate points.

The vast bulk of those air travellers are made up of either business people or people flying for holidays, visits and personal reasons. Most either charge their fares as a business expense or are prepared to pay more for ground access given the occasional nature of their travel. After all, air travel usually involves a number of significant outlays such as air fares, accommodation, meals, taxis and personal expenses. People who fly don’t generally expect to pay a Zone 1-2 fare – that is one reason why a one-way rail ticket to the CBD costs $15 at both Sydney and Brisbane airports.

Quite frankly, while recognising there is an equity issue here, I’d rather see the money applied to some other purpose – like education, health, fostering renewable energy or actually improving public transport – than used to subsidise fares to the airport. We don’t directly subsidise domestic and international air fares, so I reckon there’s a case for seeing the ground travel component as part of the flight and leaving it unsubsidised as well. And let’s not forget that a large proportion of the people who travel to and from Melbourne Airport are not Victorians, so they’re not paying much in the way of State taxes here!

However I think airport workers should only pay what the rest of us pay to get to work every day. Their travel expense is recurring. But I don’t think that necessarily implies construction of a new rail line. Most residents of Melbourne do not live within walking distance of a rail or tram line – those who use public transport rely on bus services either to travel directly to their destination or to connect with a rail or tram line.

Fortunately, from early next year, the orbital 901 Frankston to Ringwood Smartbus service will be extended to Melbourne Airport via Blackburn, Greensborough, South Morang, Epping, Roxburgh Park and Broadmeadows. It will provide a regular service between the Airport and Broadmeadows station and enable passengers, whether they be airport workers or air travellers, to connect to the CBD for $5.80 (or presumably for less if they are travelling locally).

Smartbus provides a good level of service. On weekdays the 901 operates at 15 minute frequencies between 6.30am and 9pm. It operates every half hour from 9pm to midnight and on weekends. Trains run every 20 minutes to the city from Broadmeadows and take circa 30 minutes for the trip (at midday on a weekday).

A trip to the CBD could be time-consuming. While it might be as short as 50 minutes it could take considerably longer. Trains will need to be well-coordinated with the 901 (not a strength of the public transport system at present).

I think airport workers who travel via the CBD would accordingly be better catered for by a direct subsidy from the Government to Skybus, just as other private bus operators are subsidised to provide a service. I expect there would only be a very small number of airport workers in this category as the majority live within the northern and western regions where cars are a considerably more attractive mode than any form of public transport is ever likely to be. I understand Skybus offers a discount to Airport workers but I think this should be a State responsibility.

However the primary value of the Smartbus connection doesn’t really lie in providing access to the CBD but rather in improving access to other suburban locations. It will connect with stations on all the key northern, eastern and southern rail lines as it journeys across the suburbs from the Airport to Frankston.

These sorts of train-bus connections are the future of public transport in Melbourne. For example, the Public Transport Users Association’s Every 10 Minutes to Everywhere initiative envisages a grid made up, on the one hand, largely of heavy and light rail lines serving the CBD, and concentric rings of orbital Smartbus-type routes, on the other. They describe it as like a spider’s web. The term “10 minutes” refers to the frequency of services – it means that timetables would be unnecessary as the average waiting time would (theoretically) be five minutes.

A particular value of this perspective is it recognises the airport is in many ways like the CBD – it’s a metropolitan scale destination that attracts users from across the entire metropolitan area (and indeed from the whole State). The great bulk of airport users will not from the CBD but from elsewhere in Melbourne, so for those who use public transport the efficiency of transfers at grid nodes is of paramount importance.

(I’ve previously discussed the issue of a Melbourne Airport-CBD rail link hereherehereherehere and here).

13 Comments on “Should public transport fares to the airport be subsidised?”

  1. Matthew says:

    Yes it should be subsidised, not by general taxpayers, but by adding to the toll on the Tullamarine Freeway (and adding tolls to other freeways) and not putting the extra revenue into CityLink coffers, but into funding public transport and cycling and walking projects, including an airport rail link. That is what London’s congestion charge succeeded at spectacularly. Not reducing congestion (like who cares?) but funding alternatives to being a contributor to and a victim of that congestion. Tolling motorists to fund alternatives is a model that should be more widely adopted, including in backwards Melbourne.

