This is an HTML version of an attachment to the Official Information request 'Advice on the cost of a proposed student bus fare'.

 
 
Report 13.104 
Date 
6 May 2013 
File TD/07/09/04 
Committee  
Council 
Author 
Tass Larsen, Manager, Projects and Planning 
Fare Structure Review 
1. Purpose 
To present to the Council: 
  The principles used to evaluate the various options for the fare components 
considered in the Fare Structure Review 
  The options recommended for further development prior to public 
consultation. 
A detailed report outlining the options for the structure, products, and 
concessions that have been considered, along with analysis, assessment, and 
estimated impacts on revenue and patronage is available on the Council’s 
website. 
2. 
The decision-making process and significance 
The matters requiring decision in this report have been considered by officers 
against the requirements of Part 6 of the Local Government Act 2002. 
The subject matter of this report is part of a decision-making process that will 
lead to the Council making a decision of medium significance within the 
meaning of the Local Government Act 2002. Officers advise that there is no 
process explicitly set out in the Local Government Act 2002 or any other 
enactment for making the decisions anticipated by this report.   
This report assesses various options against the Fare Structure principles, and 
recommends options for inclusion in the future Fare Structure. Further detailed 
analysis will be undertaken to confirm that the proposed Fare Structure is 
financially viable.   
Following the further analysis, consultation on the proposed Fare Structure will 
occur through the next review of the Regional Public Transport Plan (RPTP).  
It is anticipated that detailed analysis around the preferred smart card products 
and how transfers are dealt with will be further refined through the integrated 
fares and ticketing project. 

Officers consider that, in light of their assessment of significance, more 
intensive assessment is not warranted for the purpose of identifying the 
Preferred Option. Further detailed analysis, modelling and pre-market and 
customer behavioural testing with users and potential users will occur prior to 
final decisions.  
2.1 
Community views and preferences 
Community feedback on the current Fare Structure and potential changes has 
been sought through:  
  Formal consultation feedback (Report 12.462)  
  A discussion forum for public transport users, advocates and residents 
groups on the issues around any change to the public transport fare 
structure  
  Focus groups around the relative perceived value for money of public 
transport in the region  
  A Reference Group comprising representatives from the public transport 
operators, the Council and the community.   
A summary of the community feedback is included in Attachment 1
Public consultation on the Preferred Option for the future Fare Structure is 
proposed to be undertaken as part of the consultation on the Regional Public 
Transport Plan in 2013/14.   
3. 
Evaluation of options 
An evaluation of the options considered as part of the Fare Structure Review 
has been completed. This was undertaken as three streams of work: 
1.  Consulting with the stakeholders and the community as outlined above in 
section 2.1. 
2.  Learning through review of literature and international case studies of Fare 
Structures in cities around the world.  
3.  Analysing the options including modelling the patronage and revenue 
impacts of the various options. 
The Public Transport Fare Structure Review – Exploration of Options Report 
summarises the results of these three streams of work.   
The initial assessment of the options for each component of the Fare Structure 
(i.e. structure, products and concessions) was carried out against review criteria 
agreed by the Economic Wellbeing Committee in April 2012 (Report 12.151).  
Feedback from consultation and initial modelling work on concessions and off 
peak fares was reported to the Committee in October 2012 (Report 12.462).   
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The review criteria distinguished between structure options, but did not clearly 
differentiate between options for products and concessions. As a result, a set of 
seven principles have been developed to guide decision making on the 
preferred option for the future Fare Structure based on the objectives of the 
Fare Structure Review and the objectives and policies of the Regional Land 
Transport Strategy and RPTP.   
Once the Preferred Option for the Fare Structure is agreed by the Council, 
further detailed financial analysis, pre-market and customer behavioural testing 
with users and potential users will be undertaken prior to consultation as part of 
the RPTP process in 2013/14.  
4. Guiding 
principles 
 
