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Subsidized fares

What are they?

Subsidized public transit fares View definition aim to provide all citizens with greater mobility, regardless of their personal status or income. Generally-speaking, it is a way to achieve social equity View definition , by offering fare discounts for certain categories of individuals. It makes accessing public transit easier and encourages the social integration of all citizens, particularly by providing access to the job market, education, services and leisure activities. Subsidized fares can include discounts for full-time students, seniors or low-income earners. The expression “subsidized fares” is sometimes replaced by “income-based fares”, a term more often used to designate subsidized fares based solely on revenue.

Subsidized fares have sparked considerable interest in the metropolitan area of Montréal, where an increasing number of stakeholders are starting to wonder how to grant fare discounts to different categories of people. This issue is of particular relevance to the Communauté métropolitaine de Montréal (CMM), which plans to establish guidelines and expectations on this topic as part of the fare reform undertaken by the ARTM.

The fare reform exercise offers an ideal opportunity to establish a vision on subsidized fares for the metropolitan area. As well, other means such as fare discounts, including forms of financial assistance, could be considered to provide low-income earners with easier access to public transit.

Current situation in the metropolitan area

The current fare structure provides for fare discounts based on age and personal status. Eligibility criteria, discount level, operationalization and funding of costs vary throughout the metropolitan area, especially according to the territory covered by public transit agencies. Some specific programs, outside of the fare structure, are also used. Most often, they entail free passes for certain categories of people based on their personal status or income level, for trips made within their municipality all day or at certain times of the day.

Given this array of practices, we need to consider the goals pursued by each stakeholder and try to harmonize them, especially with regard to the category of people targeted and the different types of discounts offered.

Challenges to introducing subsidized fares

The fare reform that the ARTM will be undertaking over the next few months must evaluate the financial impact of changes to the amount of revenue from fare services. Because this involves providing greater fare discounts to a certain category of riders, funding and implementing subsidized fares are some of the challenges to implementing it. For this reason, a broader discussion across the metropolitan area needs to take place. We have included some elements to consider below:

Parameters of the fare structure

The following is a description of the goals, categories of targeted riders and discount levels proposed.

Goals

Consensus has been reached on the fact that public transit fares must meet goals that sometimes appear contradictory: fund public transit services or encourage accessibility for everyone by providing lower fares for certain riders.

Obviously, the issue not that simple and the challenge becomes balancing costs of services and transit fares, retaining current customers and attracting new customers.

“Affordable fares for all citizens” is one of the ARTM’s guiding principles.

Targeted clients

Identifying customers eligible for subsidized fares may be based on a person’s status or income.

Identifying categories of customers eligible for subsidized fares will be an important step in the upcoming evaluation, especially because of the financial impact of the approved reductions.

Discount levels

The current fare structure includes three fare categories; that is “regular”, “student” and “reduced”, which do not take level of income into account.

Currently, none of these fares vary according to income. Discounts are offered to retain current customers and attract new ones, while balancing revenues and costs.

The online panel survey conducted among 3,565 residents in the metropolitan area gave us a preliminary idea of what the population thinks of different fare options.

Public opinion on reduced fares

Reduced fares for families
62%
Reduced fares for low-income earners
63%
Reduced fares for specific categories of people (seeking employment, with disabilities, etc.)
58%
Reduced fares for students
74%
Reduced fares for seniors
73%
Reduced fares for families
63%
Reduced fares for low-income earners
58%
Reduced fares for specific categories of people (seeking employment, with disabilities, etc.)
54%
Reduced fares for students
74%
Reduced fares for seniors
73%

PUBLIC TRANSIT RIDERS: Respondent who has taken the métro, bus or train at a frequency of at least once a month over the past 12 months

PEOPLE WHO DO NOT TAKE PUBLIC TRANSIT: Respondent who has taken the métro, bus or train at a frequency of less than once a month over the past 12 months

What other cities are doing

Different subsidized fare models are being used in many major world cities, which we have outlined below. It would be difficult to model our entire fare system on these programs because they contain a number of different variables specific to each area. However, these models can serve as inspiration for fare reform in the Montréal metropolitan area.

