Farebox recovery ratio

The farebox recovery ratio (also called fare recovery ratio) of a passenger transportation system is the fraction of operating expenses which are met by the fares paid by passengers. It is computed by dividing the system's total fare revenue by its total operating expenses.

Fare structures

There are two schools of thought in fare collections: a simple, flat rate fare structure (pay a fixed fare regardless of time of day and/or travel distance) or a complex, variable rate fare structure (pay a variable fare depending on time of day and/or travel distance).

In North America, South America, and Africa, the majority of the cities use simple, flat rate fare structures due to budgetary constraints. With the majority of North America, most of South America, and almost all of Africa being heavily reliant on the automobile for both short and long distance travel, majority of the transit budgets are allocated toward construction and maintenance of freeways and roads, with very little funding making way to investments in new mass transit technologies. Inadvertently however, the reliance on simpler fare structures due to their cheaper costs ends up increasing the tax burden on the agencies as flat rate fare structures have lower farebox recovery ratios, placing more pressure to the transit agencies to increase taxes, pursue higher fare hikes, or to cut services to maintain the transit system.

In sharp contrast, majority of the cities in Europe and Asia are heavily dependent on mass transit. Therefore, the majority of their transit budgets are used extensively on mass transit technologies, which enables these countries to install and maintain self-supporting and profitable variable pricing structures. Transit agencies that have instituted a more variable fare structure depending on distances or zones traveled have higher farebox ratios over those that rely on a flat-rate model.^[1] In addition, recent urban transit scholars agree that variable pricing methods on public transit would actually be a profitable business which can alleviate many municipal agencies' budget problems.^[2] For example, transit riders will be discouraged to travel longer distance due to increasing price as one travels further, reducing human congestion of mass transit riders who ride lengthier trips. On the other hand, an increased number of riders will opt to frequently use the transit system for multiple short and quick hop-on and hop-off trips as prices would be cheaper for shorter trips, which mass transit is better suited for. The downside however is that institution of variable-rate fares requires a high value initial investment in fare ticketing technologies such as the use of contactless smart cards, turnstiles or fare gates, automated ticket machines, as well as the IT infrastructure in which the return on investment may take years depending on the expected transit ridership volumes.^[3]

Variable vs. fixed fare models

Agenda	Variable fare model	Fixed fare model
FBR ratio with high ridership figures	100%+	50%+
FBR ratio with low ridership figures	60%+	9%+
Most common system used	Post-pay; fares are paid at the destination or upon disembarking at the end of each trip	Pre-pay; fares are paid at the start of each trip
Unlimited ride passes	Uncommon, but usually available for tourists	Daily, weekly, or monthly unlimited ride passes
Incentives over cash	Cheaper rates may be provided when using paperless contactless passes loaded with cash value	Unlimited ride passes
Concessions	Discounted variable rates for seniors, youths, disabled, or other groups as needed	Discounted fixed rates for seniors, youths, disabled, or other groups as needed
Implementation costs	Expensive, as both entry and exit points have to be accounted for to calculate variable fares. Fare-adjustment and change machines need to be installed.	Cheap, as fare is collected at entry only. Since each rider is expected to have exact change, no fare-adjustment or change machines are needed.
Reliance on subsidies	Less dependent, as each rider pays their share of distance traveled equally	Heavily dependent, as fixed fares do not cover operational costs without regard to how each rider contributed to their distance traveled
Benefits	Fairer fare structure; cheaper for shorter riders, more for longer rides. Entry and exit processes can also be used for data collection to efficiently manage how transit riders travel, allowing transit agencies to coordinate transfer times, reduce or increase transit needs based on hard ridership data.	Simplicity; everyone pays the same price regardless of distance traveled.
Risks	Confusing for first-time riders. Knowledge of the system requires an "acquired" skill	Prone to higher rates and service cuts depending on subsidies received

Farebox ratios around the world

The following table lists farebox ratios for some public transportation systems around the world.