The principles outlined below set the framework by which the various components 
of the fare structure have been assessed in this report.  These are: 
Principle 1: Continuing affordability of fares. Affordability of public 
transport fares, particularly when compared to private vehicle use and the 
general cost of living, is a key component of retaining existing users and 
attracting new ones.   
Principle 2: Increasing patronage. Increasing public transport patronage is a 
key outcome in the RPTP. Increased fare revenue, decongestion and liveable 
cities are the key benefits of increased public transport usage. Patronage levels 
change in response to a range of factors such as public transport service levels, 
service reliability, the relative affordability of fares compared to other transport 
options, levels of car ownership, and petrol prices. The most relevant factors 
relating to Fare Structure that impact on patronage levels are the affordability 
of fares, the perceived value for money of fares, how easy public transport is to 
use and how easy the payment systems are to use. Patronage increases may 
also be gained through attracting non users to use the public transport system. 
Principle 3: Reducing complexity. Complexity in a Fare Structure stems from 
the nature of the basic structure itself as well as the number of products. 
Reducing complexity increases patronage through making the public transport 
system easier to use and improving the transparency of the fare structure, and is 
a prerequisite for the introduction of integrated electronic ticketing.   
Principle 4: Rewarding target behaviours. Fare products can be used to target 
and reward particular behaviours which support the broader aims for public 
transport. These target behaviours include: 
  Encouraging users to shift their time of travel from the peak to off peak 
period to alleviate capacity issues in peak times 
  Encouraging frequent and regular use of public transport (e.g. the number 
of journeys made in a day, week or year) to increase patronage 
  Encouraging greater use of the smart card payment system to shrink the 
use of cash fares in the system  
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  Encouraging non users to use public transport to increase patronage levels. 
Principle 5: Improving consistency. Consistency in the Fare Structure means 
that users making similar journeys pay similar fares, regardless of operator or 
mode. This means that the Fare Structure is perceived as unbiased towards any 
particular group or mode. When users are able to see that fares are allocated on 
a consistent basis, there is likely to be greater acceptance of changes in the Fare 
Structure. Having a consistent set of fare products for all modes also makes the 
system less complex. 
Principle 6: Meeting fare box recovery targets. Farebox recovery targets 
establish the proportion of the cost of providing the public transport service 
that is met through fares as opposed to public funding (i.e. rates or NZTA 
funding). NZTA set a national target of a minimum of 50% of total costs to be 
met through fares. The council’s current target is to meet 55% to 60% of the 
cost of the service through fares. This target may need to be reviewed as the 
impact of current decisions around integrated ticketing, capital investment in 
new rail carriages and a network wide electronic payment system, and fare 
structure are included in future budgets. 
Principle 7: Enabling incremental change. Any change to the Fare Structure 
will positively or negatively impact on some current users. The acceptability of 
any change can be increased by a gradual transition from one Fare Structure to 
another, allowing users to adjust their travel patterns in response to the changes 
made. Making changes incrementally also enables the Council and the New 
Zealand Transport Agency (NZTA) time to adjust their funding levels and 
budgets to match the changes in predicted fare revenue.   
5. Discussion 
5.1 
Principle 1: Continuing affordability of fares 
Structure 
The structure governs the base method by which the fare for any journey is 
calculated. Under the current 14 concentric zone structure, longer trips have a 
higher fare than shorter trips, the fare per kilometre decreases with increasing 
distance travelled, and local trips in Wellington city tend to have a higher fare 
per kilometre travelled than local trips elsewhere in the region. 
Considerable modelling has been undertaken to establish the impact of 
changing the current zonal structure or replacing it with a distance-based 
approach. In a revenue neutral environment1, any major changes would 
increase fares for a sizeable group, and this would raise affordability issues. 
For example in a zonal structure, increasing the size of the zones means that 
the one zone fare will increase, negatively impacting users making local trips 
anywhere in the region and reducing overall patronage from current one and 
two zone trips.  
                                                 
