What is Fare Free Public Transport?

Many cities around the world, and now few states in India as well, have some form of fare-free schemes, also known as Fare Free Public Transport (FFPT). Fare free means that the riders do not have to pay the tariff for the ride. The eligibility of the rider getting access to Fare Free has been different in various situations. Such policies have been in practice for decades though most of them are concentrated in Europe. In 2013, Tallinn, Estonia became the first capital city to introduce FFPT for its citizens. Last year Luxembourg became the first country to do so. While the intention for such policies has been to reduce the private vehicles on roads, recent developments show an inclination towards equitable distribution of infrastructure as the primary reason. Michelle Wu, the newly elected mayor of Boston, on her first day in the office proposed to make three city bus lines free for two years to ‘strengthen racial equity and eliminate barriers to opportunity’.

The pandemic has put public transportation systems across the country on hold, and increased the demand for private vehicles (PVs) for those who can afford them and for Non Motorised Transport (NMTs) across income groups. The current need for less crowded modes of transport to facilitate social distancing and reduce the risk of virus transmission, coupled with better financing options, has further encouraged this trend.

Fare Free Transport in India

The goals of free-fare transport in India have largely been aligned to the goals of gender equity. In 2019, the Delhi government operationalised free public transit for all women in the Delhi Transport Corporation (DTC) buses. Following the national capital, Punjab, Tamil Nadu and recently Puducherry too announced fare-free transportation for women. Studies have shown that women in India are more dependent on public transport than men, and are more likely to decline better paid jobs that are far away from their homes because of lack of affordable and safe mode of transportation. Hence, such policies are laudable considering gender based inequalities for accessing job opportunities.

Secondly, even before Covid-19, the representation of women in the labour force has been abysmally low, at 20.3%, according to the Female Labour Force Participation Rate 2018-19, which has fallen further following the pandemic. This has been the primary reason for leveraging economic mobility for women through fare free public transportation.

While such steps are undoubtedly progressive from the lens of empowerment and equity, recent announcements of fare free transportation may seem to defy economic and financial logic to those who have noticed transit services struggle for revenue, especially in the last two years.

The Paradox of Free Fares

Following the nationwide lockdowns to control the spread of COVID-19, authorities introduced several curbs on travel and buses remained off roads for several months. In many cities, services began on a few routes with limited passenger capacity. Commuters also shifted to private vehicles and service providers fell behind in maintaining the number and frequency of public buses, nearly undoing all the efforts to promote public transport in the last few years. The steep hike in fuel prices, loss of fare and commercial revenue along with operation and maintenance cost has resulted in many transportation companies to declare financial crisis. Even the Bengaluru bus system which is one of the most financially efficient services in India announced that it was in deep crisis, having incurred a loss of Rs 400 Cr in this year. Other state transport undertakings (STUs) are also facing a similar fate.

“The steep hike in fuel prices, loss of fare and commercial revenue along with operation and maintenance cost has resulted in many transportation companies to declare financial crisis”

The employees of Maharashtra State Road Transportation Corporation have been on a strike since October 27 demanding higher salaries and to have MSRTC absorbed into the state government. The lockdowns resulted in salaries being delayed for months and the state government has so far provided assistance of Rs 3549 crore. Despite the capital inflow, the corporation is facing a loss of nearly Rs 9000 Cr.

This is the case with many transport operators who have been forced to restrict their services and increase fares. STUs of Bihar, Telangana, Kerala and city services in Pune, Ludhiana among others announced fare hikes ranging from 5 to 50%. Hence, while there are so many states which have been forced to hike fares to deal with the financial loss, it seems paradoxical for other states to make public transport free, even for defined user groups.

Lessons and Learnings for Pursuing Fare Free Transport Policies in India

Where has it worked and where can it work?

City-Size: Based on the existing operations of FFPT in various cities across the world, evidence seems to suggest that such policies are more successful in small and mid-sized cities. In smaller cities, where the revenue through fares do not cover substantial costs of operations, the FFPT experiments have been successful. In larger cities, where the fares constitute a large amount of revenues for the transit agencies, substituting the loss in fare through FFPT policies seemed to cause financial strain and hence making it unsustainable over the long run. Fare free transport in smaller cities can be optimised by strategically tapping other sources of income such as advertisements or additional grants. However, there are proponents that argue that FFPT can be feasible in any scenario as FFPT can lead to cost savings such as those of ticketing infrastructure.

