University of California Transportation Center

Many transit agencies, faced with budget shortfalls, must consider increasing fares. In this paper we analyze the case of the Alameda-Contra Costa Transit District (AC Transit). In March 2005, AC Transit put forth five alternative fare proposals for public discussion. The proposed fare structures included combinations of fare hikes, base fare reductions, eliminations of free transfers, and discontinuation of periodic passes. Using data from the agency’s 2002 on-board survey, we assessed the impacts of the various fare proposals on different subsets of riders and evaluated the equity of each proposal. We also estimated the fare revenues resulting from each proposal, using alternative estimations of price elasticity to estimate changes in ridership due to changes in price. The analysis reveals that fare policies that increase the cost of transfers or eliminate unlimited-use passes produce dramatically unequal impacts on various groups of patrons. Proposals for flat fares per ride were found to be the least equitable of the fare policies, even when the base fare was lowered, because lower income riders, youth, and minorities make more trips and transfer more frequently than their more affluent counterparts. Proposals that maintained existing pass instruments and allowed transfers for small fees were the most favorable. The case study demonstrates the utility of on-board transit survey data in analyzing the effects of proposed fare changes and illustrates an approach that could be used by other transit agencies to evaluate fare options.