Ratio of fares to operating costs for public transport systems (%)

Continent	Country	System	Ratio	Fare system	Fare rate	Annual ridership	Year
Asia	Hong Kong	Hong Kong (MTR)	186%	Distance based	HKD 3.50+ (cash) HKD 3.50+ (Octopus card)	1,553,000,000[4]	2012[5]
Asia	Japan	Osaka (Hankyu Railway)	123%	Distance based	JPY 150+		1991[6]
Asia	Japan	Osaka (OMTB)	137%	Distance based	JPY 200+		1991[6]
Asia	Taiwan	Taipei (MRT)	119%	Distance based	TWD 20+ (cash) TWD 16+ (EasyCard)	602,200,000[7]	2012[7]
Asia	Japan	Tokyo Metro	170%	Distance based	JPY 160+		1991[6]
Asia	Singapore	Singapore (SMRT)	125%	Distance based	SGD 1.10+ (cash) SGD 0.73+ (EZ-Link Card)		2008[8]
Asia	China	Beijing Subway	59.5%	Distance based	CNY 3.00+	2,460,000,000	2012[9]
Europe	Netherlands	Amsterdam	73.6%	Distance based			2014[10]
Europe	Germany	Berlin	70.3%	Zone based	EUR 2.60+		2010[11]
Europe	Belgium	Brussels	35.2%				2007[12]
Europe	Denmark	Copenhagen	52%				1991[13]
Europe	UK	London Underground	92%	Zone based		1.265 billion (2013/14)[14][15]	2014[16]
Europe	Spain	Metropolitan lines of Ferrocarrils de la Generalitat de Catalunya (FGC)	93.18%	Zone based		77,183,208	2014[17]
Europe	Spain	Madrid	41.3%				2007[12]
Europe	Italy	Milan	28%				1991[13]
Europe	Germany	Munich	42%	Zone based			1991[13]
Europe	Czech Republic	Prague (DPP)	53.2%	Flat rate	CZK 24+	1,232,000,000	2013[18]
Europe	France	Paris (STIF)	29.7%	Zone based for passes Distance based for tickets	€1.80	4,298,800,000[19]	2014[19]
Europe	Sweden	Stockholm	37%	Zone based	SEK 44–88 (conductor) SEK 25–50 (SL Access card) Note: Tickets are not sold on buses.		2007[12]
Europe	Italy	Rome	36%				2007[12]
Europe	Austria	Vienna	50%	Flat rate	EUR 2.00		1991[13]
Europe	Finland	Helsinki	49%[20]	Zone based; each borough forms a zone. Boroughs with a small area are treated as being part of one of their neighbouring boroughs.	EUR 2.80–7.00 (cash) EUR 1.90–5.60 (travel card) Transfer free of charge	336,000,000[20] (boardings, one trip can include more than one boarding)	2011
Europe	Switzerland	Zurich	66%				1991[13]
North America	USA	Amtrak	71%	Distance & demand based			2009[21]
North America	USA	Atlanta (MARTA)	31.8%	Flat rate	USD 2.50		2012[22]
North America	USA	Austin (CMTA)	12.4%	Flat rate	USD 1.00-2.75, depending on modality		2012[22]
North America	Canada	Brampton (BT)	46%	Flat rate	CAD 3.25 (cash) CAD 2.65 (Presto Card)		2012[23]
North America	USA	Boston (MBTA)	43.7%	Flat rate	USD 2.65 (cash) / USD 2.10 (CharlieCard)		2014[24]
North America	Canada	Calgary	50%	Flat rate	CAD 3.00		2011[25]
North America	USA	Chicago (CTA)	43.0%	Flat rate	USD 2.25 (cash) USD 2.00 (ChicagoCard)		2012[22]
North America	USA	Chicago (Metra)	55%	Zone based	USD 2.75+		2012[26]
North America	USA	Cleveland (GCRTA)	21.5%	Flat rate	USD 2.25		2002[24]
North America	USA	Dallas (DART)	13.7%	Flat rate	USD 1.75		2012[22]
North America	USA	Detroit (DDOT)	13.9%	Flat rate	USD 1.50		2002[27]
North America	Canada	Edmonton (ETS)	39.4%	Flat rate	CAD 3.00		2007[28]
North America	USA	Harrisburg, PA (CAT)	35.0%	Flat rate	USD 1.75		2005
North America	USA	Las Vegas Monorail	56.0%	Flat rate	USD 5.00		2006[29]
North America	USA	Long Island (MTA)	50.0%	Zone based	USD 5.00+		2012[22]