1 A revenue neutral environment is one where the total fare revenue equals the fare revenue received under the current Fare Structure.   
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Modelling shows that a distance based fare structure that can maintain at least 
the current fare revenue must have fares per kilometre for the first 5 – 10 
kilometres of a journey that are roughly comparable to the existing rates within 
Wellington city.  
A distance based fare structure with a linear decrease in fare per kilometre with 
distance travelled over the first 40 km of a journey can increase predicted 
revenues significantly with these revenue increases generated mainly from trips 
between 10km and 20km (i.e. commuters from the Hutt or Porirua to 
Wellington) and from local trips outside Wellington city. Overall patronage 
levels are maintained under this scenario as the large reduction in patronage 
outside the Wellington city area is off-set by an increase in patronage within 
the city itself.  
Amending the rate of decrease in fare per kilometre to ensure distance based 
fares more closely match the revenue from the current fare structure would 
mitigate the issue of higher fares for commuters travelling to and from 
Wellington, however there would still be a significant negative impact on local 
trips outside Wellington city.  
Reducing operational costs 
The affordability of fares is increased indirectly by decreasing the underlying 
cost structure of public transport. Fare revenue is used to meet at least 50% of 
the operating cost of the public transport service, so reducing the overall cost of 
running the service also reduces the level of fare revenue required to meet the 
50% threshold. The operating cost of the public transport service can be 
reduced by: 
  Reducing demand for vehicles at the peak. The cost of operating the 
public transport service is in part related to the number of vehicles required 
to meet peak demand. Encouraging users to shift their travel time from 
peak to off peak times helps to alleviate capacity issues during the peak 
time and consequently reduce or delay the need for capital investment in 
vehicles. Reducing the fares charged during off peak times may encourage 
users to change from travelling in the peak times to travelling in the off 
peak times where spare capacity is generally available.  
  Increasing the efficiency of the network design. Moving from a complex 
system of overlapping “point to point” bus routes towards a simpler 
interconnected network design increases the efficiency of the network. For 
an interconnected network design to be practical, users must not be 
penalised when they make a transfer between modes or vehicles. Allowing 
free transfers within a journey achieves this and also assists in improving 
the affordability of fares for those already making transfers.   
  Reducing the passenger boarding and alighting times. Reducing 
boarding times increases the speed and consequently the cost of the 
service. Boarding times can be reduced by replacing a cash based payment 
system with electronic card to reduce the time a vehicle remains stationary 
at stops as users ‘purchase’ their tickets as they board. 
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Length and frequency of trips 
The perceived affordability of public transport is also related to the length of 
journey and the number of trips made. Longer journeys have higher fares, and 
where these trips are made each day of the week, the total weekly cost of 
multiple longer trips can become significant part of a users cost of living. 
Implementing a fare structure with a fare per kilometre of travel reduces with 
increasing distance goes some way to increasing the affordability of such trips. 
Including products that provide discounts for frequent users also moves 
towards making a service more attractive and addresses affordability of fares. 
Concession fares  
Concession fares for the transport disadvantaged may increase the affordability 
of public transport for eligible users. The Council may provide concession 
fares where these: 
  Can be justified on a decongestion basis. Child and school student fares 
can be justified on the basis of removing the need for parents to take or 
pick up their child from school. Currently, congestion in the urban areas is 
significantly reduced outside term time when parents make fewer school 
related car trips between 8am and 9am and 2.30pm and 4pm. Concessions 
for school aged children encourage greater use of school bus services 
which reduces congestion.  
  Address an underlying and persistent social need. The case for 
concession fares for tertiary students, people with disabilities on a benefit 
or other beneficiaries can be made on the basis of low income. The student 
allowance and other single persons’ benefits are set at approximately the 
same level of $171 per week or just under $9k per annum. This level of 
income means that many people would struggle to meet daily living costs, 
however this is not due to excessive transport costs but limited total 
income. A distinction may be made between those who have a temporary 
social need and those with a persistent need. Tertiary students and other 
beneficiaries who have the ability to increase their income in the future 
could be argued to have only a temporary need, albeit for a number of 
years. People with a disability who are unable to participate fully in the 
workforce are likely to be receiving the invalids benefit for the majority of 
their adult life. As such, their underlying social need is persistent and a 
concession fare is more easily justified. 
  Reflect central government policy: SuperGold card holders are eligible 
for free travel during off peak times. The Council continues to support the 
existing SuperGold scheme as funded by NZTA.   
One potential advantage of introducing a discounted off peak fare as identified 
above is that many beneficiaries and students travel in off peak times. In 
particular, most beneficiaries would be able to adjust their travel patterns to 
take advantage of reduced fares. As such, an off peak fare could address, in 
some part, the need for a concession fare for very low income users.   
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A concession fare or discounted off peak fare could be funded through 
increasing other fares or through public funding from rates and taxes. 
Increasing fares to meet the cost of providing a concession fare or off peak 
fares raises fare affordability issues for other users and may impact on the 
perceived value for money of the public transport service. Increasing rates to 
pay for concession fares raises affordability issues for ratepayers.   
5.1.1 Proposed 
changes 
Proposed elements of a future Fare Structure that would support the continued 
affordability of public transport fares in the Wellington region are: 
  Retaining the existing structure with 14 concentric zones radiating out 
from Wellington city 
  Introducing an off peak fare - available between 9am and 3.30pm and after 
6.30pm (Monday to Friday), and from 5am Saturday to 12 midnight 
Sunday, and all public holidays 
  Introducing a universal smart card payment system for all Metlink public 
transport services 
  Removing transfer penalties and introducing integrated fares  
  Retaining a fare structure with a reducing fare per kilometre travelled 
  Including discounted products attractive to frequent users 
  Providing concession fares for children and youths, SuperGold card 
holders and, in the event an off peak fare is not introduced, to people with 
a disability unable to participate in the workforce. 
5.2 
Principle 2:  Increasing patronage 
Making public transport easy to use 
Ease of use is an important influencer of patronage and patronage growth.  
Public transport ‘ease of use’ is influenced by a range of factors from: how 
easy it is to get to, on, off, and transfer between services, how easy it is to find 
information about services, and how easy it is to pay for using the service. The 
fares aspects of ‘ease of use’ link to how easy it is to know what the fare is for 
a particular journey (transparency), how easy it is to pay, and how easy it is to 
transfer between services. Ensuring transparency in the Fare Structure gives 
people greater certainty and confidence in using the public transport network. 
Zonal fare structures tend to provide greater transparency for users regarding 
the fare for a journey compared to distance based fares as it is easier for users 
to know what fare they will pay prior to boarding.   
A single network wide smart card and integrated fares enables easy payment 
and easy transfer between services. To become an attractive payment option for 
users, any smart card (or other fare media) must be accessible to users and easy 
to reload with funds for future travel.   
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Peak and off peak fares 
Currently, around 28% of rail trips and 57% of bus trips are in the off peak 
(making around 48% of all trips in the off peak). If an off peak discount were 
introduced, the lower fares are likely to increase patronage in the off peak and 
