15Fare Policy and Structure

Price is what you pay. Value is what you get.Warren Buffett, businessman, 1930–

Defining fare policies can be a tricky subject. There must be an adequate balance between the technical and political aspects that may come into play when defining them. It is often the case that mayors have the authority to define public transport fares but do not necessarily consider all the technical aspects related to such an important decision.

The fare policies must take into account issues such as:

• Will the system receive subsidies or will it generate profit?
• If the system is profitable, what will be done with this profit?
• Will there be discounted fares for population groups (seniors, students, etc.), either now or in the future?
• How will the system be affected by political climate change in the future?
• Who are the system’s stakeholders, and which of those will receive payment and how (i.e., vehicle operating companies, feeder operators, security and maintenance providers, fare collection operator, BRT authority, trust fund manager, others)?

Since each case is different, every city should develop its own set of questions before implementing a fare policy, always taking into account that this is the decision that will probably affect users the most.

Once the questions are answered, implementers must do an analysis of all the possible costs and revenue sources of the system. This will allow cities to have a more precise idea of what the “fair fare” should be and allow them to start considering possible financing sources, such as private or public investment.

In the following sections, we will discuss objectives, techniques, and points to consider when deciding on a fare policy for a BRT system.

Contributors: Fabio Gordillo, GSD+