Does it cost less to drive to work than catch the train?

Laneways of Melbourne (photo from Planning Institute - VYP Street Art Tour)

The Public Transport Users Association (PTUA) is keen to make the case that it costs more to travel by public transport in Melbourne than it does by car. The PTUA says above-inflation fare rises over the last decade mean public transport now costs much more than “petrol in the car” for many trips.

The PTUA might take some moral support from this op-ed in The Age this week by journalist Gabriella Costa (the paper calls it an ‘Analysis’). Like the PTUA, she also argues that commuting by car is cheaper. She says the 9% fare increase announced this week by the Government will make driving a better option. Her contention is that, “even loosely, the maths just don’t add up” for rail:

And it’s a simple equation. A Metro daily ticket from a zone 2 station into the city? $11.90 from January 1. Petrol from home to work and back? two to three litres. Parking: less than $10 a day on the city’s edge.

Ms Costa doesn’t actually do the maths, so I have. Unless she gets her petrol for free, even on those numbers it still costs less to take the train to the city than drive! Petrol at $1.35 per litre is $4.00 a day, plus $10 for parking. Even loosely, that adds up in favour of the train! But as we all know, there’s more to the financial cost of driving than just petrol and parking, so I’ll try to do a tighter estimate.

Ms Costa’s example is based on her own circumstances. I know from her article that she lives in St Albans, near Giniver station in Zone 2. By her estimate, she’s 17 km by road from where she works in the city (presumably at The Age HQ in Spencer St). I’ll assume she commutes 220 days a year after taking rec leave, public holidays, sick leave, the odd day off, a bit of work-related travel and weekends into account. If she drove to work on every one of these 220 days she’d therefore travel 7,480 km in a year.

I’ll assume she drives the cheapest vehicle you can buy new in the small car class, a Hyundai i30. According to the RACV, operating costs of this vehicle for fuel, tyres and servicing, are 16.6 cents per kilometre, giving her an annual commuting cost of $1,224. That’s conservative because the fuel component is based on a city-country average – commuting in busy traffic is thirstier work.

Add to that parking at $10 per day for 220 days and her all up cost for a year of commuting by car to the CBD totals $3,444. That’s still quite a bit more than the cost of catching the train from St Albans, even under the new fare structure that takes effect from 1 January.

St Albans is in Zone 2, so Ms Costa could buy a myki Yearly Pass in 2012 for $2,021. That would save her $1480 compared to driving. Even if she travelled every day on a myki Daily Cap it would cost $2,438 over the course of a year, still putting her ahead by $1,000 compared to driving.

And if she lived any further out the cost of train travel would stay the same but driving would cost considerably more. If, for example, she lived in Pakenham (since she mentions it in her article) her annual expenditure on driving would increase to $6,371 p.a. because it’s 57 km from her workplace. But the cost of the train would be the same as it is from St Albans, since both stations are in Zone 2.

It’s important to note that I’ve only considered variable costs, specifically parking, fuel, tyres and servicing – I’ve taken no account of the cost of owning the car. But it makes no sense to ignore standing costs, because if she doesn’t actually have a car she can’t drive to work! The RACV says the annual standing cost of a Hyundai i30 is $5,668, made up primarily of depreciation, interest, insurance and registration.

If I assume commuting accounts for half of her total annual travel by car (i.e. she drives 7,480 km to work each year as well as doing a further 7,480 km p.a. in non-work travel), then the standing costs that should be attributed to her journey to work come to $2,834.

Add that $2,834 to the $3,444 she pays for parking, fuel, tyres and servicing and Ms Costa is up for an annual total of $6,278 for the privilege of driving to work from St Albans. Remember, a myki Yearly Pass will cost much less, just $2,021, and even a myki Daily Cap will cost her $2,438 for the year. Read the rest of this entry »


Should public transport fares be higher?

Fare revenue/per passenger km ($) for public transport in selected cities (data from Ian Wallis & Assocs)

The report in The Age that the Government is considering a 10% real increase in public transport fares has generated an intense negative reaction from readers.

If the Government went ahead with the touted increase, the paper calculates that combined with CPI increases, the cost of a weekly zone one myki pass would rise from the current $30.20 to $34.90 in 2013, or by $4.70 per week. The equivalent zone two pass would rise from $51.00 to $58.95.