increase the percentage of the overall number of trips made in off peak period.   
International examples of off peak fares are generally set at least 20% below 
the peak fare. The revenue impact of a 25% differential between peak and off 
peak fares is estimated to be $4.5 million per annum if there is no increase in 
peak fares. Increasing peak fares to ‘pay’ for an off peak fare will negatively 
impact on the affordability of public transport for over half of all trips. Users 
who travel by public transport at peak times rather than travelling by private 
vehicle provide benefits to the wider transport network through reduced 
congestion costs.   
Whilst introducing an off peak fare at a lower differential than 25% will reduce 
the financial impact, no work has been undertaken as this stage to identify at 
which point a discount is likely to influence people’s behaviours and encourage 
them to switch from travelling in the peak period to travel in the off peak 
period. A low level of discount may not provide sufficient incentive to effect 
this change. 
New products 
Encouraging non-users to use public transport is about making public transport 
easy to use but also to encourage new users through providing new products 
which are able to provide positive experiences of public transport use. These 
products may be based on a full cost recovery model or as a loss leader 
acknowledging the potential for attracting new users.  The opportunities 
considered as part of the review are: 
  Encouraging greater use at weekends and public holidays 
The Council has little robust data on public transport use at weekends, 
however anecdotal evidence is that many families avoid using public 
transport at the weekends due to the cost. For example, it would cost a 
family of two adults and three children around $25 to make a return trip 
from Miramar or Island Bay into the central city by public transport. This 
does not compare favourably to travel by private vehicle.  Providing a 
weekend family pass where up to four children under a specified age can 
travel for free when accompanied by a fare paying adult would bring the 
affordability of public transport use more into alignment with the cost of 
travel by private vehicle at weekends for these groups of potential users. 
This would increase patronage during a period where there is spare 
capacity.  A precedent for this type of ticket is set through the current 
combined bus and rail Metlink Explorer ticket which allows a child 
between 5 and 15 years old accompanying the ticket holder to travel for 
free. 
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  Event tickets 
The Council currently has an event ticket for use on rail when attending 
large events in Wellington, particularly at the Westpac Stadium. The 
pricing of the event ticket means that it is slightly above the fare for a 
return trip using a 10 trip ticket on the Johnsonville line and travelling 
from zone 5 on the Porirua and Lower Hutt lines, but below the 10 trip fare 
for longer trips. Event tickets for bus users are event specific.   
Encouraging the use of public transport to get to larger events can greatly 
reduce congestion and reduce pressure on parking in the city. A 
mechanism successfully used in other cities and for specific events in 
Wellington city (such as the Round the Bays run) is to include the use of 
public transport in the price of the event ticket. In most cases, the costs of 
any additional public transport are funded by the event organiser however 
there is potential to investigate working with event organisers and venue 
operators to include public transport travel to a venue in the price of an 
entry ticket to the event. Patronage benefits are around the potential to 
attract new users to public transport through a positive experience of 
public transport when using it to attend an event. 
  Bulk purchase scheme 
Bulk purchase schemes typically involve an organisation, group or 
business paying up front to bulk purchase public transport period passes at 
a discounted rate for their members or employees. The purchasing entity 
then administers the distribution and replacement of the period passes for 
the transport agency and may set the price of the pass. These schemes are 
used successfully overseas as a mechanism to encourage patronage 
growth. In the US, the schemes are supported through federal and local tax 
incentives which enable employers to offer heavily discounted passes, 
however a scheme in Melbourne also runs without similar tax incentives. 
A bulk purchase scheme is a potential mechanism to offer groups of users 
the opportunity to access cheaper fares. Tertiary students may benefit from 
such as scheme provided an umbrella organisation is able to administer the 
scheme. Further work on the opportunities provided by this type of product 
is required, particularly around how any such product would be priced.  
5.2.1 Proposed 
changes 
Proposed elements of a future Fare Structure that would support increased 
patronage of public transport in the Wellington region are: 
  Retaining a zonal structure 
  Introducing a single region wide smart card payment system, valid for all 
modes and operators of Metlink services 
  Introducing integrated ticketing allowing one ticket to be purchase for one 
journey, irrespective of the number of transfers and modes used 
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  Introducing a weekend family pass where up to 4 children under a 
specified age would travel free when accompanied by a fare paying adult 
  Developing a bulk purchase scheme for groups of users 
  Undertaking further work on the benefits of event goers using public 
transport to get to large events, including working with event organisers 
and venue operators around including travel by public transport to an event 
in the ticket price of larger events. 
5.3 
Principle 3:  Reducing complexity  
The principle of ‘reducing complexity’ supports greater transparency in public 
transport fares and making the public transport system easy to use.  
Transparency 
Structures ranges from the very simple, such as a single flat fare for all 
journeys, to the highly complex, such as point to point fares with a different 
fare for every potential journey. Flat fares generally tend to generate less fare 
revenue which may increase the level of public subsidy required. Flat fares also 
reduce the relative affordability of fares for short trips compared to longer trips 
within the same system. A zone based structure is relatively simple and easy to 
understand with users able to know how much their fare will cost before 
boarding. More complex fare structures, such as distance based and point to 
point fares, are generally associated with increased fare revenue from a public 
transport network, however the complexity in the fare structure reduces the 
ease of use of public transport as it is difficult for users to know how much as 
journey will cost prior to boarding. Ensuring that both the fare structure and 
fare products offered are consistent for bus and rail also reduces complexity. 
Making public transport easy to use 
Generally, simplifying the Fare Structure is considered to support patronage 
growth through removing a potential barrier for new users who may switch to 
using public transport from other modes. Currently there are over 250 fare 
products which may be used on the Metlink network. Comparable public 
transport networks overseas tend to have fewer products, with some having as 
few as 20 to 50 products for their whole network. Reducing the number of fare 
products could be achieved through aligning bus and rail fare products, 
removing seldom used products, and introducing standardised approaches to 
transfers and ticketing. This will reduce the number of products by around 100. 
If adult and child off peak fares are retained on rail and introduced on buses, 
the reduction would be around 70. 
A balance is required between complexity, affordability of fares and ease of 
use with the aim that a Fare Structure provides limited and clear choices 
around the best fare product for a journey.   
5.3.1 Changes 
proposed 
Proposed elements of a future Fare Structure that would reduce complexity are: 
  Retaining a zone based structure 
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  Introducing integrated ticketing allowing one ticket to be purchase for one 
journey, irrespective of the number of transfers and modes used 
  Ensuring the same structure and products for bus and rail, and 
  Phasing out the seldom used products. 
5.4 
Principle 4:  Rewarding target behaviours 
Travelling in the off peak period 
Encouraging users to switch from travelling in the peak to the off peak is to be 
encouraged as part of reducing capacity issues during peak times on public 
transport. This has been discussed above under Principle 1: Continuing fare 
affordability. 
Encouraging use of the smart card payment system 
A single region wide smart card system is proposed to be introduced as part of 
the integrated ticketing and fares project and has been discussed above under 
Principle 1: Continuing fare affordability. Use of smart cards to pay for fares 
may be encouraged through ensuring the best value fares are only available on 
