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Fare Capping: Balancing Revenue and Equity Impacts (2022)

Chapter: Chapter 4 - Case Examples

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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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Suggested Citation:"Chapter 4 - Case Examples." National Academies of Sciences, Engineering, and Medicine. 2022. Fare Capping: Balancing Revenue and Equity Impacts. Washington, DC: The National Academies Press. doi: 10.17226/26510.
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26 Case Examples This chapter provides five case examples. Each one illustrates how the responding agency implemented, or was currently working to implement, fare capping. Introduction This synthesis report includes case examples of five agencies that either have implemented fare capping or plan to implement it soon. The five agencies are Dayton RTA, Miami-Dade Transit, C-TRAN, NFTA, and IndyGo. These agencies were selected to represent a range of geography, system size, technology, and implementation approach. Conversations with these case agencies revealed the goals and motivations for pursuing fare capping, the decision- making and implementation processes, and the evaluation of impacts on revenue and other metrics. Agency staff shared the challenges of implementing fare system upgrades, including the internal capacity and support needs of associated improvements. They also noted com- munity and internal outreach efforts to promote and educate people about new fare policies and platforms. In addition to the selection of case examples with a mix of agency characteristics, agen- cies also represent different aspects in the following areas: equity focused platform-based approach (Dayton RTA); multi-modal and open payment integration (Miami-Dade Transit); multi-agency regional approach (C-TRAN); capital investments etc. Greater Dayton Regional Transit Authority Background Greater Dayton Regional Transit Authority (RTA) pursued fare capping as a critical piece of a larger effort to modernize its fare pay- ment system. However, equity was a primary reason for the decision to pursue a fare capping policy specifically, and it is the benefit that RTA emphasizes most as it promotes the new policy. The agency was motivated to act after frequently observing that those who are least able to pay are often paying the most for service. RTA also believes that fare capping will simplify transit use for both current and future riders. Although a common argument is that this will generate more ridership, staff acknowledge that it remains to be seen whether people will actually ride more with the new system. Nevertheless, RTA still believes that there is value in making transit as easy to use as possible. C H A P T E R 4 RTA Key Findings Year implemented: 2021 Purpose • Equity • Modernize fare payment system • Simplify riding experience Lessons learned • Having a clear purpose is important • Riders face a learning curve during the transition • Anticipate a revenue loss that will need a long-term solution

Case Examples 27   Program Design RTA initially introduced fare capping in February 2021 through their Tapp Pay app, which is available via the third-party app Transit, and is now available to riders who use a Tapp Pay smart card as well. Fares are capped on a daily and monthly rolling basis, with fares currently capped at a promotional rate of $3 per day and $30 during a 31-day rolling period. Riders who use a Tapp Pay smart card do not have to register their card to benefit from fare capping; however, registering an account provides riders with balance protection in case their card is lost or stolen, and access to promotional fare offerings. Riders can add value to their accounts through the Tapp Pay app using a credit or debit card, online to their card, and at ticket-vending machines to both the app and card. RTA also partners with two vendors to enable transactions at retail outlets. Whether riders use a Tapp Pay card or the mobile app, they can use cash to reload value at over 300 retail locations, 200 of which are within a quarter-mile of a bus stop. RTA hopes to continue expanding sales outlets to facilitate transactions. Riders are allowed to go one trip negative on their balance so they can get to a retail location to reload. This practice was adopted from London’s fare capping policy. RTA also is looking into having Tapp Pay cards available for distribution at libraries, especially since all library branches are located along bus routes. Fare capping also applies to paratransit trips. Paratransit vehicles have been equipped with the same fare validators as those on fixed-route vehicles, and passengers can use Tapp Pay media to pay their fares. Paratransit customers can and will continue to ride RTA’s fixed-route service for free, but in fall 2021 they will need to tap on when they board to validate the ride. Implementation Fare System Modernization In 2014, RTA upgraded their computer-aided dispatch/automatic vehicle location (CAD/AVL) system in anticipation of a fare system modernization. The agency issued a Request for Infor- mation in 2018 to assess the available options, and then a Request for Proposals to solicit bids from vendors. In 2019, they contracted with Masabi for the fare platform as well as the onboard validator equipment. These validators tie into their previously upgraded system, which meant that there was no additional cellular networking cost to set up a new fare system. In May 2020, RTA launched the Tapp Pay mobile fare payment system in partnership with Masabi and Transit, introducing mobile ticketing for the first time. Riders can purchase and use fares through the Tapp Pay app, or through the Transit app that many riders already used for trip planning and real-time bus tracking. Mobile payment was originally done through visual validation by operators until November 2020, when onboard ticket validators were installed on buses in addition to the existing GFISoftware fare boxes. Although there was concern about the cost necessary to invest in a new fare system, RTA calculated that it spent over 10% of its fare revenue just to manage fare collection under the previous fare system, and that it would cost about 7% of its fare revenue to maintain the new system, yielding a savings of about 3%. Fare Capping RTA launched daily and monthly fare capping through the Tapp Pay mobile app in February 2021. As part of the launch, RTA deeply discounted its fares for Tapp Pay users to both promote fare capping and incentivize people to switch from cash and use the new system. The agency plans to keep the promotional rates in place for a limited period before reverting to the original prices. On July 1, 2021, RTA no longer sold day passes aboard vehicles.

