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Metro ridership is on the upswing, but the gains aren’t translating to increased fare revenue for the transit agency, an unanticipated outcome of fare changes in recent years meant to lure back passengers lost to telework.
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Fare revenue from July to September fell 16.5 percent short of Metro’s projections, “primarily due to lower than anticipated paid ridership for Metrorail and unfavorable average fares across all modes,” according to a staff report presented Thursday to Metro’s board members. Revenue from fares, parking, advertising and other sources during the fiscal quarter amounted to $108.4 million, which is $17.7 million less than Metro predicted.
The transit agency is facing a $750 million operating budget shortfall next fiscal year because of depleted federal pandemic aid and a steep drop in commuters, many of whom have going to the office for working from home. Jurisdictions across the Washington region are discussing options for boosting annual subsidies to Metro, which transit officials say is needed to avoid drastic service cuts.
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Metro leaders didn’t express significant concerns Thursday while learning of the quarterly revenue gap, saying the pandemic proved the agency can’t rely so heavily on fares. Transit officials have long noted the rail system has fixed maintenance, operational and repair costs that don’t change, regardless of the number of riders it carries.
Even if Metro had hit its revenue target, the amount still would have been less than one-quarter of the system’s operating expenses.
Metro approves first fare hike in five years, discount for low-income riders
“What we do to induce trips is run really good service. High frequency, high reliability, and it’s safe. And I think we are doing that,” Metro General Manager Randy Clarke said after the meeting. “That’s why our customer satisfaction of our rail [system] is the highest it’s ever been in the history of the agency.”
Metro’s financial snapshot was the first since the agency restructured fares in April, the first cost increase for passengers in more than five years. The increase added about 3 percent to an average rail trip, but the changes largely affected long-distance riders who pay more to ride.
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That strategy is one reason Metro collected fewer fare dollars than expected, the report said. Other reasons cited were fare evasion, lower numbers of federal employees working in offices, and the introduction of flat Metrorail fares for weekend and late-night rides.
“Though rail ridership is growing, post-pandemic traveling patterns and change in average rail fare continue to impact revenue as passengers have shifted to the timing and distance of travel,” the report said.
The report found ridership grew during periods where Metro reduced fares.
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In 2021, Metro board members were eager to win back riders when they created a $2 flat fare for weekend Metrorail rides. They also passed a $2 flat fare for weekday nights starting at 9:30 p.m., hoping to encourage passengers to ride to restaurants, bars and entertainment venues.
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Meanwhile, the transit agency raised fares for those whose trips take them at least three miles on weekdays. The board reasoned that most suburban commuters have their commutes subsidized by their employer, especially the federal government. Metro officials also expected more federal workers in offices this year.
Instead, weekend Metrorail ridership boomed to 90 percent of pre-pandemic levels. Weekday ridership, however, was only 55 percent of pre-pandemic levels.
Ridership on the rail and bus systems totaled 30 million trips during the quarter, which is 30 percent higher than a year ago and 1.3 million more than Metro had projected.
Metro cited fare evasion as one factor in missing projections. The transit agency began tackling unpaid fares last year, restarting enforcement that had been dormant for years while modifying Metrorail fare gates to make slipping through or jumping over more difficult. The taller gates have been installed at 11 of Metro’s 98 stations. An internal report this past summer said they resulted in a 70 percent reduction in evasion.
Metro board says service cuts are real if funding doesn’t increase
Less has been done to counter fare evasion on Metrobus, which Clarke said is a challenge because Metro can’t deploy a police officer to every bus. He said transit police will begin to ramp up enforcement at bus bays.
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“I don’t think that’s 100 percent on us because we’re not going to have a cop on every bus,” Clarke said. “And if we did, we wouldn’t run a normal bus service.”
Some board members said they wanted to see Metro put more effort into tackling Metrobus fare evasion.
“Obviously it’s challenging, but I would encourage creativity … without being overly disruptive,” board member Matthew F. Letourneau said.
But board member Tracy Hadden Loh said too many fare boxes on buses don’t work.
“It’s super premature to talk about any kind of fare enforcement on the bus that would cost money when we need to get what’s under our control right first,” she said. “More than half the time when I get on the bus, the fare box is broken or hasn’t been turned on.”
Metro inspector general resigns one day after releasing critical audit
Also Thursday, board members named Kevin Muhlendorf, a partner at the law firm Wiley Rein, as interim inspector general to replace Rene Febles. Febles resigned last week after he said the board told him he would be dismissed one day after releasing an audit that claimed Metro was impinging on his office’s independence, in violation of federal law. Muhlendorf is a former assistant chief in the fraud section of the criminal division of the Justice Department and a former senior counsel in the enforcement division of the Securities and Exchange Commission.
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