smart cards. A premium on cash fares above smart cards may act as a 
disincentive to use cash fares and as in incentive to switch to smart cards. 
Further work on the level of the premium on cash fares and potentially 
amalgamating the zones for cash fares will be undertaken as part of the 
integrated ticketing and fares project. 
Rewarding regular and frequent use 
Period passes are currently used for a variety of purposes, including providing 
discounts to regular or frequent users, reducing the cost of revenue collection, 
and reducing fare evasion. The monthly rail pass is attractive for rail users as it 
gives around a 40% discount on the cash fare based on 40 trips per month. The 
current monthly rail pass is estimated to cost around $2 million per annum in 
foregone revenue, and to generate around 3% of rail patronage, and is justified 
on the basis of reducing administrative costs and improving revenue collection 
in a paper based system. There is no product with similar incentives for regular 
users on buses. Providing a similar level of discount on bus monthly pass 
products would have an impact on fare revenue estimated to be around $3 
million per annum, based on 20% of bus users using a monthly pass. The 
estimate of the percentage of bus users taking up the monthly pass is based on 
a high level analysis of existing travel patterns.   
An alternative is to consider changing the type of products offered on both rail 
and bus to regular and frequent users. Cities such as Christchurch, London and 
Melbourne have introduced a fare capping regime, where the total fare paid for 
a specified period of travel is capped at a set amount. Fares can be capped at a 
fixed daily, weekly or longer period amount. Fare capping has the advantage 
over period passes in that it is a pay as you go fare up to the maximum 
predetermined limit above which no additional fare is charged for additional 
trips. The pay-as-you-go aspect of the product removes a potential barrier to 
lower income people accessing the cheapest fares as under the current system 
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they may be unable to afford the upfront cost of a monthly pass.  Anecdotally, 
this is already occurring with a number of rail users purchasing 10 trip tickets 
as they do not have sufficient spare income in any one week to purchase a 
monthly pass. In addition, a daily capped fare may be more attractive to regular 
public transport users who use public transport one, two or three days per 
week. It also allows users to receive the discount based on their actual travel 
behaviour, rather than requiring users to forecast their travel over a period and 
calculate which product would be cheapest. Fare capping also supports 
Principle 1: Continuing fare affordability and Principe 2: Increasing patronage. 
A fare capping product offers a significant advantage over period passes to the 
majority of users. Further work on the level of the capped fare needs to be 
undertaken and will be considered as part of the broader integrated fares and 
ticketing project.   
Encouraging new users 
Encouraging new users to switch from private vehicles to public transport is 
achieved through a combination of initiatives around perceived value for 
money, making public transport easy to use and new products to attract new 
users. These are discussed above in Principle 1: Continuing fare affordability 
and Principle 2: Increasing patronage. 
5.4.1 Changes 
proposed 
Proposed elements of a future Fare Structure that would reward target 
behaviours are: 
  Introducing of an off peak fare - available being between 9am and 3.30pm 
and after 6.30pm (Monday to Friday), and 5am Saturday to 12 midnight 
Sunday, and all public holidays  
  Setting the single cash fare at a premium above the single smart card fare 
  Ensuring best value fares are only obtained through smart card usage 
  Introducing fare capping (further work on setting the level of the capped 
fare and capping period required). 
5.5 
Principle 5:  Improving consistency  
Consistency can be considered on an individual basis (consistency between 
individual journeys), a collective basis (consistency in fares between different 
groups of users), a regional basis (consistency fares for similar journeys across 
the region), and on a modal basis (consistency of fares and products between 
different transport modes).   
The current Fare Structure is inconsistent in a number of ways, for example 
there are different fare products on rail and bus, off peak fares only on rail, and 
different fares for journeys of similar length.   
Consistency between products on bus and rail has been discussed above under 
Principle 3: Reducing complexity, and off peak fares have been discussed 
under Principle 1: Continuing fare affordability. 
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Zone boundaries on the western side of the region are more widely spaced than 
those between Upper Hutt and the Wairarapa making the fare for a similar 
length journey from Kapiti lower than the fare from Featherston. The 
boundaries for zones 1 and 2 within Wellington are more closely spaced than 
other zones, meaning that a short trip outside Wellington city may be only one 
zone and a similar length trip in Wellington city may be three zones. Some 
minor modifications to the current zone boundaries to align the fares charged 
for similar longer distance travel would increase consistency. Increasing the 
spacing of zones in Wellington would increase consistency but reduce the 
revenue generated from fares (see Principle 7: Meeting farebox recovery 
targets). Reducing the spacing of zones outside Wellington would increase 
consistency but reduce patronage in these areas as fares increase. The 
introduction of an off peak fare would in some part go towards balancing the  
short trip fare inside and outside Wellington city as the majority of off peak bus 
travel is in Wellington city. 
Charging the same fare for similar journeys is also impacted by how transfers 
are dealt with in the fare structure. The current network of routes means that a 
number of journeys can be made using either a direct service or two or more 
services depending on the time of day travelled and the services operating. 
Currently, users who have to transfer between services or vehicles generally 
have to pay a new fare for the second leg of the journey which increases the 
total fare for their journey above that paid by those on a direct service. 
Currently some operators permit free transfers between services; removing any 
penalty for transferring between vehicles or modes for all services improves 
consistency.   
In the current concession fare for school aged students, the current system is 
based on an outdated understanding of the age students leave school, and 
discriminates against some young people who do not have school identification 
or are home schooled. A more standardised approach to the concession for 
current school aged student concession would be to extend the concession to all 
under 19 year olds. This would simplify and remove any potential 
inconsistency around the eligibility criteria. 
5.5.1 Proposed 
changes 
The proposed changes to improve the consistency of the Fare Structure are: 
  Ensuring the same structure and products for bus and rail 
  Removing any transfer penalty when transferring between vehicles or 
modes 
  Making minor modifications to the zone boundaries to align the fares for 
journeys of similar distance on the Kapiti and Wairarapa lines  
  Making the eligibility criteria for the school aged student concession to all 
children and young adults from the age of five years old to all young adults 
under 19 years old 
  Introducing an off peak fare. 
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5.6 
Principle 6:  Meeting farebox recovery targets 
A key issue when considering any changes to the Fare Structure are the 
predicted changes in fare revenue. Currently the Council is considering a range 
of initiatives either through the Fare Structure review or other projects that 
have a potential negative impact on fare revenue that are not currently 
budgeted for in the Long Term Plan. Options considered as part of the Fare 
Structure Review are summarised in the following table. 
Modelled options 
Revenue impact3 
Patronage impact 
Bolded = preferred option 
14 concentric zones (current 
$0 million 
0% 
structure) 
Large district based zones 
- $1 million 
0% 
Distance based fares 
+ $8 million 
- 1% 
25% off peak discount 
- $4.5 million 
+ 4% 
50% off peak discount 
- $12.0 million 
+ 10% 
Integrated fares1 
- $3 million 
Not yet quantified 
Dependent on level of 
Capped fares2 
Not yet quantified 
capping 
Weekend family pass 
- $0.5 million 
Not yet quantified 
Bulk purchase scheme 
Dependent on scheme  Not yet quantified 
design 
50% concession fare for tertiary 
students 
- $4 million 
+ 1% 
25% concession fare for tertiary  - $1.5 million 
+ 0.5% 
students 
50% concession for adults with a 
Un-quantified and 
disability receiving invalids 
- $1.5 million 
benefit 
approximated to 0% 
50% concession for all under 
Un-quantified and 
- $0.5 million 
19 year olds 
approximated to 0% 