28 Fare Capping: Balancing Revenue and Equity Impacts RTA estimates that 10% of its revenue is collected through human services providers. The agency is distributing Tapp Pay fare cards to these organizations so that their clients are enrolled on the Tapp Pay system, but fare cards have passes loaded and cannot have their fares capped. Outcomes • While promotional fares may help encourage adoption of RTA’s new system and increase use of fare capping, they also will make it difficult to isolate the effects of fare capping versus discounted fares on ridership and revenue. To date, the initiative is anticipated to be a revenue loss for the agency, especially with the discounted fares. However, the agency believes that a fare capping policy is the right thing to do, and their Board has been supportive of it. • Staff believe that RTA can maintain the loss operationally and financially in the short term. If the situation changes and the agency needs to revisit with a need to pursue significant options to preserve funding, then at that time they will have a reason to reevaluate their fares amidst other options. In the meantime, RTA is committed to capping fares under the current policy. • One metric RTA wants to track is what the average customer is saving per month as a result of fare capping. They also would like individual customers to be able to see what they can save, or are saving, thanks to fare capping. • The largest cost savings from upgrading their fare system has been the amount of labor necessary to support and maintain their previous fare boxes. The agency recognized that one thing they could control was how much they would need to maintain their fare system, and they wanted to ensure that the upgrade yielded a savings in that respect. Outreach and Education Staff noted that fare capping can be a difficult concept to introduce to customers at first, and that other incentives help to encourage riders to switch to a new system and become comfortable with using it. On top of discounted fares for Tapp Pay users, RTA has pursued other incentives to encourage adoption of the system. Currently, when riders create a new account, RTA will give them $15 in fare credit; if riders add $15 to their account within 30 days, RTA will credit them with another $15 in value. As a result, riders who create a Tapp Pay account can receive the equivalent of a month’s worth of free trips. This strategy aims to get people to sign up for Tapp Pay, but also to practice loading value onto their accounts and become familiar with the system so that they continue to use it. In addition, RTA is issuing $30 in fare credit to people who are fully vaccinated and use transit, with funding support from the State of Ohio. RTA also has promoted fare capping through engaging informational videos that explain fare capping and how it benefits fare equity (Figure 10). Looking Ahead Although smart cards offer many advantages over cash, the costs associated with them are fairly high, including the cost of the card media, as well as distribution to sales outlets. As a result, RTA would like to encourage more riders to use mobile fare payment instead. In the next year or so, RTA hopes that open payment using credit cards and digital wallets becomes possible and that fewer people will use a smart card. RTA plans to become a cashless system aboard all vehicles. As of this writing, about 23% of RTA riders use day passes, which can be substituted by daily fare capping, while 6% of riders pay for trips with cash. On July 1, 2021, RTA planned to no longer sell day passes aboard vehicles. RTA expected to stop accepting passes aboard vehicles on September 1, and on November 1,