Out of well in excess of 100 reader comments on the story, only a handful defended the proposition. The overwhelming view is the system is so broken it would be outrageous for the government to ask beleaguered users to pay more. While many say they’d be prepared to pay more if it meant the system were improved, quite a few think public transport is already too expensive at current fare levels – indeed, a number argued public transport is a “public good” and should be free.

Some warn higher fares would be self-defeating because they’d encourage further fare evasion – equivalent revenue could instead be raised by getting serious about evaders. Another objection is that recent increases in patronage have raised enough additional revenue to obviate the need for increasing fares.

There’s also a common sentiment that increasing fares would increase car use and hence be bad environmentally. A surprising number reckon the increase would make public transport more expensive than driving.

I think The Age has taken some licence here. Current policy is that fares increase in line with inflation, so some of the prospective rise is going to happen anyway. By itself, a 10% increase (i.e. a 5% increase in each of two consecutive years) would put up the cost of a zone one weekly myki pass by $3.10 per week. The corresponding increase for a zone two weekly would be $5.25 per week.

Still, I don’t think even these somewhat lower numbers would do much to assuage the vitriol spat out by most readers. However I disagree with them. As I’ve pointed out before, I support the idea of increasing fares in real terms. This is not a conservative view – the public transport advocates who undertook the Independent Public Inquiry into Sydney’s long-term public transport needs think it’s a good and necessary idea too.

The argument that fares shouldn’t be increased because the system is flawed is politically potent but counter-productive. More revenue is one of the crucial inputs needed to improve the system. Better service is a much more important driver of patronage than fare levels.

Fares aren’t in any event expensive relative to the cost of the service provided. They’re already heavily subsidised – fare box revenue in Melbourne only recovers 44% of operating costs and none of the capital cost. Moreover, fare revenue is around 12 cents per passenger kilometre – that’s around average for Australian cities but considerably lower than some major cities in New Zealand, Canada and the United States (see exhibit).

There’s a sense of perspective missing here. For all its failings (and I’m not suggesting they aren’t real), the public transport system in Melbourne is still delivering a reasonable service. In fact it’s been good enough to support spectacular jobs growth in the transit-dependent CBD over recent years – employers are prepared to bet on it.

There are good reasons for pursuing revenue foregone through fare evasion, but it isn’t a magical hollow log. Collecting the marginal dollar entails substantial and increasing costs, such as employing more inspectors (or conductors). Likewise, recent boosts in patronage have increased revenue, but they’ve also raised operating costs and required more investment in infrastructure e.g. new trains.

The argument that higher fares will increase driving isn’t convincing either. While there would undoubtedly be some drift at the margin, the great bulk of public transport users are “captive” in the sense that they either can’t drive or motoring is simply too expensive due to high parking costs and traffic congestion. Even a one-off 10% real increase isn’t going to change that equation substantially (although I expect it could well give a modest boost to cycling).

The key market for public transport is work trips to the city centre. The CBD couldn’t exist in its current size and form without transit. There’s no convincing reason – on either efficiency or equity grounds – why CBD employers should have the travel costs of their generally well-paid workers subsidised by the rest of the population by holding down fares (in an ideal world I’d favour a tax on central city employers to supplement funding of transit services but that’s another story).

Despite what some readers of The Age think, public transport is not a “public good”. It’s neither non-rivalrous nor non-excludable – it gets congested and users pay. Of course it has a social function but so do water and energy. As is usually the case with these utilities, subsidies should be directed at eligible users, not bestowed on all passengers via the fare structure irrespective of income .

Overall then, I think increasing fares in real terms is a good idea. However I don’t see fares as the only source of revenue – CBD businesses should be paying too (and Sydney’s Independent Inquiry also identified a number of other potential sources of funding). I’d also like to see attention given to the fare structure, so that among other things, it provides further incentive for travellers to shift to non-peak services. Read the rest of this entry »


Should fare zones be rationalised?

I like the principle underlying Melbourne’s two zone public transport fares system – if you travel further, you pay more. Travel within roughly 11 km of Flinders St Station is a Zone 1 fare and travel within the area beyond that is a Zone 2 fare. Those who travel between zones pay a Zone 1-2 fare. Sensibly, there’s a three station ‘grace’ overlap between zones.