Revenue impact based on removal of transfer penalties and a zonal structure. A more 
detailed assessment of the revenue and patronage impacts will be undertaken as part of the 
Integrated Fares and Ticketing project. Increased revenue for additional patronage has not 
been calculated. 
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A more detailed assessment of the revenue and patronage impacts will be undertaken as 
part of the Integrated Fares and Ticketing project. Preliminary high level estimates indicate 
that the costs could be of the order of $2 million to $5 million, but costs would be 
determined by how a cap operates. 

The revenue impacts outlined in this table are based on high level modelling and do not 
reflect the expected financial impact on GWRC based on the current contractual 
provisions. The funding required for any change to the fare structure is subject to 
commercial negotiations. 
NZTA sets a target of achieving a farebox recovery ratio of 50% nationally and 
the Council has a target for the farebox recovery ratio to be between of 55% to 
60%. Currently the Council’s projected farebox recovery for 2012/13 is 56.6%, 
equating to approximately $11 million above the minimum required under the 
NZTA farebox recovery policy. 
The preferred options highlighted in bold above add up to a maximum negative 
net revenue impact of approximately $9 million to $14 million if all were 
implemented immediately. The positive benefits for the Fare Structure 
including increased patronage need to be balanced against the requirement to 
match the reduction in fare revenue with increased public funding from 
regional rates and NZTA funding.  
The rates funding requirement for public transport is projected to rise above the 
rate of inflation for the next few years as a result of factors including the 
reducing NZTA share of funding for rail (ie the reduction in the FAR rate from 
60 to 50), integrated ticketing, and the cost of servicing debt to fund capital 
investment. The availability of NZTA funding is constrained by the funding 
allocation in the Government Policy Statement for Land Transport Funding. In 
the short term, there is insufficient headroom from either of these funding 
sources to make up a revenue loss of $9 million to $14 million. 
The Council has already signalled its intention to introduce a single region 
wide smart card and integrated fares with a preliminary estimated cost of up to 
$3 million in revenue (the potential revenue impact is not currently budgeted 
for in the Long Term Plan). Officers consider that to gain the best advantage 
from the introduction of a single smart card system, capped fares are a 
desirable part of this project. As such, in the short term, there is limited 
capacity to introduce other initiatives without any further patronage growth.  
Both capped fares and integrated ticketing are anticipated to have positive 
impacts on patronage growth. 
Introduction of an off peak fare is predicted to generate additional patronage 
but with a net loss in fare revenue. To evaluate the effectiveness of an off peak 
fare, further work around customer behaviour and response is required to 
assess at what point a differential between peak and off peak fares would 
influence the target behaviours (shifting from peak to off peak time of travel 
and increased patronage). 
Introducing a concession fare for people with disabilities who are unable to 
participate in the workforce meets the principles of this review. This would 
however be a significant change to the current approach to supporting the 
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transport disadvantaged, which largely focuses on the accessibility of services 
(rather than affordability), except where there is a standard national approach 
such as the provision of child and SuperGold card concessions. A similar 
nationally based approach to this issue would be preferable. 
The introduction of distance based fares has been modelled as generating 
higher revenues, which could then be used to fund other initiatives. However, 
this is not supported under the principles of ‘Continuing affordability of fares’ 
(for those journeys negatively impacted by such a change), ‘Reducing 
complexity’ and ‘Enabling incremental change’ and is therefore not 
recommended. 
5.6.1 Changes 
proposed 
The changes proposed to the Fare Structure to ensure farebox recovery targets 
are achieved are: 
  Prioritising initiatives on the basis of their positive impact on patronage 
growth 
  Developing a staged approach to implementing the preferred fare structure  
  Approaching NZTA for a national approach to concessions for people with 
disabilities. 
5.7 
Principle 7:  Enabling incremental change 
Changes to the Fare Structure will have different impacts on different users. 
The acceptability of any change can be increased by a gradual transition from 
one fare structure to another, allowing users to adjust their perceptions and 
travel patterns in response to the changes made. The patronage growth 
anticipated from the introduction of an initiative is unlikely to occur 
immediately after implementation and will occur over the short to medium 
term. As such, changes to the Fare Structure which are expected to give a net 
reduction in revenue and increased patronage, such as an off peak fare, will 
have an immediate negative impact on revenue as existing users gain the 
advantage of a reduced off peak fare. The revenue impact of the change will 
only gradually reduce towards the modelled net revenue position in the short to 
medium term as new users are attracted to public transport and existing users 
increase their public transport use. A staged approach to introducing each 
initiative is required to avoid a single large reduction in revenue and 
consequent impact on rates. Any potential changes to the requirement for 
additional public funding is not currently in the budgets for either GWRC or 
NZTA. As such, fare revenue impacts and the consequent impact on rates will 
need to be considered through the Council’s Long Term Planning process as 
well as its planning around the future of public transport in the region through 
the Regional Public Transport Plan. 
As discussed above under Principle 6: Meeting farebox recovery targets, the 
public transport network does not generate sufficient fare revenue to enable the 
introduction of all the options for change at one time and still meet farebox 
recovery targets. Retaining the existing 14 zone structure and gradually 
phasing out the existing products as a single smart card is introduced will 
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enable a gradual change to the proposed Fare Structure. If larger district based 
zones were preferred as the base structure, then incremental change could be 
managed through gradually removing some of the existing 14 zone boundaries 
for cash fares, and then moving the smart card fares to district based. If 
distance based fares are preferred, these would not be implemented prior to the 
introduction of a single smart card system, and the integrated fares and 
ticketing project would need to determine whether it would be cost effective to 
gradually transition to distance based fares through adding more concentric 
zones or whether a single shift to distance based fares is preferable. 
5.7.1 Changes 
proposed 
Proposed elements of a future Fare Structure that enable incremental change 
are: 
  Retaining the existing 14 zone structure 
  Gradually phasing out existing products over the short to medium term  
  Phasing in other initiatives as they become affordable through increased 
patronage growth. 
6. 
Preferred Fare Structure 
The conclusion of this phase of the Fare Structure Review is that the preferred 
option has the components outlined below. The preferred option represents an 
aspirational statement about the future Fare Structure with implementation 
phased over time. The phasing is identified in the table as short (2 to 3 years), 
medium (5 to 7 years) and long term (more than 10 years) in the table below.   
Implementation 
Preferred option 
timeframe 
Structure 
1.  Retain the existing 14 concentric zones with minor  Short term 
zone boundary changes 
2.  25% peak / off peak differential available between 
9am and 3.30pm and after 6.30pm (Monday to  Long term 
Friday), 5am Saturday to 12 midnight Sunday, and all 
public holidays  
3.  Universal smart card payment system for all Metlink  Medium term 
public transport services 
4.  Transfer penalties eliminated and integrated fares on  Medium term 
smart cards only  
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Implementation 
Preferred option 
timeframe 
5.  Consistent fare structure and fare products for bus and  Medium term 
rail 
Already 
6.  Premium fares for identified services 
implemented 
Products 
7.  Existing fare products phased out and replaced by the 
 