Case Examples 29   the system planned to no longer accept cash payment aboard both fixed-route and paratransit vehicles. During a grace period, passengers who board mid-route and attempt to pay with cash will be allowed to board, but those who board at transit centers will be required to use official fare payment, since transit centers are access points where riders can load value onto their accounts and get a Tapp Pay card. RTA will deploy staff on bus routes with higher rates of cash payment to assist customers during the transition. The agency conducted a Title VI review and survey to support their decision to go cashless aboard all vehicles. Part of RTA’s vendor agreement is the potential ability to pay for things like bikeshare with a Tapp Pay account. In addition to making payment options more convenient for users, it also would address a key equity component by ensuring that users without a credit card or bank account could purchase bikeshare trips using their account value. RTA also would like to find a way to partner with companies like Uber and Lyft on account-based payment. Lessons Learned • RTA staff emphasized that the “why” is important when it comes to fare capping, and that it was important to have purposeful reasons for pursuing it. The most important motivator for introducing a fare capping policy was equity: staff recognized that those who were least able to pay for transit often ended up paying the most. But also important is that the agency was strategic about adopting fare capping, evaluating the many components, and pursuing it as part of a larger vision for the system. • Fare capping can be difficult for riders to understand at first, and there are only so many ways to explain how it works. It will take time for people to adjust to the system. Education and incentivizing the use of the new system are critical to ensuring that riders adopt it. • Better ongoing communication to riders about when their fare cap period ends and whether they need to reload value on their accounts is needed. Miami-Dade Transit Background Fare capping followed Miami-Dade Transit’s (MDT’s) adoption of open payment, accepting credit and debit cards for onboard fare payment. The open payment platform was unable to handle transfers well, which was particularly important in light of the MDT system’s network redesign in previous years that emphasized more transfers between routes. Fare capping also Figure 10. RTA video explaining fare capping and its benefits.

30 Fare Capping: Balancing Revenue and Equity Impacts was introduced as an incentive to get more people to use credit or debit cards and stored-value cards, and to get away from using day passes. As long as a day pass was more cost-effective than paying per trip with a credit or debit card, there would be little incentive to use a card instead of a day pass. MDT’s approach to introducing a daily fare cap has been that it is not a new fare type or product; rather, instead of selling a day pass to riders at the beginning of the day, they sell it to them later in the day instead if they need it. There has not been any challenge or necessity to make a business case for implementing fare capping. MDT recognized that fare capping would impact equity, providing a more affordable option for riders who cannot pay for the upfront cost of a monthly pass. However, the agency currently has several fare-relief programs that provide free or discounted rides to passengers. The State of Florida’s Transportation Disadvantage Program provides funding support for Golden Passport, which lets MDT riders who are age 65 and over, or have limited income, ride fare-free. MDT paratransit users and veterans also ride fare-free, while riders who make 150% to 200% of area median income ride for half fare. Program Design MDT caps fares on a daily basis. The adult single-ride fare for both Metrobus and Metrorail is $2.25, and fares are capped at $5.65, equivalent to the cost of a 1-day pass. Fares are capped on both Metrobus and Metrorail, which charge the same flat fare; with the introduction of fare capping, MDT anticipates eliminating the existing bus-rail transfer fee. Fares are not capped for paratransit trips. Open payment allows MDT riders to pay their fares using a credit or debit card or a digital wallet. Riders who use MDT’s EASY smart card also can have their fares capped without having to create an account, although they can register their cards to benefit from balance protection if a card is lost or stolen. Riders can add value to their EASY cards at train stations, retail locations, and online. MDT continues to accept cash on board, but riders who pay with cash cannot have their fares capped. Implementation Daily fare capping was first introduced in August 2019, when MDT launched contactless payment for riders paying with bank cards or digital wallets on rail only. Open payment (see Figure 11) was then rolled out on its bus system by January 2020 once vehicles were equipped with fare validators. However, fare payment was suspended in March 2020 due to the COVID-19 pandemic. During the pandemic, MDT has taken the time to perform the devel- opment and testing that allows fare capping as well as free transfers on its stored-value cards. Starting on June 1, 2021, with the reinstatement of transit fares on the MDT system, riders who use stored-value cards will also have capped fares. The agency has no plans to implement a fare cap for other time periods (e.g., monthly or weekly). Although it is possible to implement monthly capping with their open payment system, it would take significantly more development to make fare capping possible with stored-value cards, and providing a monthly cap for open payment users only would be inequitable. When Miami-Dade Transit Key Findings Year implemented: 2019 Purpose • Integrated fare system • Expand fare cap program beyond credit and debit card users • Market transit services Lessons learned • Understanding how riders use system helps inform daily versus monthly caps • Open payment reduces the liability of stored value cards • Fare capping helps market services, by making the system easier to use

