MiWay demand returns to normal levels for first time since pandemic, spurs need for fare increases
As demand for the City’s transit system ramps up to normal levels for the first time since the onset of the pandemic, staff say the increase is triggering the need for fare increases and more funding in the the 2024 budget.
Public transit suffered for nearly two years and the City’s transit system provider (MiWay) saw revenue losses as ridership was slow to recover after the pandemic. Over 16 months of off and on stay-at-home orders and other public health measures, between 2020 and 2022, along with fears of being in close quarters resulted in plunging ridership levels even after restrictions were gradually lifted. An August 2021 report from City staff revealed that at the height of the pandemic in 2020, MiWay ridership had decreased by 75 percent.
Earlier this year Geoff Marinoff, Transit Director at the City of Mississauga, told council members during the budget review that MiWay ridership numbers had fully recovered, two years sooner than staff had anticipated — much quicker than other transit systems in the GTA. January and February of this year saw 107 percent and 110 percent ridership respectively when compared to the same months in 2019. The return to normalcy means the City can turn its attention to improving the level and quality of service and its efforts to transition bus fleets from diesel to electric buses to meet critical climate change targets.
A report to budget committee Wednesday reaffirmed this revelation, noting MiWay ridership has recovered well over pre-pandemic levels in 2019, to 109 percent as of August 31, with ridership expected to continue to increase through the remainder of 2023 and into 2024. The report notes the City is anticipating a 104 percent fare revenue recovery in 2023 compared to 2019 pre-pandemic levels. To accommodate the increase, staff are proposing a $224 million operating budget for the transit in 2024, reflecting an increase of $6.7 million (three percent) over the 2023 budget.
“MiWay is experiencing greater pressure as ridership continues to grow, necessitating increased investment to improve and expand service levels,” Wednesday’s report states.
Mississauga City Staff are anticipating an 104 percent fare revenue recovery for 2023.
(The Pointer files)
As ridership levels exceed previous levels, staff note MiWay fare pricing must be considered in relation to other Greater Toronto and Hamilton Area (GTHA) transit fare prices, current fare category usage trends, ridership impacts and current and future cost pressures, adding, “Each of these factors will have an impact on the overall revenue MiWay will realize from customer fares.” According to the report, MiWay fare pricing is below the 2023 GTHA average in several categories.
The recommended fare increases would put Mississauga’s transit system slightly above the average GTHA fare rates for adult and youth riders, but below its sister city Brampton.
Staff reports over the last few years have revealed how MiWay fare revenues were negatively impacted in 2020, 2021 and most of 2022 due to a reduction in transit riders as a result of the Covid-19 pandemic. To support residents who continued to use Mississauga’s transit system during the pandemic, transit fare pricing was frozen as part of MiWay’s ridership support and recovery program.
“The fare structure is a critical component of transit service delivery. It needs to strike a balance between providing affordable fare options for riders, consistency with other GTHA transit systems and contributions towards a reasonable cost recovery ratio for taxpayers. Considering the escalating costs and additional investments necessary to improve services and support expanding customer demands, it is recommended that a fare increase be implemented,” the most recent report to budget committee noted.
To keep up with inflation and budget pressures, the City’s 2024 budget identifies a transit fare revenue increase.
“The increase will help offset baseline budget increases due to inflationary pressures and operational requirements resulting from increasing labour costs, major maintenance costs, foreign exchange rates and PRESTO commission costs,” the report states.
Effective April 1, 2024, proposed fare increases to cover transit operating costs would include:
a 6.2 percent increase in PRESTO adult fare (ages 20-64) from $3.20 to $3.40. The adult monthly pass is proposed to increase 7.6 percent, from $131 to $141. Adults currently make up 82 percent of MiWay ridership. Staff anticipate the fare increase will generate an additional $2.7 million in revenue in 2024;
an 8.2 percent fare increase for the PRESTO youth fare (age 13-19) from $2.45 to $2.65. Youth account for 14 percent of MiWay ridership and the fare increase will generate an additional $0.5 million in 2024; and
a 6.3 percent increase to the cash fare, from $4.00 to $4.25. The report notes the last fare change for adult/youth cash fares was in January 2020.