following: 
  Cash fare, set at a premium above the smart card  Medium term 
fare with the premium increasing over time 
  Smart card fare with no transfer penalties 
Medium term 
  Fare capping (further work on setting the level of  Medium term 
the capped fare and capping period required) 
  Weekend family pass for up to four children 
under a specified age travelling with a fare  Short term 
paying adult (valid on Saturday, Sunday and 
public holidays only) 
8.  Bulk purchase product enabling group purchase of 
period pass at discounted rate (further work on pricing  Medium to long 
and scheme development required, initially targeted  term 
towards tertiary students and subsequently offered to 
other groups) 
9.  Travel by public transport to and from a venue 
included in the price of entry tickets to larger events  Medium term 
(further work required) 
Concessions 
10.  Concessions as follows: 
 
  Free travel on all services for children under 5 years  Existing 
old 
concession 
  50% concession fare for all services for children and 
young adults from five years old up to and including  Short term 
18 years old 
  Free travel for all SuperGold card holders outside  Existing 
peak hours. 
concession 
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7. Next 
steps 
Further detailed financial analysis of the Preferred Option, and pre-market and 
customer behavioural testing with users and potential users will be undertaken 
and to confirm the proposed Fare Structure is financially viable. In addition, 
consideration of the cost of achieving patronage growth through changes to the 
fare structure compared to achieving similar results through other service 
changes needs to be considered. This will occur through the review process 
around the RPTP. Once the analysis is complete, consultation will be 
undertaken as part of the review of the RPTP in 2013/14.   
8. Communication 
Communication with stakeholders will continue as part of the on-going work 
programme. Formal public consultation will occur through the review of the 
RPTP. 
9. Recommendations 
That the Council
1.  Receives the report. 
2.  Notes the content of the report. 
3.  Agrees that the matters for decision in the report have a medium degree of 
significance. 
Principle based approach 
4.  Agrees the principles for the Fare Structure Review evaluation are: 
  Principle 1:  Continuing affordability of fares  
  Principle 2:  Increasing patronage 
  Principle 3:  Reducing complexity  
  Principle 4:  Rewarding target behaviours 
  Principle 5:  Improving consistency 
  Principle 6:  Meeting fare box recovery targets 
  Principle 7:  Enabling incremental change. 
Fare Structure Preferred Option  
5.  Notes  that the Fare Structure Preferred Option will be refined through 
further analysis and future Council decisions as part of the integrated 
fares and ticketing project and review of the Regional Public Transport 
Plan. 

