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Jack Horner

A peak surcharge on transit is conceptually similar to road congestion charges.

Road congestion charges attempt to force motorists to meet the external cost of their motoring (external aka spillover cost: a cost which my actions impose on you without compensation. When I enter a congested road I not only suffer delay but also increase the delay suffered by everyone else, without compensating them).

Road congestion charges improve economic efficiency by forcing more economically rational choices about where/when to drive in a way which reduces the considerable external costs of peak period motoring (whether you regard them as fair is another matter).

In the transit case, the public subsidy of the trip is a cost external to the rider. The peak traveller causes an above average externality cost by using a service with below average cost recovery.

Possible contrary argument: the externality cost of road congestion is greatest in peak hours, so the benefit of getting people onto transit at this time is greatest, so perhaps a lower financial cost recovery for transit at this time is tolerable for the sake of the benefit to remaining motorists of reduced congestion (ideally they would compensate the transit authority for this).

But this is a second best argument: it would not be needed if there are appropriate road congestion charges.

Alex B.

Good points, Jarrett.

I realize that you're trying to speak in general terms here, but I'd want to point out that Washington, DC's Metro already has a substantial difference between peak and non-peak fares. This isn't a question of going from a flat fare to a rush hour surcharge, it's a matter of making the difference between peak and non-peak even greater.

Off-peak fares vary based on distance, you pay either $1.45, 1.95, or 2.45.

Peak fares (M-F, opening-9:30 am, and from 3 pm-7 pm) vary based on distance between $1.75 and $4.60. They are not broken out into three discrete levels like the off-peak fares, your fare may increase by 5 or 10 cents for traveling one extra station down the line.

Sean N.

The argument to use peak fares to shift demand is an excellent one, IMHO. But here in Vancouver it's effective because "peak" fares aren't "peak" at all but are actually "weekday" fares, applying every weekday until 6:30PM. If Vancouver really wanted to spread demand out then they'd only apply peak fares during peak times, say 7-10AM and 3-6PM.


How does the peak fare interact with things like unlimited passes? If there's only one kind of unlimited pass, and it includes peak fares, then what you accomplish is moving occasional riders to the non-peaks.

Tom West

The other way of looking it is that you are offering adiscoutn to off-peak users. In your classic commuter-orientated system, stuffed peak horu buses provide enough revenue to off-set the lower income per revenue hour generally found on off-peak buses.

I've also seen student bus passes avilable in two types - a limited hours version designed to be able to get them to and from school (generally not valid weekday evenings, weekends or holidays) and a unlimited, more expensvie version that is valid any time.

In England, seniors get free bus travel - but only after the morning peak. On the British rail system, travelilng after 9am on a weekday allows you to use a cheaper ticket.


The trouble with peak fares is that it encourages people to drive, because peak fares increase the cost of public transit compared to the cost of driving. For peak fares to work, there also have to be peak road tolls, high parking fees or some other deterrent from driving to work.


I pretty much fall into this camp:

"so your formula that off-peak passengers are subsidizing the peak is not correct."

It's very difficult to come up with passenger numbers on a system that would support your contention that off-peak passengers are the subsidizERS rather than the subsidizEEs. Those empty buses or trains may cost slightly more in labor, but it can't possibly be THAT much more to make up for the bus/train being full in rush hour (i.e. hundreds of fares versus a handful of fares would more than make up for the cost of weird shifts and empty vehicles the other direction - this also ignores the fact that in many cities, reverse-commute peak vehicles are not all that crowded but still carrying more people than the off-peak vehicles are).


Also a point I forgot to make but just made over at Yonah's blog is that the individual incentives cannot be ignored; the off-peak passenger is more likely to be transit-dependent and paying a more discounted fare than is the peak passenger; you may, in fact, invoke the transit version of Laffer's Curve if you're not careful here (raise fares enough that your most lucrative customers go drive the car they doubtlessly have parked in their driveway).

Alon Levy

Anonymouse: some cities, for example Berlin, have cheaper passes that are valid only after 9 or 10 am.

M1EK: the principle about high costs reducing demand is called a demand curve, and has nothing to do with Laffer. For-profit companies compute demand curves all the time to figure out how to price their product. The difference with transit is that as a public service with positive externalities, it's priced below the profit-maximizing level.


A quote from the blog post:

"Transit ridership is determined by choices people make from among their available options. If transit is already much more attractive than the other available options (as is usually the case for commutes into a major CBD where motorists would face huge congestion and parking costs) the cruel facts of supply and demand argue that the fare for transit service in those situations can probably rise without much loss of ridership."

Does the argument stand up if there are not huge congestion and parking costs for driving? Or would people give up the bus in favour of the car at peak hours?


The idea of charging extra for peak trips only on inward trips in the morning and outward trips in the afternoon happens to be great for people like myself who live in the centre and often work in the suburbs.

To what extent would it further those incentives; making the city a more attractive place to live, and the train-station-based suburbs a more attractive place to locate your business. And if so, those "train suburbs" would attract more residents, and more activity/development in general.

It would make the rail system a more attractive thing to base you life around, in every direction.

Alon Levy

Off-topic: I want to commend you for putting a non-rhetorical question in your post title. More often than not, titles like "Should we do X?" or "is Y happening?" are just FUD or sotto voce.