    • Alan Davies says:

      Agree strongly with charging for road space (as I’ve often said) but I’d still use the revenue for other public transport projects. There is a long list of needed public transport improvements in Melbourne. Many would not grab the public’s attention but they’re needed to make the system better.

    • Joseph says:

      Matthew, I suspect your suggestion of hiking road tolls is impossible. I can’t imagine that the contract between Transurban and the Government allows a tax to be levied. Why would anyone build a road if the government could plunder the revenue at will? There is also the distributional impact, I suspect that road tolls are regressive but I would be interested in any studies into this issue. I also suspect that much of the benefit of public transport subsidies accrue to the rich that live in areas well served by public transport. Does it really make sense to tax the poor and subsidise the rich?

  2. TomD says:

    You made a pretty good case the other day that Skybus is already a remarkably good service in many different ways – frequency, pricing for distance, etc.

    I have always found it that way myself, so no subsidy needed from my perspective, unless price was increased to the level where it really started to add adversely to the overall airfare/trip cost calculation for a traveller!

    But of course, despite this acceptance of a relatively good deal, shared your additional view that if given a choice between bus and train would always prefer the latter mode of travel.

  3. TomD says:

    … was also surprised, in fact impressed that SB actually runs at no loss, like so many other services yet does all that it does for the price it does!

  4. Aenveigh says:

    Given a one-way Skybus fare on a multipass (10x) is only $12, and a 10x 1+2 metcard around $10, there’s not a huge difference in price anyway for regular users. Only problem is no transfers to the ‘regular’ PT system so if you want to transfer you’re also up for extra at either or both ends of the trip.

    Given that price difference that large, and Skybus currently makes $1m profit per year, I’d say there’s an argument for running it as part of the regular system under myki, but charging an airport surcharge for Skybus Express pax (it’s a special service, after all – dedicated luggage racks, etc).

    Once that’s in and understood, perhaps surcharge fares for super-express trains as found on the longer lines? These take up valuable paths and peak infrastructure, and probably more accurately reflect the costs of long-distance travel.

  5. Aenveigh says:

    Oops – posting too quickly. I was assuming only one-way travel per day, in which case the fares are relatively close. If you have to do a daily return trip (ie not flying, or day trip) it obviously work out quite a lot worse.

    Either way, I’d rather see a more integrated system that simply charges the actual (most likely minimal) cost premium for the service, but that could be a slippery slope (how fine-grained do you get, charging for congested stations, peak, etc).

  6. Aenveigh says:

    I am a dunce. Comparing a zone 1+2 daily @ $10 is not really appropriate for a one-way trip. So Skybus is roughly double a standard fare for a one-way trip.

  7. Aenveigh says:

    Thought I might provide a more considered response!

    I would argue there is a strong case for the Airport to be included as part of the regular PT network.
    The argument that travellers are somehow wealthier, or a customer to be fleeced, can’t really be sustained in light of similar traffic destinations already receiving regular fare PT. Centres such as the CBD and Chadstone Shopping Centre host high-end shopping in which customers may easily spend hundreds or thousands of dollars in a single visit – easily comparable to the cost of domestic and/or international airfares. Similarly, a regular shopper (just groceries) could drop a couple of hundred dollars week in, week out at a major shopping centre and we see fit to provide them with subsidised* travel, so why are irregular or semi-regular (travellers) or regular (airport workers) users going to a shopping/travel destination somehow special? Would we charge premium fares to get to the Airport if it was, in fact, a station (or VFT station)? RPT air services are just that – another form of public transport, and the Airport is simply an interchange (or should be, rather than the semi-isolated node it is).

    The only argument I can see for fare surcharges or non-Metlink fares is where special infrastructure is provided, such as buses with luggage racks. Even then, we see specialised rollingstock on the regular network – trains fitted for interurban service, the Stony Point diesel, and now trains with reduced seating for more ‘metro-style’ operation. Similarly, “express” services (such as Skybus) are also found in the regular network in Melbourne (401 bus) and other cities (eg 727 in Canberra) that operate within the normal fare structure. These services are intended to complement and extend the network, with consequent boosts to patronage – something a surcharge would discourage. I’m not averse to surcharging per se but think their use should be limited to managing congestion or similar, rather than fleecing a subset of transit riders, especially those who may have limited PT options. (For example, one may catch the Heathrow Express (premium fare) or the Tube (regular fare) to Heathrow Airport – Melbourne does not have this choice). Even with the Smartbus extension (901+Broadmeadows) I’m not sure the frequency/reliability (and hence average travel time) is really good enough for it to be a realistic alternative access mechanism.