North America	USA	Los Angeles (LACMTA)	25.5%	Flat rate	USD 1.75, with discounts for seniors, disabled, students		2015[30]
North America	USA	Maryland	23.1%	Variable	USD 1.60-11, depending on distance & modality		2012[22]
North America	USA	Miami	24.1%				2012[22]
North America	USA	Minneapolis - St. Paul	31.4%	Flat rate with rush hour and express surcharges	USD 1.75 to USD 3.00	81,000,000	2008[31]
North America	Canada	Mississauga (MiWay)	46%	Flat rate	CAD 3.25		2011[25]
North America	Canada	Montreal (STM)	57.1%	Flat rate	CAD 3.00		2006[32]
North America	USA	New York City (MTA)	51.2%	Flat rate	USD 2.75		2015[33]
North America	USA	New York/Connecticut (MTA)	36.2%	Distance based	USD 2.25+		2009 Q1[34]
North America	USA	New York/New Jersey (PATH)	41.0%	Flat rate	USD 2.75		2015[24]
North America	USA	New Jersey (NJT)	56%	Distance based	USD 2.25		2001[35]
North America	USA	Orlando (Lynx)	25.7%	Flat rate	USD 2.00	29,200,000	2012[36]
North America	Canada	Ottawa (OC Transpo)	52%	Flat rate	CAD 3.30 (Cash) CAD 2.60 (Tickets/Presto Card)		2011[37]
North America	USA	Philadelphia (SEPTA)	40.7%	Flat rate	USD 2.00 (cash) / USD 1.55 (Token) / USD 1.00 (Transfer)		2013[38]
North America	USA	Pierce County, WA	13.0%	Flat rate	USD 2.00		2009[39]
North America	USA	Philadelphia/New Jersey (PATCO)	66.2%	Distance based	USD 1.40+		2012[40]
North America	USA	Portland Metro Area (TriMet)	22%	Flat rate	USD 2.50		2010[41] 2012[42]
North America	USA	Greater Seattle Area (King County Metro)	29.1%	Zone and peak based	USD 2.25+		2013[43]
North America	USA	Puget Sound Region (Sound Transit)	22.2%	Zone & distance based	USD 1.50+		2007[44]
North America	Canada	Quebec City (RTC)	39%	Flat rate	CAD 3.00		2011[25]
North America	USA	San Antonio (VIA)	12.8%	Flat rate	USD 1.20	46,700,000	2012[45]
North America	USA	San Diego MTS	40%	Flat rate	USD 2.50	34,500,000[46]	2012[47]
North America	USA	San Francisco Bay Area (BART)	75.67%	Distance based	USD 1.95+		2014[48]
North America	USA	San Francisco Bay Area (Caltrain)	51.3%	Zone based	USD 2.75+		2011[49]
North America	USA	Staten Island (MTA)	15.2%	Flat rate	USD 2.75		2015[24]
North America	Canada	Toronto (TTC)	73%	Flat rate	CAD 2.90 (tokens) $3.50 (cash) Jan 2016	538m[50]	2013[51]
North America	Canada	Toronto, Hamilton and area (GO Transit)	78.2%	Distance based	CAD 4.68+		2013[52]
North America	Canada	Vancouver (TransLink)	51.9%	Zone based	CAD 2.50+		2010[53]
North America	USA	Washington, DC (WMATA)	62.1%	Distance based	USD 1.95+		2010[54]
North America	Canada	Winnipeg	60%	Flat rate	CAD 2.50		2011[25]
Oceania	New Zealand	Auckland	44%	Zone Based		69,000,000[55]	2012/13[56]
Oceania	Australia	Canberra	21%	Flat rate	AUD 4.20		2007[57]
Oceania	Australia	Sydney	20%	Distance Based	AUD 0.15 / km	281,000,000[58]	2014[59]
Oceania	Australia	Melbourne	~30%	Zone and time based	From 3.76 AUD / hour / zone		2014[60]
Oceania	New Zealand	Christchurch	35%	Zone Based		13,500,000[55]	2012/13[56]
Oceania	New Zealand	Dunedin	54%	Zone Based		2,900,000[55]	2012/13[56]
Oceania	New Zealand	Hamilton	34%	Flat rate		5,000,000[55]	2012/13[56]
Oceania	New Zealand	Wellington	57%	Zone Based		35,000,000[55]	2012/13[56]

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