Union Pearson (UP) Express

A high-quality, fast, reliable link to Pearson Airport, not vulnerable to road congestion, is considered important to maintaining Toronto’s position as Canada’s leading business centre. The Union Pearson Express is now under construction and will be completed in time for the 2015 Pan-Am Games. Our analysis indicates that the scheme is very good value for money, and most if not all capital costs will be repaid from operating surpluses.

Metrolinx seems not to have prepared a Benefits Case Analysis for the UP Express scheme, even though construction is well under way. Metrolinx has released only limited information in Project Fact Sheets. Nevertheless, the limited information makes it possible to estimate the benefits of the scheme.

According to Metrolinx, traffic volumes on the UP Express will be fairly small, perhaps 3 million per year or about 8,000 per day, when it opens. Perhaps half of the passengers would otherwise have used the existing express bus, which provides service direct to several downtown hotels. However, some passengers would otherwise drive, either by taxi or by limousine. Taking even a few hundred peak-hour trips off the Gardiner Expressway, Queen Elizabeth Way and Highway 427 will have a real benefit.

Metrolinx has not yet disclosed its fare strategy for the new service. The current express bus from the airport to the Royal York charges about $27, with cheaper fares if tickets are pre-purchased or purchased in bulk. Metrolinx expects the Union Pearson Express will take 1.2 million cars off the road in 2015,[1] suggesting a total ridership of perhaps 3 million, including passengers diverted off the existing express bus service.

Ridership will depend on the fares that are charged, but also on convenient arrangements for onward travel. Currently, the express bus runs directly to several downtown hotels. UP Express passengers will need to walk or take taxis from Union Station. Some passengers, especially those with considerable luggage, will continue to use a taxi for the entire journey, because they will not want the inconvenience and delay of transferring at Union Station.

Our analysis uses the Metrolinx ridership figure of  3 million annual passengers in 2015. We  assume an average fare of $15. About half of these passengers might be new to transit, and the rest would be diverted from the express bus. The average load per train would be 57 passengers, although numbers would vary widely by time of day and some trains would reach the full capacity of 180 passengers on a two-car DMU. Using these figures, revenues should be sufficient to recover all incremental costs, so there is no net cost per new passenger. We also believe that ridership will grow quickly, perhaps 50% by 2023, and doubling again by 2033.

Passenger benefits would mostly be captured with fares. Road user benefits could be substantial, in the order of $10 for each trip diverted or about $504 million NPV.

Table A3 in the Appendix contains our estimates of costs and benefits for the Union Pearson Express.

Overall, the UP Express scheme seems to be worthwhile, with all costs recovered from fares over time.[2] Metrolinx should consider how to make the service more attractive to airport workers and travellers who need to connect to the subway, GO, or VIA to complete their journey. PRESTO makes it possible to apply various market-segmentation techniques. For example:

  • A large discount could be offered to frequent users. The fare could be $15 for the first 4 trips each month, and then drop to $2 for subsequent trips. Airport workers would then only pay an average of $4.60 per trip, assuming they use it 20 days per month.
  • Discounts can be offered to passengers using connecting subway or GO rail services. Most likely, the connecting trip should be “free,” as passengers who need to ride the subway or GO to get to Union Station from their home or workplace probably have alternative ways to get to the airport more directly.
  • UP Express should also consider offering “family” fares, for groups of two or more travelling together.
  • UP Express could operate a connecting bus from Union Station to downtown hotels. This would either be free to UP Express passengers, or have a small incremental fare. This would be similar to the van service that currently links downtown hotels to the Airport express bus.

These types of initiatives could double or triple the ridership on the UP Express, and mitigate criticism that the service is aimed only at affluent business travellers, and not “ordinary travellers.”

 
[2] Metrolinx had hoped that the line could be developed as a P3 concession with private investors taking traffic and revenue risk, but it seems private investors demanded too high a risk premium. While revenues seem likely to outweigh costs when discounted at a “public-sector” rate of 5%, private investors would insist on a much higher rate, typically 15% on equity. Private investors are also likely to insist on guarantees from Metrolinx such as long-term rights to train paths, which might make it difficult to develop new commuter services over the Georgetown Line, and even restrictions on competing airport bus services.