A mass transit system of any scale is a capital-intensive project and requires heavy financial resources. The economic benefits of the system, however, are much higher than the financial costs, due to which it is in the favour of governments to provide a transit system. Public transport forms a lifeline of cities as it allows people to access economic opportunities and earn a living. Apart from this direct economic benefit, there are more indirect benefits such as reduced air pollution, congestion, travel times, road accidents and such, that make transit systems more economical for all. In many developing countries, a large part of the society depends on transit as they do not have a choice of owning a personal vehicle due to lower affordability. For these reasons, many governments around the world subsidize the use of public transport so as to make it affordable for the public, without whom, there will be no public transport. In countries such as India, Germany, France, Nordic countries and others, which are ‘welfare states’ committed to protecting and promoting social and economic well-being of its citizens, public transport is counted as a ‘social good’. Social goods are never provided with the intention of making monetary profits. That is also the reason why most public transport systems around the world are not able to make profits, although some have been able to make operating profits. It is not common for transit systems to make profits after accounting for subsidies doled out by the governments.
It is a common belief among people that fare revenues are critical for provision of a transit service. However, some recent developments in Europe will make you wonder if that is really true. Recently, there have been some interesting and encouraging examples from European countries who have already or are planning to make their public transport free for their residents. Germany is planning to make public transport free in some of its cities like Essen, Bonn, Mannheim and others. Luxembourg plans to make it free all over the country from beginning of 2019 (Radu, 2018b). Estonia is also planning the same for 11 out of its 15 counties from summer of 2019 following the success of its capital city Tallinn that is already doing it since 2013 (Radu, 2018a). Almost 20 French cities like Dunkirk, have made their public transport completely or partially free. All these examples have become an inspiration for other cities, while also being criticized by other experts (King, 2017) (Newmark, 2019). Some experts believe that instead of completely free transit rides, that will lead to huge losses, fares should be means-tested or income-based. Interestingly, however, the Mayor of Dunkirk city explains that the fare revenue of public transport covered only about 10% of the entire cost of operations (although for bigger cities like Paris, the fare revenues make up for about 50% of the operational costs) (Willsher, 2018). This loss of financial revenue was compensated in Dunkirk by other sources of income while the social advantages have been huge. There has been increase in ridership to the tune of even 50% on some routes. He also explained how making the transit free, has changed the way people treat public transport now. Earlier, the people paid a small fee but felt to have bought the right to abuse it or mistreat it. Now, however, they feel more responsible towards it.
Although the step to make public transport free remains debated, it has two very important features that must be remembered. Firstly, once implemented, it is almost impossible to go back and revert to the usual fare system. Public will not accept the change. Secondly, free transit service will increase ridership that will put pressure on the system’s capacity. If the transit capacity is not increased, comfort levels will reduce which will eventually push away the choice-riders. Hence, it becomes imperative to keep investing in transit services to keep them attractive to riders.
Cities in developing countries have to be aware of this possibility of sudden and extreme pressure on transit capacity and be prepared for it. If the existing system has no extra capacity and city authorities are not in a position to invest in the augmentation of transit service immediately or in near future, it is best not to experiment with this step. However, making transit free or discounted during off-peak hours should improve ridership during that time, leading to more efficient use of transit throughout the day. Public reaction to such a step is quite unpredictable but a major factor in success or failure of such a step. While the cities in Europe have experienced a very positive reaction, it would not be surprising if people in other countries tend to devalue or abuse the facility that is given to them for free. Many psychological, social and cultural factors are at play here. To conclude, affordability of public transport remains a key factor is inducing and encouraging transit use and there are many ways to achieve that, ranging from subsidizing to making it partially or completely free.
TheEconomist. (2018) Big Mac Index – global prices for a Big Mac in July 2018, by country (in U.S. Dollars). Available at: https://www.statista.com/statistics/274326/big-mac-index-global-prices-for-a-big-mac/.