The logic of the tariff is premised on the idea that trips are to the CBD. If you live in Epping (say), you are 19 km from the CBD and in Zone 2, whereas someone living near Bell station in Preston is only 9 km out and is in Zone 1. The standard Two Hour Zone 1 fare is $3.80 and the Zone 2 fare is $2.90. If you cross zones, the fare for the longer distances expected with Zone 1-2 trips is $6.00.

That all sounds good, but inevitably there are anomalies. For example, a traveller boarding a train on the Epping line at Reservoir station can travel through 15 stations to Flinders St for a Zone 1 fare. However anyone boarding at the next station out, Ruthven, must pay a Zone 1-2 fare to travel to Flinders St.

Residents who live near the overlap stations and make short trips face a very high marginal cost. For example, someone boarding at Bell station on the Epping line can only travel 3 stations away from the CBD before incurring a Zone 1-2 fare.  Similarly the four station inbound trip from Ruthven station to Bell is a Zone 1-2 fare. The same pattern happens on other lines.

Another anomaly is the cost of Zone 1-2 fares compared to Zone 1 and Zone 2 fares. With so much of the cost of operating a rail service tied up in capital items, it’s hard to see why a Zone 1-2 fare costs 60% more than a Zone 1 fare and over 100% more than a Zone 2 fare. That might possibly make sense for buses but seems a real stretch for trains.

These sorts of anomalies could be seen as unfortunate but inevitable compromises – after all, most travellers are bound for the city centre. However as discussed here, the great bulk of jobs are now in the suburbs, not the CBD. Moreover, most Melburnians live relatively close to their key travel destinations, usually in the same or a contiguous municipality.

We should expect that public transport travellers will increasingly be seeking to make intra-suburban trips via a grid of well coordinated train and bus services. Indeed, many advocate such an approach. A two-part tariff based on distance from the CBD makes less sense in that situation. While the CBD will remain the main market for trains for a considerable time yet, they nevertheless are likely to have a growing role in intra-suburban travel. Policy-makers should be thinking about how to make them work harder in this role. Read the rest of this entry »


Should public transport users pay their way?

The peak industry body, Tourism and Transport Forum Australia, got itself into hot water with the media last week. The Forum suggested in a new report, Meeting the funding challenges of public transport, that eligibility for concession fares should be drastically restricted.

The brouhaha was unfortunate because the Forum’s underlying contention – that public transport in Australia should be operated on a full cost-recovery basis – is worthy of closer examination. Closer examination, that is, provided we’re talking about recovering full costs from those who can afford it!

At present, fares only account for approximately 36% of public transport operating costs across Australia’s five largest cities according to the Forum’s consultant’s, LEK. They say the rest comes from Government subsidies and is low compared to an international average of 60%.

The challenge facing governments in Australia is simple enough. Public transport capacity has to increase enormously to deal with expected higher demand driven by issues like peak oil, climate change and unprecedented population growth. For example, patronage has already grown 5% p.a. over the past five years in Brisbane and Melbourne. Read the rest of this entry »


Is Melbourne Bicycle Share all spin?

I hope I’m proven wrong but I can’t help feeling Melbourne Bicycle Share is much more about political spin than about transport.

The PR material indicates the scheme is pitched at short-distance and short-duration travellers “running an errand at lunch or going across town for a meeting or lecture”. It extends “your public transport options and makes the CBD more accessible than ever before”.

The big question to my mind is what exactly is the need that this scheme is filling? Or more precisely, what is the justification for the Government subsidy it requires?

The very idea of a CBD is that it is walkable and if the trip’s too far then travellers take public transport. In fact public transport in Melbourne’s CBD, where we have the choice of the city rail loop and a dense tram system, is pretty good by world standards. Quite simply, the CBD doesn’t need share bicycles for transport.

I can’t see a lot of sense, either, in spending public money to take off-peak passengers away from public transport – that’s the very time when the system has spare capacity and should earn extra revenue with minimal extra cost. And why subsidise walkers to ride instead?

I’m not in any event confident that Melbourne Bicycle Share is even going to work. Read the rest of this entry »