ORCA LIFT a Cost-Effective Add on Sounder
Assuming the Sound Transit Board of Directors grasps that the proposal for updating fares on ST Express and implementing a low-income discount fare on all ST Express routes is very likely to increase ridership, increase revenue, reduce travel time, and reduce operating costs, and then proceed to pass the proposal, Sounder is next in line for consideration of adding a low-income fare category.
Some quick math shows that going after low-income riders with an ORCA LIFT (low-income) fare discount is more cost-effective than focusing on maintaining regular-fare ridership on Sounder.
The background material for the Sounder fare proposals projects $567,000 of additional annual fare revenue on Sounder if the fare increase proposal is implemented without ORCA LIFT. Projected ridership loss in that scenario is 188,000 annual boardings. That comes out to $3.02 of additional revenue for each boarding lost due to the fare increase.
If the fare increase is implemented with a new LIFT fare category, the increased revenue drops to $510,000, while the ridership loss drops to 160,000 boardings. In other words, for $57,000, Sounder gains 28,000 low-income boardings. Those boardings are gained at an average cost of $2.04 per rider.
A look at some ridership data from 2014 helps explain this counterintuitive math.
Sound Transit's 2014 Fare Revenue Report has a breakdown of boardings by payment method for each mode. (See pages 14, 19, and 22.)
| Payment Method | ST Express | % | Link | % | Sounder | % |
|---|---|---|---|---|---|---|
| ORCA Business Passport | 7,038,964 | 39.8 | 2,427,462 | 22.2 | 1,722,589 | 51.2 |
| ORCA Puget Pass | 3,248,449 | 18.4 | 1,572,964 | 14.4 | 595,691 | 17.7 |
| ORCA E-purse | 3,775,409 | 21.4 | 1,584,340 | 14.5 | 694,606 | 20.7 |
| Non-ORCA | 3,607,011 | 20.4 | 5,353,117 | 48.9 | 348,432 | 10.4 |
| TOTAL | 17,669,833 | 100 | 10,937,117 | 100 | 3,361,318 | 100 |
Bruce at ST also provided me a key datapoint: 10.0% of Sounder riders would qualify as low-income, based on the 2011/2012 origin/destinations survey. Assuming those 10% don't have Business Passport ORCA, that would leave only 39% of riders on Sounder fully sensitive to regular/youth/RRFP fare increases.
A driving force behind the proposed fare increases is that Sounder is rapidly approaching falling below the red line set by ST policy for minimum farebox recovery, which is 23% for Sounder. Per the 2014 Fare Revenue Report (p.8) Farebox recovery was 26.9% in 2014. It is projected to be 26.0% in 2015, and then 24.1% in 2016.
As I calculated at the start of the post, the best way to value both ridership and revenue on Sounder is to adopt ORCA LIFT and attract low-income riders, who are much more price-sensitive than the typical regular-fare payer, especially one with a Business Passport ORCA paid for by her/his employer.