    I’ve in the earlier posts said that Skybus could have or sustain surcharges, and it could (and is). However, I’d only want to see this in the context of multiple PT options as above – and with the same concept applied across the network. In this manner, you would see trains with express paths being surcharged, and stoppers providing the regular service. Such arrangements could be enforced using appropriate platform design at major stations (eg Box Hill). It’s a slippery slope though and one of the key features of the Melbourne network is its ease of interchange between services, and as such, having anomalies in the system severely reduce the simplicity and accessibility of the network, even if the surcharges are applied ‘silently’ (by myki money – without having to fumble for change). Such negative effects would have to be carefully assessed against the gain in farebox revenue (or congestion management/demand reduction effects) from surcharges.

    Alan you’ve mentioned that increasing demand (by charging regular, not premium fares) you might end up providing even more subsidy – but up to a point this won’t scale linearly – until you hit a capacity threshold it costs no more to run a half-full bus as it does a full one, and of course some PT routes make profits. Removing demand from road services will limit costs for road renewal and expansion (if it’s even possible to do the latter) so the ‘subsidy’ could be viewed as ‘road expansion equivalent’ costs – a low ongoing cost that avoids a high upfront expense (+ debt servicing, maintenance etc). However, Airport runs would be a likely candidate for profitability as the run has more-or-less continual flows in both directions (provided you don’t overcapitalise the service – hence keep to buses).

    You also mention that many travellers are not Victorians (hence not deserving of subsidy) but if you want to capture value here I would argue it is best done with an aeroplane landing tax rather than via the proportion of people who choose to use Skybus/PT. Your average business/high value customer is in a taxi, through which no or low value capture is made (nor subsidy provided to). This way everyone is slugged who ‘chooses’ to fly, and airport workers remain exempt from surcharge effects.

    Anyway, thanks as always for thought-provoking posts.

    *Of course, the actual subsidy being provided, if one takes into consideration externalities avoided by PT use compared to car, should be determined – I suspect by the time opportunity costs of parking lots, reduced mortality/injuries etc are factored in the subsidy is minimal if it even exists… but that’s another post….

    • Alan Davies says:

      Charging almost three times the Metlink fare for Skybus is not equitable, its price discrimination (i.e. selling essentially the same good/service in different markets at different prices), but as I said in the post, I wouldn’t change it, except for airport workers (although they do already get a discount from Skybus – not sure how big it is).

      Since there’s no great public outrage in Sydney or Brisbane about the higher prices for rail to the airport and since it would cost money to remove the discrimination, I’d ignore it and spend it on other projects that I think are far more worthy.

      I’m not so sure the Smartbus/Broadmeadows option is unrealistic. The future of public transport is going to be about connections. If the trains could be increased to 15 minute frequencies that wouldn’t be so bad, maybe an hour (might need to remove some capacity constraints on the Broadmeadows line first though). I just don’t think its realistic to have direct public transport from A to B in all situations – a lot of trips will have to entail inter-modal transfers.

      On the marginal cost stuff, buses are small and fill up pretty quickly, then the operator has to buy another one. Doesn’t it make better sense to charge average cost? BTW as far as I know, Skybus is the only public transport route in Melbourne that makes a profit.

  8. […] outlined the case against an airport rail link before (here, here, here, here, here, here and here), but in summary the key objections […]

  9. […] whereas Skybus is profitable. Both the Sydney and Brisbane trains charge $17 one-way. There are sound arguments for charging a different price for airport travel rather than incur a substantial ongoing cost to […]

  10. […] It’s often argued that if an airport train were priced at a Zone 1-2 fare, it would attract higher patronage than SkyBus. That’s likely to be true, but it’s totally unrealistic – no Government is going to spend billions on an airport rail line and then subsidise its operations. And nor should they. […]

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