Case Examples 31   considering a monthly cap, MDT analyzed their ridership and found that few riders use service more than 5 days per week. Based on the predominant ridership patterns and the pricing of the daily pass and monthly pass, MDT determined that the vast majority of riders would not spend much more than the equivalent of a monthly pass already. When previously looking at their monthly pass, MDT found that some people who do purchase a monthly pass barely use transit, but instead use it to get a monthly parking pass at Metrorail stations. In response to this, MDT plans to introduce a separate parking-only pass that would be priced comparable to the monthly transit pass, and those customers who value the parking but ride infrequently would benefit from daily fare capping instead of purchasing a separate monthly transit pass. Outreach and Education MDT suspended their fares at the beginning of the COVID-19 pandemic, and only reinstated fare collection as of June 1, 2021. As a result, MDT has taken the opportunity to promote using card payments in tandem with the reintroduction of fare payments. The agency has done marketing focused on contactless fare payment, and specific branding for its mobile fare payment app, GO Miami-Dade Transit. MDT also performed a campaign to promote smart cards by distributing cards preloaded with the equivalent value of a day pass. However, the agency has not done any specific outreach or marketing around its fare capping policy. Looking Ahead • While there are no plans to introduce a calendar month cap, there is interest in being able to offer a rolling monthly cap to offer more flexibility and convenience to customers. However, MDT’s current system is not equipped to do this. • MDT is interested in moving away from stored-value cards in the future. The existing stored-value cards leave MDT responsible for the balance on riders’ cards, with the potential for liability. Figure 11. MDT fare payment with open payment option.

32 Fare Capping: Balancing Revenue and Equity Impacts • MDT has tried to work with Transit app to incorporate MDT’s fare payment into the trip planning app. However, the community leans heavily toward Apple users, and MDT has not been able to get their fare payment system into the Apple native digital wallet. • Like many agencies, MDT would like to become a cashless system, but there are no immediate plans to do so. Some routes currently do not accept cash. Lessons Learned • Fare capping makes using transit much simpler for customers. Even during the testing experience, staff noted that it is easier to take advantage of short, but more convenient, transit trips if they know their daily total will be capped. • Off-the-shelf solutions are more appealing than customization to reduce complexity and cost. • Open payment provides lots of options, and may end up being less expensive overall. An open payment platform is also necessary to pursue Mobility as a Service (MaaS). C-TRAN Background Fare capping in the Portland, Oregon–Vancouver, Washington metro area was pursued as part of a larger effort to integrate and modernize transit fares across the region. The three systems serving the region— TriMet, C-TRAN, and Portland Streetcar—all offer different services and different fare prices, and each system previously had their own distinct fare media. The regional effort presented an opportunity to pursue a modernized fare system with significant upgrades in technology and operations. With the launch of the new Hop Fastpass regional fare system, fare capping (“Save as You Ride”) was introduced as one way to make the passenger experience more seamless and easier to use. Instead of researching and calculating the best possible fare across multiple systems, riders are automatically charged the best fare for their trip without worrying about how many trips they will take on the different services. Prior to pursuing the new fare system, C-TRAN also had been looking into alternatives for their monthly pass, and fare capping offered an opportunity to let riders earn the equivalent of a monthly pass in lieu of a separate fare product. Program Design The Hop System caps fares on a daily and monthly basis. Fare capping is only available to riders who use the Hop Fastpass card or mobile app (shown in Figure 12), and riders must create an account to take advantage of fare capping, whether they pay with the card or the app (an account is required to use the app). In addition to its fixed-route service, C-TRAN has Hop validators installed on paratransit vehicles, and fare capping is available on paratransit trips. Hop does not require users to have a credit card or bank account: they can add value to their accounts at retail outlets, ticket vending machines, or ticket offices using cash or credit/debit cards. C-TRAN still accepts cash fare payments on board, but those riders are not able to take advantage of fare capping. C-TRAN Key Findings Year implemented: 2017 Purpose • Integrate transit fares across multiple regional providers • Modernize fare payment system • Improve rider experience Lessons learned • Regional fare system has benefits for smaller and midsize systems • Anticipate costs associated with administration and data processing

Case Examples 33   TriMet primarily handles the backend administration of the fare system for all three services, including the collection of all electronic revenue from the system. Every month, TriMet issues a funds transfer to C-TRAN for their share of revenue. C-TRAN contributes a set monthly fee to offset the administration required by TriMet, which is automatically deducted from their monthly revenue transfer. Revenues are allocated to the participating agencies based on which service a passenger boards; whichever service or vehicle a passenger boards, that service receives the revenue from that fare. If a commuter takes a C-TRAN bus to and from work in Portland, the fares from both trips would be allocated to C-TRAN regardless of where the passenger boarded the C-TRAN vehicle. Any upcharges associated with transfers to other services are allocated to those services accordingly. The agencies considered other models for revenue sharing, but they would require additional time and staff to track and manage transactions and more sophisticated revenue shar- ing arrangements. Allocating revenue based on rides was simpler. Implementation Fare capping was introduced as part of the launch of the Hop Fastpass fare system in 2017 among C-TRAN, TriMet, and Portland Streetcar. C-TRAN’s board was enthusiastic about fare capping, particularly as a way to make service easier for riders to use. The agency would have liked to pursue fare capping sooner, but as a mid-sized transit system, the associated technology costs and staff support required were prohibitive. A regional effort made the new fare system upgrade feasible for C-TRAN and made it possible for the agency to offer fare capping to its riders. C-TRAN recently installed Hop readers on its paratransit vehicles, and paratransit trips are capped as well. Notably, the base fare for a paratransit trip is the same as fixed-route trips. Outcomes • After the introduction of fare capping, C-TRAN experienced an initial slight decline in revenue; the largest share of this loss was attributable to riders who used to purchase monthly passes but do not take enough rides to meet the monthly cap, costing C-TRAN the difference. There is also some revenue loss from capped fares on paratransit trips. • While there have been some slight increases in ridership, staff acknowledge that there are several factors that may affect it. Figure 12. Hop Fastpass mobile app.