While City staff argue the increase is needed to improve service delivery levels, transit group CodeRedTO executive director Cameron MacLeod says the proposed increase will not generate enough revenue to make a valuable difference in service quality.
“This sort of fare increase does not enable improved service or new vehicles or new routes. It definitely can help to account for some increased costs, like inflation and 6 or 8 percent might be in the right realm for that sort of thing, but this is a tiny amount of revenue,” he told The Pointer. “It adds up to a few million dollars over the course the year, which is huge for one family, but tiny for a transit agency.”
“Transit is not profitable, and subsidies are always required; it's part of making our city and making our region function. It's the economic blood system, it's the academic blood system, it's how we travel around,” he explained. “Charging fares is a choice that almost every transit agency makes, and that's okay, but a key thing to understand is that transit fares continually are increased faster than inflation.”
MacLeod noted that if transit fares had just kept pace with inflation from where they sat in the GTA in 1996 at $1.60, the fare would only be $2.85 today.
An important consideration when looking at fare increases is where the funding is being spent and looking at whether the revenue is being spent on improved transit service, new vehicles and routes, or on transit reliability, or if it's being directed towards managing parking rates or road maintenance.
“There's a lot of other things that happen that use up municipal budgets and provincial budgets, and that's legit, but it's all about choices,” he said. “Mississauga Council and Queen's Park have to make different decisions if they really believe in the idea of building transit. Continually adding more cost on to those transit riders does not have a great impact on ridership, and it doesn't actually make the service any better.”
Transit made up a large portion of Mississauga’s 2023 budget, with the City approving roughly $168 million (or 35 percent) for transit improvement — the largest commitment in the City’s 2023 capital budget. The majority of this year’s spending focused on the greening of the City’s transit fleet ($83.8 million for hybrid vehicles and infrastructure) and the refurbishment or replacement of other buses that remain in the fleet.
Dania Ciampini, manager of customer experience for Mississauga’s MiWay transit system, previously told councillors that although the operating budget showed a $15.8 million increase, the jump was merely to maintain existing service levels. In 2019, MiWay made $41.2 million in ridership revenue, which translated to 136,000 rides on an average weekday, she explained. When comparing ridership levels in December 2022 to December 2019, Ciampini said ridership recovery was at 101 percent but noted it has not been equal across the network as there are some routes that are performing well above pre-pandemic levels while others are still below them.
MacLeod noted increases to fares like what’s being proposed in Missisauga can have a very direct impact on ridership levels of the city.
“Every single transit fare increase does impact ridership, it does push some marginal riders away from transit,” he explained. “There may be some riders who literally just can't afford it that's not available in their budget. And they need to shift to active transportation, cycling more than they want to or more than they safely can, or walking more.”
“Separately, on the other margin, those who have stable income… might abandon transit, because now it's getting closer to the cost of what they're spending on their car, or spending on parking costs or spending on gas,” he added.
“Increasing fares happens and it's a known issue that any change in fares to increase them does impact ridership.”
Mississauga’s 2023 budget included a $15.8 million increase to the City’s operating budget for transportation. Spending for 2024 will be revealed when budget committee reconvenes at the end of November.
(The Pointer files)
One thing to consider when increasing fares, MacLeod explained, is purposeful increases. If the increased fares allow for increased service reliability and frequency through new vehicles and new routes, they can draw in more riders to account for that, but it's a choice that has to be made in good planning.
“When you're talking about tweaks to the fares, you need to think about, what is this enabling? Is this actually going to make a material change for those riders? Or are we shuffling the deck chairs a little bit and not accomplishing an improvement for those riders?”
“There are a lot of people who have been priced out of transit. We're dealing with challenging economic times, we're dealing with a lot of precarious employment, a lot of people who lost their stable work in service industries, especially as COVID really had its strongest impact over the last three and a half years.”
