Monday, August 18, 2008

Transit metrics

The Pitt news had a story a while back on the pending Port Authority strike (the ‘pending’ is my description). It has a quote on how rising fuel prices are hitting the Port Authority's budget. No doubt that is true. Their quote is that for every cent fuel goes up their budget takes an $80K hit.

Port authority contracts for their fuel and I assume its an annual contract. According to that article, the Port Authority's fuel contract is due to be reset and their diesel prices are slated to rise from the $2.27 a gallon they have been paying recently to $4.27 a gallon. So a rise of roughly $1.70/gallon which at $80K/cent gives you ~$13.6 million additional fuel cost for the upcoming year. .

But what about the increased revenues???? Take the story from the weekend that Port Authority ridership is up 6% July over July. It's odd that the Port Authority goes out of its way to tell the public about their higher fuel prices, but fails the mention the increased revenues higher ridership is bringing in. Isn’t that part of the financial equation?

So for all the assignment editors out there, don't you think there is a story out there in what the percentage increase has been in farebox collected revenues over the last 6 months? Seems relevant to a lot of transit issues these days, not the least of which are the contract negotiations ongoing.

Can we guess at that? Making this overly simplistic, but assuming that the bus service in the short run is very much a fixed cost industry. That just follows from the number of routes and buses being the same even if ridership bumps up. At some point they would have to add buses but I doubt that is happening much just yet. So the added riders are mostly net new revenue. Also assuming that the marginal rider is mostly a full fare paying person. That I know isn’t true and maybe I’ll come back to that. But you figure the person really being pushed to not commute by car is someone who does not have a free or discounted pass already.

Round trip fare per day: $4 (which is lowball for the full fare, zone 2 and 3 fares go up to $6.50/day.. but I am ignoring the discount factor for monthly/annual passes so maybe the two assumptions balance out a little).

250 days of typical daily commuting per year. So I am undercounting by not even taking into account weekend ridership which is lower, but also increasing at a much faster pace in recent months. =$1000 per new full fare paying rider per year. To cover an $13.6 million dollar gas charge you need 13,600 new full fare paying daily commuters.

Funny how that number comes awfully close to the 13,379 increase in average weekday ridership being reported. Increased weekend ridership would provide additional revenue on top of what I calculated above. You have to wonder how much ridership would be up if routes had not been gutted by such a large magnitude right as the demand for transit ridership was about to spike up. Like a lot of things in town, even things that make sense to do here are done at the completely wrong time. Fighting the last war is another way to think of it... We're good at that around here.

Also consider the fact that the higher fuel prices have not been hitting the Port Authority's bottom line through the year. They contract fuel on long term contracts, so the cost side of the equation is only really going to hit them going into the future, yet they have been collecting the increased revenue from higher ridership for months now at least. Ridership has probably ramping up over the last year.

So yes.. I could be and probably am wrong on the back of the envelope calculations above. Why do we need to guess at things? Is there any reason at all the Port Authority could not put online in near real time its ridership and revenue numbers. It is a public authority after all. Wouldn't it make so much more sense to do that fairly trivial-to-implement bit of data disclosure vice going to the time, effort and expense to produce that biased "Rumor of the day" web page and associated web site. Think about it. I bet it's an order of magnitude cheaper to put online revenue numbers they already have collect compared to what they are paying someone to first come up with some 'rumors' to then to refute them online.


Anonymous djm said...

This is an interesting post, but I think that it points out just how heavily subsidized the Port Authority is and how heavily the state contributes to keeping it running. The following numbers were taken from the 2008 budget posted on their website:

$79 million in revenue (fares minus advertising, other revenue)

$336 million budget

$13.6 million increase in fuel costs (47% over last year)

So let's say that ridership and fare revenue goes up 15% (which is probably too high since that is what it is going up in higher growth/densities areas like DC, NY, Boston). That means that Port Authority is only making an additional $11.85 million from increased ridership, which still leaves it in the hole.

I don't know how they would handle it, but assuming that takes more employees to run service, count $, clean more buses, the revenue could be lower. If they just run the same service and pick up more riders, than it should be pretty close.

I don't know or think that the union contract enters into this picture. I think that the data would indicate that people are paying way too little at the farebox for a ride that is becoming much more popular.

Monday, August 18, 2008 11:04:00 AM  
Anonymous Ken Zapinski said...

Chris, ridership for Jan-June 2008 was 33,219,964, compared to 34,582,538 for the first six months of 2007. Though ridership was down, farebox revenue ran about 6% higher in FY2008 (ending June 30) compared to FY2007. And the FY2009 budget already includes a 4% increase over the FY2008 farebox numbers.

For anyone who is interested, I have additional analysis of the very interesting July ridership numbers at my new transit/transportation blog,

Finally, to djm's point -- the Port Authority is heavily subsidized. So is every other transit agency in the country. About 75% of the Port Authority's budget comes from various taxes. Than's almost identical to Portland and less than Cleveland. I'll take a more in-depth look at this on my blog in the near future.

Monday, August 18, 2008 12:33:00 PM  
Anonymous Anonymous said...

Ken, you're slipping. djm beat you to the first post!

Anyway, you got me to thinking about how the ACCD's planning activities vis a vis the pending strike could be construed as attempted union busting.

Monday, August 18, 2008 1:35:00 PM  
Blogger C. Briem said...

Ken, thanks, but a couple things. The point is why they don't make the revenue number available more readily. I do bet you have that and a lot of other stuff. The Port Authority has all but refused every request for the simplest of data I have ever made from them. Funny that you get that and more pretty easily I bet. What is the $ value
of the marginal increase in farebox (and passes I assume?) revenue. What has it added up to over the last 6 months?

and as for subsidies.. what is one big subsidy the Port authority gets? The full fare reimbursement for elderly riding. How many more elderly ride Port Authorty buses every day than on the RTA in Cleveland. You have to mention that if you are going to make that type of comparison. Net that out of the equation and then what do you have to say, that the Port Authority is much less subsidized per non-elderly commuter. That and the ridership here is much much higher than cleveland, so that subsidy buys a lot more here than it does up the pike. Without going into things like that, the comparison to Cleveland or elsewhere is superficial and misleading.

Monday, August 18, 2008 9:37:00 PM  
Anonymous Ken Zapinski said...

Very good point, Chris, about lack of data available on the Port Authority web site. The monthly revenues and expenses, and the comparison to the budget, would be easy to make available.

Same with monthly ridership numbers. If they're available on the web site, I can't find them.

As for the subsidy question, I'll be posting more on that on my blog in the next few days.

Tuesday, August 19, 2008 9:04:00 AM  

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