Myth: Periodical tickets are inflexible; per-trip fares are better for users

Myth: Periodical tickets are inflexible; per-trip fares are better for users
Fact: Buying a periodical ticket involves much less of an ‘unrecoverable investment’ than buying a car. Users of periodical tickets find them much more convenient than buying a separate ticket every time they travel – something motorists do not have to do.

The view is sometimes expressed that periodical tickets – like the weekly, monthly and yearly tickets offered in Melbourne – aren’t the boon to users that the many people who buy them seem to think they are.

The argument goes that periodical tickets are ‘inflexible’ because they require travellers to predict their usage and pay a large sum well in advance of travel. What users would rather do is pay fares ‘just in time’ as they travel. This is often argued by proponents of the Myki smartcard technology the previous Brumby Government introduced in Melbourne, because one stated purpose of smartcards is to make it easier to pay a new fare for each and every trip.

This is a good example of an argument that can be tested by analogy with car travel. Car travel is actually an extreme example of the supposed disadvantages of periodical tickets: in order to partake of it one has to buy a car, and this of course requires a significant upfront, non-recoverable investment. Yet this has not stopped car travel becoming the most popular mode of transport throughout the developed world.

What car drivers are not required to do is pay a separate fee every time they travel. Nor do they take kindly to the prospect of doing so, as the ongoing controversy over freeway tolls shows. It is supremely convenient to be able to travel at the spur of the moment without having to check the contents of one’s wallet or bank account: this is the kind of convenience that periodical tickets offer, and that motorists take for granted.

It’s also not quite true that the cost of a periodical ticket is an ‘unrecoverable investment’. Most systems that offer periodical tickets, including Melbourne’s, provide for refunds in the event of unexpected changes of plan, such as relocation or loss of employment. Periodical tickets are also discounted in order to be attractive even to those who do not travel every day of the week, so that even if one’s circumstances change, a periodical ticket is still worthwhile – just as car owners can usually find a reason to hold on to their cars even if they’re not driven every day.

Charging a new fare for each trip is of course very convenient for the operator, as they make a marginal return on each additional trip. What private operators really don’t like is the prospect of people making limitless additional trips without paying extra; but from the point of view of a passenger, or a policymaker wanting to encourage more travel by public transport and less by car, this is a positive advantage of periodical tickets!

In Zurich, the city with the second-highest public transport use in the world, periodical tickets are heavily discounted, and actively promoted to users as an environmental measure. This is because holders of periodical tickets have an incentive to maximise their public transport use, while other ticket holders have an incentive to minimise their use. We should be doing more to follow their example, despite having sunk much good money into smartcards, which are a solution in search of a problem.

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Last modified: 4 January 2011