Despite revenue crunches and inflationary pressures that promoted austere spending in the City’s 2023 budget, council pushed earlier this year for free transit for children in addition to expanding the $1 senior pass for the City’s MiWay transit system. It was a decision that was met with contention from some members of council given the timing and the grim reality that the City is currently facing a substantial infrastructure deficit. The approved transit fare motion was for a one-year pilot project, introduced to gauge interest and ridership growth impacts, that allows children 12 and under to ride the city’s transit system for free, while expanding a $1-fare program for seniors.
Seniors account for 3.5 percent of MiWay riders. Earlier this year staff anticipated that introducing a $1 all-day seniors fare would result in a direct revenue loss of $1.4 million annually. Staff also projected an additional revenue loss of $1.1 million from fraudulent use of free senior fares. The January report noted children 12 and under account for 0.3 percent of MiWay’s total riders. It was projected that providing free fares for children aged six to twelve would result in a direct revenue loss of $0.4 million annually. A revenue loss from fraudulent use of the free child PRESTO card of $1.7 million was also anticipated. Fare evasion estimates were based on experience in other GTHA transit systems offering free fares, the council report noted.
MacLeod noted subsidy programs like the City’s one-year pilot program can help some residents, but the actual impact is often measured more symbolically than the actual financial benefit to users, which is hard to quantify.
“[The program] helps a bunch of families for sure, but it's not a solution. It's just one puzzle piece, and you have to do the other work. You have to do the work of improved reliable service, frequent service, so that transit is a realistic predictable option for everybody.”
At the time of the motion’s approval, the committee voted to have the budget adjustment to accommodate the reduced fares be taken into account for the 2024 budget cycle based on financial reporting at the six-month point in the pilot. The one-year pilot program came into effect in May this year and will run until the end of April 2024. Staff note MiWay will provide an updated report on the progress of the pilot program to general committee in December.
Wednesday’s report includes a breakdown of MiWay fare revenue collected between 2019 (pre-pandemic) and the projected revenue for 2023 and the 2024 budget. In 2019 the annual revenue for the City’s transportation service totaled $90 million. In the years following the strike of the pandemic, from 2020 to 2022, MiWay saw revenue losses as ridership made meager efforts to recover to pre-pandemic levels. According to the staff report, the service is anticipating $94 million in revenue, a $4 million surplus compared to 2019, with ridership at 104 percent since before the pandemic. As part of the 2024 budget, staff are currently projecting $99.6 million in revenue — a surplus of $9.6 million — with ridership recovery at 110 percent compared to 2019.
A report to budget committee showed staff project a revenue surplus of $9.6 million in 2024.
(City of Mississauga staff report)
While the proposed operating budget for transit in 2024 is $224 million — a $6.7 million (three percent) increase from 2023, the 2024 proposed total fare box revenue budget for Mississauga’s transit is $99.6 million — an increase of $9.9 million (11 percent). Staff anticipate the jump to be the result of the fare increase scheduled for April 2024, which is expected to generate an additional $3.6 million in revenue. The staff report notes projected revenue growth for 2024 includes an estimated $1.8 million from new riders stemming from service enhancements. The base revenue budget will also increase by $4.5 million due to higher-than-anticipated ridership growth in 2023.
Between the fare increases and revenue generated from advertising (projected to be $4.1 million), the proposed total revenue budget in 2024 for the City’s transit service is $103.7 million.
“[Mississauga’s transit system is] certainly structured in such a way that it can continue that way in future. Council can continue to make short term decisions tweaking, slightly adjusting 6 percent here, 8 percent there, and it's not going to create any shock to the system or shock to the ridership. However, it's not going to actually fix anything,” MacLeod explained.
“Hurontario isn't going to get less congested. it's not going to draw in a dramatic group of new riders. it's not going to shift carbon emissions or pollution throughout the city of Mississauga. It's sustainable, I would say, in terms of a very narrow looking at the budget view. But no, it's not actually supporting other goals that the City of Mississauga has declared.”
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