“Fare free transport in smaller cities can be optimised by strategically tapping other sources of income such as advertisements or additional grants.”

Ridership: Places with low existing ridership on public transport may benefit more from FFPT since free access to PT has shown to increase ridership. Even in the cities where fares were restored after the brief introduction of FFPT, the public transport modes had witnessed an increase in ridership. The current scenario where ridership has plummeted due to COVID may present a suitable case for FFPT to be used as an attraction to riders. In Tamil Nadu, introduction of FFPT has already resulted in the proportion of women’s ridership immediately increasing from 40 to 60 percent. There are studies however which suggest that since Public Transport is already cheaper than private modes, instead of shifting private drivers, FFPT attracts walkers and cyclists.

How free is free?

The fact is that public transport is already heavily subsidized i.e. nowhere in the world does the passenger pay a fare that completes the full cost of running the transit system. So it seems that the answer is not a choice between free or paid transport but how much of the cost of running can be avoided being paid from the fare revenue. Public transport is funded from the government (which gets the money through taxes or loans) or supported financially by private agencies with commercial interests (through advertisements etc.). As a result, most transport corporations have running deficits, or viability gaps between cost and earnings.

Hence, depending on the financial situation of the transport agency, the user demographics, the existing subsidy regime, and other factors, a successful FFPT policy can be created. For example, in Luxemburg,the loss of 8% of revenue from FFTP is compensated from taxes. Other cities too like Olympia, Washington have dedicated sales and property taxes for funding transportation projects. The “Zero Fare Demonstration Project” in the city involved more than two years of strategic planning for successful implementation.

Making fare free is not enough

While FFPT seems to be a tool operationalised through fares, using it alone may not guarantee its success. It needs to be complemented with other policies which can impact citizen’s behaviour; improve other factors related to public transport such as quality, frequency; influence the usage of private transport among others. However, financial implications are still one of the most critical aspects of planning fare-free transportation.

“The goals need to be clearly defined in such cases, in terms of target user groups and their needs while also ensuring that the system is secure and well in place before such schemes are implemented”

FFTP is indeed a complex system and can have multiple outcomes, planned and unplanned. For example, fare free transport results in an immediate increase in ridership but at the same time, can also raise the level of criminal activities as riders with anti-social behaviour may also increase their travel on such modes. This was a reason that drove away regular commuters in Austin, USA when FFPT was introduced for all citizens in 1989. In Tamil Nadu, introduction of FFPT resulted in the proportion of women’s ridership immediately increased. But many women also reported an increase in harassment by conductors and male bus riders. Government bus drivers and conductors would receive incentives for total fares collected which were not substituted by the new scheme and double fares were allegedly collected in some cases from other riders. This highlights the need for foresightedness that considers multiple factors and effects, especially where a subject as sensitive as women’s safety is involved.

Hence, the goals need to be clearly defined in such cases, in terms of target user groups and their needs while also ensuring that the system is secure and well in place before such schemes are implemented. Transportation systems are extremely interconnected and one user is likely to use multiple modes to reach their destination. Immediate increase in demand for once can result in increase in cost of other modes. As such, the overall cost of travel may remain unaffected even with fare-free rides. One solution can be to plan for transit oriented development and include multimodal transportation under a single umbrella.

One method for implementation can be to identify critical routes for socio-economically deprived areas of the city or to improve ridership where buses run with low capacity or where traffic congestion is high. What can be ensured about fare free public transport is that it while it cannot heal all the

Fare free public transport is extremely relevant in a situation where many have lost their regular sources of income. The ongoing pandemic also necessitates a long term planning for safe public transportation that does not rely on stopping services. The collapse of public transit in India can undo the progress of the last few years and be disastrous for our climate resilience goals. Experts suggest that free concepts cannot heal the scars of the current system and if misused can create new problems. It can be well fitted with other instruments for supporting common goals for development. For the common citizen, what is perhaps being assured through such policies is a vision of an equitable and sustainable future for urban India.

This piece is part of the Small City Mobility Series of the Nagrikal. Nagrikal is a platform for citizens from small cities to share their experiences so that they be channeled into policies.