34 Fare Capping: Balancing Revenue and Equity Impacts • There are operational costs to administer the system. These include credit card and process- ing fees and restocking Hop cards at vendors. Additional staff were needed to implement the new system, for backend and data processing as well as customer service and outreach. • Cash collection has gone down significantly on C-TRAN service since adopting the Hop System. Outreach and Education C-TRAN led a major public outreach and education effort around the launch of the Hop System. A large marketing campaign spread the word about the new system, but education was particularly important. The biggest issue for many people was how they would obtain fare media and ensure they could add value. In particular, C-TRAN aimed to ensure that older adults knew how to access and use the new fare media and how to reload value on their cards. C-TRAN built a strong on-street customer service team and travel trainer team that were able to engage directly with the public and orient them to the Hop System. The agency credits these efforts for the high—and relatively fast—rate of adoption by riders. Looking Ahead Hop member agencies are not currently able to accept open fare payment. Although this is a desirable future step for the Hop System, the high-level security upgrade that is necessary for onboard credit card payments was prohibitively expensive. Going cashless is a popular topic of discussion, but there is concern about the dispropor- tionate impact it would have on some riders. Staff noted that there are riders who can only afford to preload small values onto their cards at a time, but do not have the ability to frequently add value to their card, especially if it requires at least one trip just to reach a sales outlet. Lessons Learned • Staff recognize that, while fare capping does not necessarily have a significant benefit for a transit agency, it definitely benefits the rider. • There are a lot of costs, depending on the agency’s starting point and the kind of capabili- ties sought. In addition to upfront investment, there are costs associated with ongoing data processing, administration, and customer service capacity. • The regional approach has served C-TRAN well. If the agency operated a larger system, then fare capping and the investments that are necessary to implement it may have made sense, but the investment was less feasible for a mid-sized agency acting on its own. The Hop System made fare capping feasible for C-TRAN and has provided greater regional ben- efits to the agency and its riders. NFTA Metro Background Niagara Frontier Transportation Authority (NFTA Metro) plans to introduce fare capping as part of a larger fare system upgrade project, with the major motivation of reducing cash handling, no longer selling fare products on board, and moving to an account-based system. The agency is interested in fare capping specifically as a strategy to replace day passes, which currently constitute a significant share of fare payments. NFTA introduced day passes in the early 2000s as an alternative to the monthly pass with a lower upfront cost. NFTA later eliminated transfers, necessitating that riders pay a fare for each segment of a trip, which encouraged many cash riders to heavily use day passes. Operators sell day passes on board and validate them by

