Background Note
From:
Tass Larsen, Manager Projects and Planning
Date:
June 2013
Subject:
Tertiary student concessions – background information
Update of previous advice
Tertiary travel within Wellington
There is very little accurate data around current public transport usage in Wellington by tertiary
students, as they don’t currently have a fare product that we can report on. There are approximately
22,000 full time and 4,500 part time students at Victoria and Massey Universities in Wellington who
currently pay adult fares to use public transport.
The following information is based on information from the Victoria University transport study
carried out in 2007 for their transport plan which gave figures for the percentage of students
travelling to University by bus, rail, car or walking. The financial modelling of introducing a tertiary
fare is based on the following assumptions:
• around 22% of students travel by rail and 26% by bus.
• each student using public transport takes 8 single trips per week
• students attend university for 75% of the year.
An approximate estimate of the number of rail and bus trips undertaken per year by tertiary students
has been made by the modelling team as:
• 1.6m student rail trips each year (15% of all rail trips)
• 1.8m student bus trips (7% of all bus trips).
Overall, tertiary travel represents around 10% of all PT trips within the region.
In order to estimate the impact that reducing tertiary fares might have upon both demand and
patronage, elasticities of -0.25 and -0.4 were applied to tertiary rail and bus trips respectively. Using
these proportions as an approximation of the use of public transport by all tertiary students, then the
following table shows change to the general fares are required to maintain current revenue, and the
potential overall reduction in revenue if general fares are not altered.
Increase to current adult
Estimated change in
Approximate
Potential tertiary
fares for revenue neutral
tertiary student
reduction in revenue if
student discount
scenario
patronage
no adult fare increase
25%
3%
7%
$1.5m
33%
4%
10%
$2.0 m
50%
7%
14%
$4.0m
Off peak fare
Off peak fares may be an alternative to providing a tertiary student discount. Victoria University
indicated that an off peak fare was preferable to a concession for under 20 year olds as many first
years students live in halls of residence which are within walking distance of the university
campuses.
The patronage and revenue impacts of an off peak fare at all times outside the morning and
afternoon peak periods have been modelled. In addition, two options have been modelled to assess
how an off peak differential is generated, either that
• peak fares were increased to create the differential for a revenue neutral scenario, or
• the off peak fares were discounted from the current fare.
Using fare elasticities of -0.3 in the morning peak and -0.5 in the inter-peak the impact on patronage
for each of the options is shown below:
Modelled peak
Estimated increase
Approximate
Peak / off
Estimated increase in
fare increase for
in patronage for
reduction in
peak
patronage if no peak
revenue neutral
revenue neutral
revenue if no peak
differential
fare increase
scenario
scenario
fare increase
Bus
Rail
Bus
Rail
25%
8%
3.6%
-0.5%
$4.5m
6.4%
0%
50%
21%
5.5%
-0.8%
$12.0m
12.8%
2.9%
It is important to note that the modelling shows revenue impact to the complete system. In the
current contracting environment, both the revenue neutral and peak fare increase scenarios have
potential financial consequences for the Council, as the gains / losses are shared unequally by the
Council and the operators. This would impact on the timing of any discount – to be affordable, a
discount would need to be negotiated with operators, or introduced under the new contacts.
Assuming the current NZTA financial assistance rates and mix of gross and net contracts, the
financial impact of a 25% differential is estimated to be equivalent to be around 4% on the regional
rates if the peak fare remains at current levels. For a larger 50% differential with no peak fare
increase, the impact on the regional rates would increase to around 8.5% (indicative figures only).
Auckland Tertiary Concession
Prior to 2008, Auckland had a tertiary discount of 20% off the cash fare (equivalent to 11% off
multi-trip). The discount is funded by reimbursement from Auckland Transport to operators in the
same way as child fares. Use was approx 1.5 million trips per year.
In 2008, the discount was increased to 40% off (equivalent to 33% off the multi-trip fare), and made
easier to access, available for more of the year, and aggressively marketed as part of the travel plan
process. 40% was chosen to be consistent with the child fare.
• At the time it was announced, the NZ Herald reported it was expected to have an annual
subsidy cost of $1.1 million, and lead to an additional 250,000 trips a year ie 1.75 million
total.
• After 2.5 years, take up was 4.3 million trips (ie an increase of 2.8 million trips) for the 12
months to June 2010. This was 7.2% of the total patronage in Auckland.
In 2012 Auckland Transport reduced the discount to 38%. In June 2013 Auckland Transport
announced a further reduction to 35%.
Auckland Transport has announced it will review all concession levels and eligibility after
integrated ticketing is implemented, specifically including a possible change to the SuperGold card
discount in the afternoon peak, and a review of tertiary discounts and eligibility. At a minimum for
tertiary fares this is likely to involve tightening up eligibility and enforcement.
Availability of tertiary student concessions around New Zealand
The following is based on fare information available on the web.
Region
Tertiary concession
Description
Bay of
Yes in some towns; varies across Murupara and Tauranga: 40% discount
Plenty
the region
Rotorua: None
Te Puke: 33% discount
Horizons
Yes – with subsidy by UCOL
UCOL and Massey staff and students have free
and Massey Universities
bus travel within Palmerston North and
Wanganui
Auckland
Yes – on most services
Reported as 35% discount from equivalent adult
cash fare, not listed online
Taranaki
Yes – New Plymouth only
25% discount on adult cash fare; 33% discount
on smart card fare within New Plymouth only
Hawkes Bay
Yes
Tertiary students eligible for 33% discount from
adult cash or smart card fare.
Tasman /
Yes
$0.50 discount from adult cash fare (equivalent
Nelson
to between a 12.5% and 20% discount)
$1.50 to $0.50 on 10 trip cost of $20 to $32
(equivalent to between a 1.5% and 7% discount)
Otago
No concession funded by ORC.
Operator concession available only on weekly or
Operator concession on one
monthly pass with 33% and 38% discount from
route (Forth Street to Concord)
multi-trip fare.
Canterbury
No
Gisborne
No
Marlborough No
Northland
No
Southland
No
Waikato
No
Wellington
No GWRC funded concession
East by West Ferry provide a 20-30% discount
Operator concessions on Cable
Cable Car – students receive the same fares as
Car and Ferry, university
children, a 38-48% discount on the adult fare
subsidised trips between
Kelburn and downtown campus