Jack horner is right:
"A peak surcharge on transit is conceptually similar to road congestion charges"

bus fleet are sized according the peak surcharge not the average usage, so to accommodate the peak, you need to buy buses which gonna seat at the barn most of the time...

Peak surcharge is "yield management" or drive the demand toward the offer you have (rather try to match your offer to the demand)...

and yes people working after the other (janitorial services...) are actually double penalized:
-they work in time slot where public transit offer is usually poor, but still pay the full price of it...

I also believe peak pricing is not only a good management practice but accomplish also sort of social justice by providing lower fare for low income.

the idea of a reduced pass valid only after 9am or so is very great...

Jarrett at HumanTransit.org

I've added one paragraph of UPDATE reflecting key comments and questions in preceding comments.


Alon, yes, it's a demand curve, but we're also talking about an aggregate amount of revenue here, in which it's probably more useful to use an example that shows a similar change in aggregate revenues.


First, of course they should be higher, but also, of course it should not be labelled as a peak hour surcharge.

Rather, in the context of a general fare increase (all too common nowadays), it should be labelled as an off-peak discount.

What Yonah has done is get caught up in a semantic confusion. Of course mass transit in particular does relatively better at catering to peak hour congestion in terms of both direct and indirect (square feet required per rail passenger versus square feet required per bus or car passenger) ... but that is a relative not an absolute comparison.

"Doing better" means that full cost increases for mass transit and full cost increases by a much higher amount for cars during peak hour.

The off-peak discount in Sydney is that a round trip ticket bought in off-peak hours cost 120% of the one way ticket. For a low marginal cost of operation system with very high up-front capital costs for expansion, that is a quite reasonable peak/offpeak fare structure.

Also note that this kind of fare structure for the mass transit backbone of an integrated transport system is also good for the complementary bus system, with transfer bus passengers being spread out more evenly between the center of the peak and the shoulders by those with more flexible schedules targeting the start of the off-peak discount period.

david vartanoff

I may be the lone voice here, but applying "yield management" or any of its cousins to public transit is just wrong on its face. First, the surcharges mostly cheat the lowest wage riders who cannot choose when to appear at work, and are least likely to default back to car use. Secondly, in this instance (and many others nation wide) the transit agency is being denied previously agreed funding from one or more revenue streams. WMATA is in the same bind as Caltrain and many others; ridership is high but the funding, often based on volatile taxes, has shrunk leaving them unable to serve the market they have created. Pushing riders back to cars is not a path to reducing GHGs or energy conservation. In WMATA's case, the saddest part is that after three decades, they haved become so successful that poor original design and inadequate fleet are crippling their throughput.

Alon Levy

David, low-income workers often work in shifts other than 9-5.

Sean T Hedgpeth

This is a debate that needs to be heard. I think that a surcharge on peak service is the wrong way to phrase to a public hit with massive fare hikes and service cuts. Instead, midday service fares should be 'frozen' when other fares go up. The one way bias could also be fixed by providing a few stops of service in reverse commute, possibly qualifying for JARC funds.
That being said, I do not think that express peak service should cost more, its cheaper to run than local. I think one of the reasons peak service is so expensive is that the buses get stuck in traffic, while the express bus can pass by. More bus only lanes and am/pm towaway zones need to be implemented.

Jarrett at HumanTransit.org

The following comment was received from Ari, http://amateurplanner.blogspot.com

My dad tells me about "Dime Time" which Boston ran in the 1970s. The T dropped the fare—which was 25¢—to just a dime between 10 a.m. and 1 p.m. He said his office at Volpe in Cambridge would frequently decamp to the North End for pizza, but it never sounded like they worked too hard there. This was, of course, before most commuters started using unlimited use monthly passes for which the marginal cost of a midday trip is zero. I think BART and WMATA are the only major systems which charge solely per-trip.

Oh, boy, there's actually some stuff on the Interwebs about Dime Time. I smell a post coming. (Long and short of it: it didn't cause many lapsed riders to come back to the system but did get a lot of existing riders to shift their trips.)

Alon Levy

Singapore charges solely per-trip. Shanghai does, too, but if you have a multi-ride ticket, you get a 10% discount after having taken a certain number of trips in one calendar month. The MTR offers a day pass but prices it for tourists only. And none of those three systems has separate peak and off-peak fares.

But Shanghai might find it useful to congestion-price Line 1. Or just build the relief lines to connect to the rest of the system better.


The other way to frame a differential price-scheme is to say that off-peak fares are lower than peak fares. LA's Metro essentially does this for their senior/disabled pricing. The base fare for seniors is listed as $.55 (compared to $1.25 for regular riders) but this is technically the peak fare, only charged between 5-9 am and 3-7 pm. The rest of the day (16 hours) senior passengers are only charged $.25. In practice this means that senior passengers often delay their trips until after 9 am.

Chris Stefan

King County Metro started charging higher peak (5AM to 9AM, 3PM to 7PM) in the 90's rather than impose a general fare increase. They've kept the peak/off-peak distinction since then with the additional modification of removing the zone charges off-peak. Since the surcharges haven't changed since they were imposed the relative difference between peak and off peak fares is much less than it used to be when the peak charge was first imposed.

Note that the peak fares apply to all King County Metro routes during "peak hour". King County Metro also doesn't impose surcharges for commuter express routes.

This doesn't seem to have hurt ridership at all as the transit mode share, particularly for CBD commutes is relatively high.

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