Why PRESTO isn’t yet an Oyster?

When David Quarmby, a former director of Transport for London (TfL), spoke in Toronto recently, he asked for a show of hands: “How many people in this room have an Oyster card?” (This is the smartcard used on transit in the Greater London Area.) A forest of hands went up. It seems that at least half of those present, mostly Toronto business people and government employees, owned a card they used on regular or occasional visits to a city 5,700 kilometres away.

Unfortunately, Quarmby did not ask for a show of hands for ownership of a PRESTO card. It might have been instructive to see the results.

London’s Oyster card is renowned for its convenience – one card pays for all modes of transit throughout the region, from double-decker buses to high-speed Thames River boats. It also allows for smart pricing, coordinated by TfL, that charges users according to time of day, transit mode and zones travelled, making it possible for people to get discounts on short, off-peak trips, for example, while those who travel at peak times pay premium prices. Londoners who have an Oyster card never need to line up to buy a ticket or renew a monthly pass. Nor do they need to figure out the lowest fare for a journey across the region; Oyster does that for them.

Oyster Card (London, TfL) and the Presto Card (Metrolinx, GTA)

The card is part of a successful strategy that allows travellers in Greater London to get across the region quickly with “whole journey” planning across multiple zones, jurisdictions, and modes. It also pays for itself, because the biggest source of funding for transit in London is the farebox.

The PRESTO card is still being rolled out in the Toronto region (this process started in 2009), and is apparently about three years from full deployment. And it is not yet clear whether PRESTO will offer the convenience, access to a wide range of travel options, and pay-for-what-you-get smart pricing that makes the Oyster card so successful.

So what exactly is “smart pricing” and how does it compare to the fare system in the GTHA?

Smart pricing means setting fares for an entire journey at a level that is attractive compared with other transportation modes. It must be high enough to pay for good-quality transit, but not so high that passengers choose to drive or choose not to make the trip at all.

How does TfL apply “smart pricing”?

First, TfL breaks the city-region into nine circular zones, roughly rings around central London. The more zones you cross, the more you pay.  Each zone after the first raises the fare about 20%, so for the fare to double, you would need to cross five zones.  This zone system applies to all the different rail modes – Underground, commuter rail, Overground, Docklands Light Railway, Croydon Tram.  Buses, however,  are all flat fare – one touch with the card for any length of journey.

Second, TfL charges higher fares to people who travel in the morning peak, before 9:30 a.m., when trains and buses are most crowded. Fares are up to 40% cheaper if you travel after that time. Visit any London station at 9:25 a.m. and you will see people waiting to save a pound or two on their transit passes when the lower fares begin at 9:30 a.m. Even if only 10% of peak passengers travel after 9:30 a.m., crowding is greatly relieved (and there is less pressure for TfL to buy expensive trains and buses that are needed only once each day).

Third, TfL charges lower fares for buses and trams (streetcars), which are slower than trains. Fares are about twice as high for the Underground (subway) and trains.

Fourth, TfL caps any daily fare at about three times the single-trip fare. Once you have used up that much on your Oyster pay-as-you-go card, extra trips during the day are effectively free. The cap depends on how many zones you cross, and whether you travel before 9:30 a.m.

Fifth, Oyster is valid on almost all public transit services in Greater London, and even on some rail routes extending 50 km or more out from the city centre. Some services are owned and operated by TfL, but most are not.

Sixth, TfL charges premium fares on a few services that would not otherwise be economically sustainable, like the Heathrow Express, the Riverbus, and the cable car over the Thames.

Seventh, with the exception of the commuter rail companies, Oyster revenues do not accrue directly to the operator. They go directly to TfL and are pooled. Together with some revenue subsidy, these funds are used to pay for the Underground services and for the cost-only contracts with operators of bus transit, Docklands Light Rail, Overground and tram (streetcar) services. The contracted operators are held to performance standards, and receive bonuses that depend on punctuality and reliability, which are electronically monitored, as well as cleanliness and other features checked by random inspections.

What are the plans for the PRESTO card?

When Robert Prichard, Chair of Metrolinx spoke about PRESTO at the Empire Club on 23 April 2014, he used carefully worded language to describe its potential. The goal, he said, was to “develop PRESTO as an electronic fare card for all transit systems in the region as an essential foundation for seamless fare integration in the region.”

Image (left): The Big Move, Metrolinx

In other words, PRESTO sets the stage for fare integration and is today essentially an electronic card intended to be used on nine different systems with nine different fare structures across the GTHA. “We are confident that once we have PRESTO fully implemented, the case for true fare integration across the region will become irresistible,” Prichard added.

So it’s a two-step process to fare integration and step one is not yet complete. But more important, fare integration is not quite the same thing as smart pricing; it just allows region-wide travel on a single card under a single pricing regime. It may not include the peak-period and off-peak differences, zone fares, or the premium prices for premium services that the Oyster card offers.

Why is it so difficult for Toronto region to copy what has already been shown to be a successful pricing strategy in London that attracts riders to transit and has contributed to a decrease in automobile travel?

Some think that smart pricing will mean a loss of revenues. The experience of London suggests otherwise. With smart pricing, easy payment, and more choices, people will use transit more throughout the day and total revenues will rise even if certain travellers, on average, pay less.

Others say that returning to a zone system would be “political suicide.” Toronto abandoned its transit zones in 1973, and nobody dares reintroduce them. The question of equity is often raised: what about people in Priority Neighbourhoods who work several zones away? But the GTHA already has zone fares; if you cross from Toronto to Mississauga or Markham (as many workers do every day), you pay an extra fare, even if the actual distance travelled is short. The problem is that Toronto’s fare zones are too big. London shows how a finer-grained zone system can raise more money, without penalizing people who make short, cross-boundary trips. TfL promotes equity with free or discounted travel to children, older residents, disabled people, the unemployed, and war veterans.

The concern over equity may be misplaced. Is it equitable to expect a person travelling at 11 a.m. three stops along an uncrowded route to pay the same as a commuter travelling in rush hour across the entire width of the city? Is it equitable to withhold much-needed transit expansion from frustrated transit users and potential users because the model that is currently used in the Toronto region does not raise enough revenue to allow for expansion?

Smart pricing – with zone fares, integration with GO, and lower off-peak fares – could be structured to create more winners than losers. 

The Mayor of Bogota once tweeted: “A developed country is not a place where the poor have cars. It’s where the rich use public transportation.” By this measure, London succeeds. Almost everyone there uses transit. And the more people who do, the better the system becomes. If the Toronto region set itself a similar goal and implemented all the features of smart pricing, the equity issues might resolve themselves in a system that serves the whole population while largely paying for itself.