Case Examples 35   using a hole punch. The sale and validation of passes slows down service, and the passes raise security issues, given the high value of fare retail aboard the bus. In the aftermath of the COVID-19 pandemic, fare capping also will give some riders more flexibility if they are working remotely or not using transit as predictably as they were before the COVID-19 pandemic. Fare capping can help maximize the equitable nature by which cash passengers can realize their best value by only paying for the rides they take, while still capping at a maximum daily price. In terms of the upgraded fare system, a major benefit will be to reduce cash handling and onboard sales, which should improve operations, overhead costs, and security. Another significant benefit of a new fare collection system will be the availability of new data, which will provide much better information on ridership, revenue, trip patterns, and even rider characteristics to help inform NFTA decision making. Although not directly related to fare capping, additional data provides more infor- mation on how riders pay for and use the system, which is helpful when considering policy decisions around fares. Staff also hope that the new system will attract riders, by making it easy to tap on and take the bus, and even making it fun to use. Program Design NFTA planned to introduce fare capping as part of the launch of their new fare payment system in late summer to early fall 2021. Daily fare capping will be available to riders who use the new account-based system’s reloadable smart cards. Today, a single trip fare is $2; the daily cap will be $5, equivalent to the current cost of a day pass. Period passes (e.g., 7-day, 31-day) will still be available and can be added to an account. Although monthly capping has been a popular topic, it is unlikely the system would be set up for that in time for its launch. However, recent advances in fare capping methodology, and increased availability at other transit agencies, are driving a renewed interest in monthly capping sooner than originally envisioned. Riders do not need to register their smart cards to have their fares capped, but registration does allow riders to add value online and provides balance protection if a card is lost or stolen. Riders who pay reduced fare or paratransit fare need to set up their accounts accordingly for their cards to register the appropriate fare payment. Fare capping is also an important opportunity in lieu of transfers, both between bus routes and between bus and rail service. Several crosstown routes used to travel through downtown, but when the rail line was introduced, many of these routes were redesigned or discontinued, with the result of forcing more transfers. Rail stations do not currently have fare gates, with riders boarding using an honor system; as part of the new fare system, fare gates are being installed at rail stations where riders will need to tap in for the first time. Single-trip fare is the same for both bus and rail service. NFTA is implementing a network of 200 to 300 retail outlets where riders can add value to their accounts using cash or credit or debit cards. Riders also can add value and manage their accounts online. Implementation Fare capping will be just one benefit to result from a multi-year, multi-million-dollar effort to modernize the entire fare system. NFTA first issued a Request for Information in 2010 to NFTA Metro Key Findings Year implemented: 2021 Purpose • Reduce onboard transactions • Eliminate security concerns • Increase rider flexibility Lessons learned • Internal coordination requires dedicated staff • Implementation can take longer than expected, public outreach must be timed accordingly • Developing metrics at the outset will inform decision making and help measure revenue impacts

36 Fare Capping: Balancing Revenue and Equity Impacts learn more about the options for account-based fare systems and to develop a Request for Pro- posals. The idea of fare capping emerged during that process as an opportunity to offer riders a “best fare” rather than selling day passes on board. In 2015, NFTA selected Scheidt & Bachmann to develop their new fare system. The agency signed a merchant services agreement with Scheidt & Bachmann that will allow riders to use credit or debit cards to load value onto their cards, which is not currently possible with the current ticket vending machines. NFTA anticipated launching the new fare system in late summer or early fall 2021. As of July 2021, the full bus fleet is anticipated to be equipped with the new fare boxes, although the agency is still using a small amount of their existing Genfare system and fare media. The agency plans to maintain the existing fare structure as much as possible to ease the transition to the new system. Metrics will be gathered as fare capping is implemented, to assess the level to which fare capping is utilized by riders. The agency currently has an agreement with Token Transit where riders can buy NFTA fare products through their app and have them visually validated by operators when boarding the bus, light rail, and paratransit. Scheidt & Bachmann also has their own app, which generates a scannable QR code and can function like a tap card. Token Transit has proven popular with riders, but it currently cannot work like a tap card unless it can be connected to the new fare system. NFTA is working on a way to integrate them together. The fare system upgrade has proven to be a much broader effort that requires close coordi- nation with both front-facing and back-office departments, including finance, operations, customer service, marketing, and others. In addition, NFTA’s different modes and services have traditionally operated relatively independently from each other, but this process has resulted in authority-wide meetings and closer cooperation to make the system a reality. A dedicated Fare System Manager position was created for the purpose of coordinating and implementing the fare system modernization. Outcomes Although revenue implications have yet to be determined, NFTA has attempted to estimate the potential effect of the new fare system on revenue. The agency’s consultant estimated an additional cost of about 3% of passenger fares in fare revenue erosion from fees, interchange charges, and other items involved in implementing the new fare media. Some of that figure also is based on the switch to best value, where riders who would have purchased a day pass but not taken $5 worth of trips would now only pay for the trips they take. However, this erosion is expected to be offset by a significant anticipated reduction in the cost of cash handling, which currently consumes closer to 10% of passenger revenues. Other offsets will be attributable to a reduction of fare evasion on their light rail system, and projected ridership growth as it becomes easier to use and pay for rides on transit. As the new system and fare capping roll out, NFTA plans to measure as many impacts as possible, although staff recognize that with so many changes being implemented at once, it is difficult to isolate the impacts of fare capping from those of the other system changes. One metric they will look at is how many rides are “free” after riders pass their caps. There is interest in monthly capping, and staff hope that initial data will provide insight into the possibility, and value, of monthly capping as well. Outreach and Education NFTA has been conducting internal education among operators, customer service staff, and others so that they are familiar with the new system and will be able to assist riders.

