---
title: "Tarification #2: How to increase public transport operators’ revenues through fares?"
url: "https://www.systra.com/en/expert_insights/tarification-2-how-to-increase-public-transport-operators-revenues-through-fares/"
type: expert_insights
date_published: 2021-06-24
date_modified: 2024-06-26
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language: en-US
word_count: 949
reading_time: 5 min
canonical: "https://www.systra.com/en/expert_insights/tarification-2-how-to-increase-public-transport-operators-revenues-through-fares/"
featured_image: "https://www.systra.com/wp-content/uploads/2021/06/passagers-quai.jpg"
type-insight:
  - Tarification
---

# Tarification #2: How to increase public transport operators’ revenues through fares?

![Tarification #2: How to increase public transport operators’ revenues through fares?](https://www.systra.com/wp-content/uploads/2021/06/passagers-quai.jpg)

**Our series of 5 articles on pricing continues with the analysis of Chris AYLES, head of Systra MVA’s activities in South East Asia and Australasia, and Nicolas SIAUD, urban transport planner specialising in public transport planning. This week they explain how transport operators can increase their revenues.**

Mobility as a Service, referred to as Maas, cannot be developed without
addressing the issue of transport pricing, or mobility in general. This is not a
new issue, but it is even more pertinent in the context of the health crisis,
with operators hard hit, user behaviour becoming both more demanding and
unpredictable, and mobility less routine. So what fare policy should be adopted?
How can profitability and efficiency, flexibility and sustainability be
reconciled? Can a pricing policy be a lever for managing crowds in transport
networks? Can pricing have an impact on urbanisation and the shape of the city?

We asked our experts these questions. From Australia to Brazil, via Asia, the UK
and France, our international network of consultants worked together to answer
them. For a month, we shed light on the subject, informed by local experiences.

![Digital wallet payment](https://www.systra.com/wp-content/uploads/2021/06/achat-ticket-1024x683.jpg)

Fares are fundamental to the operation of public transport since they form a
major source of income for operators. The increase or decrease of the fare does
not require any particular investment. Fare variation is therefore a means of
improving public transport patronage, while at the same time allowing operators
to increase their revenues at a lower cost. Please note, however, it is
generally considered that a fare increase leads to a decrease in patronage. So
how can revenues be increased through fares? Our answers in 7 points.

### 1\. Ensuring ticket prices match with the willingness and ability to pay

Public transport pricing is of course all about social inclusiveness, but it
should also recognize that fares should not be so cheap that they create a huge
burden on the public funds to provide subsidies. In Jakarta for example we have
benchmarked the fares and find that even when spending power is considered
across different countries, the fares are among the lowest in Asia. We also
carried out a survey to demonstrate that people could afford to pay more. This
suggests that there is a chance to increase the fares. As for Singapore, fares
are kept low to promote PT usage but also to make it accessible to all.

### 2\. Set income-related tariffs

On the other hand, providing an affordable fare for low revenue groups such as
students, the elderly, the most fragile socio professional categories and a
higher fare for the rest according the ability to pay for each group is a
leverage to increase demand and thus revenue.

### 3\. More volume = more revenue

This is a basic principle but the way the fares are structured can help to
attract passengers. Low fares in Singapore ensure this accessibility but also
help contribute to a high public transport mode share. Also, the system makes it
seamless for transfers by basing the fares on distance instead of number of
boardings.

Similar systems exist elsewhere for example in Shanghai where there is a
discount for the second and subsequent boarding. However, such schemes would
tend to reduce the average fare per journey where a transfer is made, meaning
that either a single journey ticket price needs to increase, or the total volume
needs to increase to cover the loss.

![bus-hong-kong2](https://www.systra.com/wp-content/uploads/2021/06/bus-hong-kong2-1024x682.jpg)

### 4\. Encourage passengers to use public transport

In order to encourage passengers to use the metro more frequently instead of at
private car or taxi which are very popular in China, Shanghai Metro offers its
loyal users a 10% reduction in the monthly fare once 70 yuan (9 euros) has been
spent.

### 5\. Charge premium services

Services such as rail offer a premium in terms of travel time and comfort over
say bus travel. So, it is reasonable for these modes to have a premium fare;
this also reflects the increased operating cost. This principle may also apply
for example to direct or limited stop express services compared to standard
stopping services.

### 6\. Modulate pricing according tp Peak/off peak hours

![Young woman with closed eyes relaxing on a subway](https://www.systra.com/wp-content/uploads/2021/06/dormeuse-1024x683.jpg)

Latest ticketing systems and account-based ticketing allow for the possibility
of fares to be varied by time of day. For example, to offer early bird discounts
such as in Singapore and Hong Kong for travel to central areas.  Similarly,
off-peak fares could be lower to encourage the demand and fill seats which may
otherwise be empty.

UK rail networks are a classic case of a range of ticket prices for different
time periods.   Even in urban areas such as Greater London, fares are all higher
before 9.30 AM, then cheaper afterwards.  This peak pricing enables revenues to
be maximised during the busiest period. 

### 7\. Adapt the pricing according to Premium/reserved/time of travel

More applicable for inter-city journeys but a whole range of fares is possible
to charge based on the type of seat (premium, economy, bench etc.), whether the
seat is reserved and date/time of travel.

In the end, we can see that in order to increase their revenues, it is in the
interest of operators to modulate their fares according to the types of users
and journeys. Our SYSTRA experts are at your disposal to answer all your
questions on the subject!

**See you next week with the article by Sabina KAUARK, Luiza SILVA, Joana NICOLINI and Emilia GUERRA, from SYSTRA Brazil: How to manage peaks and falls in transport demand?**