CHAPTER 5

Policy Goals Guiding Tool Development

In general, research has shown that fare-free transit services (full and partial) can successfully address policy goals. Cost savings are possible, but the potential also exists for a net cost increase (particularly if the transit agency operates paratransit services) and loss of revenue (beyond the loss of fare revenues). Additional funding will likely be needed to address the net cost increase or loss of revenue and its impact on operations and capital replacements. Full and partial fare-free transit services can have a mix of positive and negative impacts on equity, operations, passenger comfort, security, and operator job satisfaction. Fare-free transit services typically result in increased ridership; the magnitude of these increases may be affected by factors such as the fare policies of other transit operators in or adjacent to the service area and the impacts of reduced revenues on service levels and capital investments. This chapter describes the policy goals for fare-free transit operations that guided the research team in developing the practitioners’ tool.

5.1 Improve Transportation Equity

Fare-free transit service eliminates a financial barrier, especially for unbanked and low-income passengers. Generally, removing financial barriers to the use of transit systems will increase access to the service and, by extension, the ability of community members to access jobs and other destinations. However, if the loss of fare revenues ultimately results in service cuts or delayed capital investments, unbanked and low-income passengers might experience adverse impacts of a different kind.

5.2 Improve Operations

Eliminating the need to collect fares can reduce passenger loading times and associated dwell times. Reduced dwell times may lead to shorter travel times and more reliable service. However, if passenger loads increase to a point at which overcrowding regularly occurs, such overcrowding might increase the amount of time that passengers need to maneuver onboard the transit vehicle. More time might be needed at transit stops to ensure that passengers who wish to alight have enough time to make their way to the door of the vehicle. In addition, overcrowding can have an adverse impact on passenger comfort. Additional information on the benefits of other transit service operational improvements is presented in TCRP Report 95: Traveler Response to Transportation System Changes Handbook (Pratt, 2013) and TCRP Research Report 231: Recent Decline in Public Transportation Ridership: Analysis, Causes, and Responses (Watkins et al., 2022).

5.3 Improve Operator Working Conditions

Eliminating the need to collect fares can also simplify operator tasks and eliminate fare disputes, which can improve the working environment for operators. However, if fare-free transit

services increase altercations between riders or increase the number of disruptive passengers, operators may be tasked with managing a greater number of altercations and disruptions. Applicability to partial fare-free operations must be carefully considered, particularly in the case of socially defined programs. Establishing sound policies regarding all-day riders and allowable behaviors supported by the presence of supervisors and other transit personnel as needed (particularly in the early phases of implementation) can help ensure success.

5.4 Improve Passenger Experiences

Eliminating the need to collect fares can simplify the use of the transit system and allow passengers to use it without financial cost. However, some agencies that have implemented fare-free transit have reported increased ridership of disruptive riders and increased altercations between riders; either situation can increase passenger discomfort and contribute to the perception that transit is less safe/secure.

5.5 Increase Ridership

Research has shown that fare-free transit services can increase ridership, particularly among unbanked and low-income community members. Ridership increases may potentially be limited by the fare policies of other transit operators in or adjacent to the service area, service cuts resulting from reduced funding, and capital improvements delayed due to reduced funding (e.g., deferred vehicle replacement). Be aware that increased ridership of paratransit services resulting from fare-free transit service implementation can have a significant adverse impact on operating costs.

5.6 Decrease Costs

Cost increases must be carefully monitored. Cost increases can result from additional services to address overcrowding, security requirements associated with real or perceived risks, and additional paratransit services to meet the latent demand for service previously limited by fares.

The fare collection process can range from a simple farebox accepting cash only to a very complex payment system with different fare media and ticket sales equipment. Any cash taken in must be counted by multiple personnel, security services are required to transfer cash to the bank, and the equipment must be purchased and maintained. Eliminating these costs associated with fare collection can be a positive benefit.

5.7 Minimize Effects to/from Adjacent Systems

Fare decisions are not made in a vacuum—the policies of other regional entities (potentially in another state) can affect the effectiveness of the local fare-free policy implementation. Regional systems that may be jointly operated but have different fare policies provide challenges for transfer riders and fleet utilization practices.

5.8 Replace Lost Revenue

With the exception of some rural transit agencies and transit agencies with large funding partners (e.g., universities or entertainment districts), state DOTs or transit agencies that are considering fare-free transit services will need to plan to replace all or part of their lost revenue. This requirement is particularly true for larger agencies. Care should be taken to consider the continued participation by funding partners if the system becomes fare free. What may have been

sold as a cost-savings measure (e.g., employer discount) with fares may not be attractive if no one else is paying for the service.

5.9 Anticipate Other Potential Challenges

To the extent possible, potential challenges should be anticipated and addressed early in the process of considering or implementing fare-free transit services. Such challenges include the following:

• Bond debt covenants linked to fares: If the debt is assumed to fund a capital project, the debt instruments may have pledged the fare revenue (in some cases, before operations are funded). Forgoing this pledged revenue stream may violate the agency’s fiduciary obligations.
• Funding designations: In any organization supported by federal funds, the source of the money can be an issue. Fare revenue is almost universally available for use as local funds to meet matching requirements. In this case, the funds must not only be replaced but must also be replaced with funds that can be used in the same manner.
• Policymaker support: Agency outreach participants consistently identified the need for a leader or champion in the discussion of fare-free transit services. Transit agencies should anticipate political turnover, the loss of an election, or even the loss of interest at a crucial juncture.
• Nonemergency medical transportation reimbursements: Transit agencies that provide these services should carefully review the reimbursement language in the agreement. Lowering fares to zero may lower the allowed reimbursement.
• Mode- or project-specific fare recovery metrics: Some projects have policy requirements for meeting a specific level of fare recovery. Fare-free transit services make this metric meaningless.

5.10 Improve Safety/Security Perceptions

A transit service that is viewed as being unsafe will be challenged to sustain and build ridership. Fare-free transit services universally raise questions about increased all-day and disruptive passengers. These issues are not new to transit but can be affected by a change in fare policy. While this issue did not manifest for many agencies (particularly smaller agencies), clear steps should be taken to mitigate the potential impacts before fare-free service is implemented (if possible). Successful agencies have followed two steps: (1) develop clearly stated policies requiring passengers to disembark at the end of the line and (2) use security personnel in the appropriate manner, escalating to law enforcement only when required. Having additional supervisory personnel on vehicles to remind passengers of the policies and to provide an authoritative presence is most important at service commencement.

5.11 Increase Mode Shift

A transit system’s foundational goal is to decrease the use of personal vehicles by shifting those trips to transit services. Fewer vehicle trips have a positive impact on the environment by reducing emissions and congestion. Although fare-free transit services typically increase ridership, this increase is predominantly attributable to existing transit riders taking more trips rather than to new riders. Existing riders importantly benefit from the improved quality of life and accessibility provided by these services. However, assumptions about fare-free transit services generating large emissions savings must be carefully considered. If this aspect is key to success, the marketing plan and system design must include elements that will make this mode shift a reality (Loder et al., 2023).