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6.  Agrees that consultation on the future Fare Structure will occur through 
consultation on the review of the Regional Public Transport Plan in 
2013/14. 

7.  Agrees the following elements of the Preferred Option for the future Fare 
Structure: 
Structure 
a.  Existing 14 concentric zones retained with minor zone boundary 
changes 
b.  25% peak / off peak differential available between 9am and 3.30pm 
and after 6.30pm (Monday to Friday), and between 5am Saturday to 
12 midnight Sunday, and all public holidays  

c.  Universal smart card payment system for all Metlink public transport 
services 
d.  Transfer penalties eliminated and integrated fares, on smart cards 
only  
e.  Consistent fare structure and fare products for bus and rail, and 
f. 
Premium fares for identified services 
Products 
g.  Existing standard fare products phased out and replaced by the 
following: 
i. 
single smart card fare as the standard fare 
ii. 
no transfer penalties on smart cards 
iii. 
fare capping on smart cards  
iv. 
weekend family pass for up to four children travelling free with a 
fare paying adult (valid on weekends and public holidays only)  

v. 
single cash fare set at a premium above the smart card fare 
h.  Bulk purchase product enabling group purchase of period pass at 
discounted rate  
i. 
Travel by public transport to and from a venue included in the price of 
entry tickets to larger events 

Concessions 
j. 
Priority for concessions as follows 
 
i. 
free travel on all services for children under 5 years old 
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ii. 
50% concession fare for all services for children and young 
adults from five years old up to and including 18 years old 

iii. 
free travel for all SuperGold card holders outside peak hours. 
8.  Directs officers to undertake further policy work including;  
a.  discussions with operators on proposals to introduce the weekend 
family pass and changes to the child and young adult concession 
b.  discussions with event organisers and operators to investigate 
including public transport fares in the cost of an event ticket  
c.  development of proposals for a bulk purchase scheme for group travel 
and work with the main tertiary institutions in Wellington with the 
view to initially developing a scheme for tertiary students  

d.  detailed analysis and user testing of off peak fares 
e.  detailed analysis of transfers and fare capping through the integrated 
fares and ticketing project. 
9.  Notes that the existing concessions for people not identified in 
recommendation 7(j) above will be phased out once they are able to be 
replaced by the off peak fare.  

10.  Agrees that an approach be made to NZTA for a national resolution to the 
issue of concessions for people with disabilities. 
Timing of implementation 
11.  Notes the proposed timing of implementation is based on assumptions 
about the lead time required and the financial impacts, and may alter once 
further analysis is completed.  
 
12.  Agrees the following timing for the introduction of initiatives that have a 
potential negative impact on fare revenue: 
Short to medium term 
i. 
50% concession fare for all services for children and young 
adults from 5 years old up to and including 18 years old 

ii. 
Weekend family pass 
Medium to long term 
iii. 
Integrated ticketing and removing transfer penalties 
iv. 
Capped fares 
v. 
Travel by public transport included in event ticket 
vi. 
Bulk purchase scheme  
vii. 
Off peak fare. 
 
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Report prepared by: 
Report approved by: 
 
Tass Larsen 
Wayne Hastie 
 
Manager, Projects and 
General Manager, Public 
 
Planning 
Transport 
 
 
Attachment 1: Summary of community views 
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