Case Examples 37   The agency is currently developing a marketing campaign for the new system, but they are cautious about the timing of the rollout due to implementation delays and do not want to promote it too soon. Staff plan to do significant direct outreach in advance of the official launch, including pop-ups at rail stations and major hubs to sell fare media and distribute information to riders. This will be particularly important at rail stations, where riders will now need to tap into the system, and every rider who uses rail will need to have a fare card by the time the system officially launches. Staff are discussing the possibility of incentives as part of promoting the new system, but they want to balance this with consideration of their budget and mitigating any additional fare erosion. Looking Ahead NFTA is looking ahead to potentially implement a monthly fare cap in addition to the daily cap. The option to implement open payment is built into the vendor contract. Riders can already purchase fare media and load value using credit cards at ticket vending machines, but the ability for riders to use a credit card as tap fare media would be significant. The addition of open payments is already planned and budgeted for in the 5-year operating budget. IndyGo Background IndyGo’s primary motivations for fare capping are addressing fare equity and improving the overall customer experience of riding transit. Anecdotal and empirical evidence highlighted the equity impli- cations of its fare structure, revealing that the upfront cost of a 30-day pass was a major barrier for people who would otherwise benefit from the savings of a pass. Survey results revealed that many riders made “suboptimal” choices about their fare payment and pass choices given how often they used transit. For riders who could not afford a 30-day pass upfront and paid with cash, they might end up paying even more if they did not have exact change, paying $2 for a trip instead of the fare price of $1.75. With fare capping, many of those who could not afford the monthly pass and ended up paying more for trips on average may likely pay less per trip without the upfront cost burden of a regular pass. Fare capping is also just one part of IndyGo’s effort to modernize the fare system, which itself is part of a holistic, ongoing effort to redesign their system and make transit more user-friendly. Many of these redesign efforts, including the fare system modernization, were initiated under the agency’s Strategic Planning Department, which focuses on long-range planning and innovation projects. Fare modernization was critical to support other system improvement goals, from faster boarding with electronic fare payment to bus rapid transit service with offboard fare payment, and even rethink- ing fare structure and needs in light of a grid-focused system redesign that increased transfer opportunities. Implementation of a fare system upgrade presented IndyGo with the opportunity to introduce fare capping, which aligned with broader agency efforts and goals. IndyGo Key Findings Year implemented: 2019 Purpose • Equity • Modernize fares as part of long-term efforts to improve services • Become a more data-driven agency Lessons learned • Inexperienced vendor will delay implementation • Marketing and outreach have a huge impact on adoption of new fare program • Limited staff capacity also can impact success of program

38 Fare Capping: Balancing Revenue and Equity Impacts An additional benefit of the larger system upgrades is more data-driven decision making. With a modernized system and new fare media, the agency has more data about trips and travel patterns that can inform service and planning decisions, augmenting information from traditional sources like onboard surveys and ride-alongs. Program Design Fare capping is available to riders on IndyGo fixed-route services who use a MyKey smart card or the mobile app. IndyGo’s paratransit service is not part of the MyKey system and does not participate in fare capping. Daily fare capping is available to anyone using MyKey, with no account required. A single- trip fare costs $1.75, and daily fares are capped at $4, the same cost as a 1-day pass. Users must create an account to receive weekly fare capping. Weekly caps are applied based on a defined calendar week rather than a rolling basis. IndyGo does not offer a monthly cap, as it is simpler to offer the cap on a consistent weekly basis since calendar months vary in length. Today, the cost of a monthly pass is $63, while the weekly cap is $15.75. IndyGo will have a network of retail outlets where riders can add value to their accounts using cash as well as credit or debit cards, which is anticipated to be implemented next year. Implementation As part of their procurement process in 2018, IndyGo specifically required fare capping capability as part of their request for proposals. The agency sought a vendor who could support a full system, including equipment (validators, ticket vending machines), an account-based system, mobile ticketing, offboard fare payment, and fare capping. In February 2019, IndyGo adopted a new fare policy informed by an equity analysis that proposed fare capping and a 2-hour transfer. The 2-hour transfer was introduced recognizing that the new grid-based network would require more transfers for many riders. Under this policy, a rider’s first tap initiates a single paid trip that lasts for a 2-hour window with unlimited transfers. After that window ends, the next time they tap on will initiate a new paid trip and start a new 2-hour window. IndyGo also simplified some fare products when it adopted the new fare policy and eliminated some pass products that duplicated MyKey offerings, such as their 7-day pass. MyKey went live shortly before the COVID-19 pandemic began, at which point IndyGo suspended fare collection for several weeks. Different components of the MyKey system have been slow to come online, and a process that they thought would take a year is anticipated to take closer to 4 years. Although the system is live and is used by some rider groups, an official public launch date was not yet scheduled. Veterans and students use MyKey fare media for their respective pass programs, but those accounts are set as fare-free and thus do not make use of fare capping. IndyGo still operates their previous fare system in parallel with the MyKey system: its buses have both fare boxes and MyKey validators, and operators sell fare media onboard buses, including single-trip tickets and 1-day passes. It is still to be determined how long the two systems will continue to operate in parallel. Paratransit operates with a different fare system altogether and does not have MyKey validators installed on board. Outcomes Some finance staff and board members expressed concern about the potential impact of fare capping on the agency’s revenue. However, IndyGo is mindful that although they have a