Calgary : Low Income Monthly Pass | Low Income Seniors Yearly Pass

Objectives

The program aims to remove financial barriers for Calgary citizens so that they can easily integrate into the community.

Targeted clientele

Customers who do not fall into the regular student and senior categories; clients are divided into eight categories of households, according to three categories of income.

Discount levels

Three fare levels are proposed based on income and size of household. The minimum discount is 50% and can go up 95% off the regular monthly fare.

Gatineau/STO : ECHO (Equity Community Choice Mobility)

Objectives

ECHO allows families below the income cut-off to take advantage of a discount on regular fares.

Targeted clientele

The ECHO program is for people from 16 to 64 whose family income is below the low-income cut-off as defined by the Government of Canada. It is open to new immigrants (less than 12 months in the area) as well as Gatineau residents.

The program is based on income for the preceding year.

Discount levels

The fare for a yearly pass for low-income seniors is reduced by about 85%.

A discount of more than 30% is offered on the regular fare for monthly packages and the “e-wallet”.

Île-de-France Mobilités : Solidarité Transport

Objectives

The program makes getting around easier and unites all stakeholders to improve mobility. Given that mobility is a fundamental right, the Région Île-de-France and Île-de-France Mobilités have decided to reduce fares for lower-income households

Targeted clientele

Solidarité Transport is offered based on a person’s status (people eligible for “revenu de solidarité active” [RSA] or “active solidarity income”), unemployed individuals, different social assistance recipients). Household members who receive social assistance can also take advantage of fare discounts.

Discount levels

Recipients receive a free pass or, based on their situation, a 50% or 75% discount off the regular fare.

Free passes or reduced passes last from 1 to 12 months.

Londres : Jobcentre Plus Travel | Discount Card | Freedom Pass

Objectives

These passes make it easier for people looking for jobs, people with disabilities and older customers to travel.

Targeted clientele

These programs target seniors, individuals with reduced mobility and people seeking employment.

Discount levels

Recipients can benefit from a free pass or, based on their situation, 50% off a regular pass. The Jobcentre Plus Travel Discount Card is valid for three months.

Toronto/TTC : Fair Pass Discount

Objectives

This model aims to test subsidized fares in multiple phases in order to evaluate its impact on access to mobility and the cost of this approach.

Targeted clientele

Recipients of the Ontario Disability Support Program or the Ontario Works program can obtain a discount off “regular adult” (first phase) fares.

The following phases of the program aim to reduce fares for other individuals who receive social assistance and low-income earners in Toronto.

Discount levels

Eligible individuals can take advantage of a reduced monthly pass or single-trip fares. Monthly fares are reduced by 20%, and single-ride fares by more than 30%.

Funding for subsidized fares

Public transit is, in part, a for-profit public service. If it is not for profit, it is subject to financial constraints. According to the Gouvernement du Québec’s Policy for the Funding of Public Services, public transit is a mixed-goods service that creates public benefits for the entire community as well as private benefits for each rider. This mixed characteristic is endorsed in the ARTM Funding Policy, which was approved by the Communauté métropolitaine de Montréal (CMM). It sets the level of funding for public transit from riders at 31%. Concretely, this means that public transit cannot be entirely free and it must, in part, be self-financing.

To conduct a feasibility study of one or more subsidized fare models, a number of elements must be considered, particularly fare revenue loss, the potential increase in fraud risk or even increased levels of service to meet growing ridership. It is also important to evaluate costs related to administering the subsidized fare program, including managing the eligibility process, overseeing distribution channels and communicating with the public.

The assessment study also calls for examining funding strategies and sources for subsidized fares.

Read our
sections

Subsidized public transit fares

Definition

Two types of fare programs:

  • Based on a person’s income.
  • Based on a person’s age or status (student, unemployed, senior, youth).

Social equity

Definition

A concept that applies to distributing resources so that everyone can enjoy equal benefits. In public transit, this means providing conditions so that everyone can use public transit in a fair and reasonable manner.

Question 1 / 1

In your view, which group listed below should benefit from reduced tariffs?

54.9%
11.3%
2.8%
5.6%
25.4%
Done