Case Examples 39   responsibility as stewards of public dollars, they also have a responsibility to provide a service to their riders and the community. In IndyGo’s last comprehensive operations analysis, one recommendation was to deemphasize measuring service based on fare recovery ratio and highlight other ways to measure service success. Staff also note that IndyGo has a relatively healthy fare recovery ratio today, and that this may provide some room for a small revenue loss compared to what they could gain from the fare capping policy. The hope is that there will be more boardings, especially if more frequent service is provided. The outcome would be a more efficient system with a lower cost per trip. Outreach and Education Although MyKey went live in late 2019, IndyGo has done limited promotion of the system. As a result, general public adoption of MyKey to date is fairly low. In December 2020, IndyGo launched a webpage and a series of educational videos to teach riders about the MyKey system (see Figure 13). Figure 13. MyKey information on IndyGo’s website.

40 Fare Capping: Balancing Revenue and Equity Impacts Lessons Learned Staff emphasized the importance of thinking holistically, and of considering factors like network design and fare structure in tandem rather than in isolation. IndyGo wanted to pursue a host of modernization projects, and many of these were in progress at the same time. Although there was enthusiasm to move significant projects forward—from a network redesign to facility retrofits to new fare policy—there was not always sufficient staff capacity to move every effort forward. IndyGo’s fare system vendor was new to transit and had not worked with fare capping before. As a result, a lot of research and new development was required to build the system for IndyGo. This also contributed to delays in launching parts of the MyKey system. Fare validators and ticket vending machines for the MyKey system are proprietary, rather than off the shelf. Staff noted that this limits IndyGo’s flexibility in working with a vendor and is also more expensive, and recommend off-the-shelf solutions instead, when possible. For example, IndyGo’s paratransit vehicles have tablets on board rather than proprietary equipment to interface with their CAD/AVL and scheduling, and this has worked well. Summary The case examples included five agencies with varying goals, challenges, and approaches in their pursuit of fare capping. Some of the key similarities and differences discovered in the case examples are: • Fare capping is frequently implemented as part of larger fare system modernizations or technology upgrades, rather than a standalone policy change in isolation. These upgrades in technology are often what make fare capping feasible for many agencies. • Staff often cite equity as a primary motivator for pursuing fare caps, even in the face of potentially lower revenues, after anecdotal and empirical evidence showed that riders who can least afford transit fares end up paying the most. • Other goals of fare capping include reduced handling of cash and fare product sales on board, and ultimately making transit easier to use and more convenient for current and potential riders. • Since fare capping is often introduced in tandem with other changes, such as new fare media, a complete fare system overhaul, or major service changes, it is challenging to isolate its impacts on ridership, revenue, and other outcomes. • Education and outreach are important for promoting fare capping and explaining how it works. Special promotions, instructional videos, on-street customer service teams, and travel trainers have helped more people take advantage of fare capping, especially many riders who stand to benefit from it the most. • Off-the-shelf solutions are preferable over highly customized systems with propriety tech- nology and hardware. Interoperability of new systems is critical for long-term plans for open payment and Mobility as a Service (MaaS) solutions.

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Transit agencies in the United States are beginning to experiment with fare caps to ensure that passengers who pay for single rides do not pay more than multiple-ride passes included in their fare structure.

The TRB Transit Cooperative Research Program's TCRP Synthesis 160: Fare Capping: Balancing Revenue and Equity Impacts includes a review of the literature; a survey of 35 North American transit agencies that have recently considered implementing, are in the planning stages of implementing, or have implemented fare capping; and detailed case examples for five transit agencies that provide greater insight into the motivations, program designs, implementations, and lessons learned.

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