In the past decade V/Line patronage has exploded, with millions more passenger journeys being made each year. What is the driver behind it – improved services, or regional sprawl? There is also another factor – the 20% fare cut of 2007.
The battleground was the 2006 State Election, and the elimination of Zone 3. From The Age:
Both parties promise ‘fare go’ for public transport
Stephen Moynihan and Farrah Tomazin
October 27, 2006More than a million Melburnians will have cheaper public transport fares in 2007, no matter who wins next month’s state election.
Within hours of each other, the Opposition and State Government yesterday announced plans to abolish Zone 3 on the metropolitan transport system.
Opposition Leader Ted Baillieu fired the first shot, saying the creation of simpler fare structure would reduce ticket prices and increase public transport patronage.
Four hours later, Premier Steve Bracks announced the same promise but trumped the Opposition with a pledge to cut V/Line fares by up to 20 per cent.
The Liberals costed their plan at $84 million over four years, with Labor costing theirs at $94.1 million over five years.
Labor won the election, with their fare changes introduced on 4 March 2007 – removal of Zone 3, and a 20% cut in V/Line fares.
What happened to V/Line?
The 2006-07 V/Line annual report had this to say.
Patronage in 2006–07 climbed to its highest level in more than 60 years, with nine million passenger trips – 29 per cent more than last year. This followed the introduction of the new timetable in September and October 2006 and the government’s 20 per cent reduction in fares from March 2007.
The patronage trend continued – from the 2007-08 annual report:
While the 29 per cent increase in passenger numbers in the previous financial year may have been seen by some as an anomaly associated with the introduction of cheaper
fares, a further 23 per cent increase this year is confirmation that we are indeed experiencing a new era in rail travel.Nearly 12 million passenger trips were made with V/Line in the past year, almost doubling our patronage of just three years ago. With the likelihood of continuing high fuel prices and increasing congestion on metropolitan roads, we expect patronage to grow to more than 13 million passengers in 2008–09.
This increase in patronage initially has a positive impact on revenue – as the 2010–11 annual report states:
The farebox has risen 57 per cent from the $49.3 million recorded in 2006, almost entirely due to the rapid rise in patronage as ticket prices were cut on average by 20 per cent in 2007. Price increases in 2008 and 2009 were at or below CPI, with prices held constant in 2010. A small increase of 3 per cent during 2011 was delayed until March and as a result had a minor impact on the overall farebox for the year.
As more people make the switch to public transport, V/Line has become a more efficient business. A key indicator of this performance is the subsidy per passenger trip, which dropped to $18.36 in 2011. This is the fourth consecutive year that V/Line has reduced this subsidy.
However this reduction in operating subsidy was short lived – by 2015-16 was already back at previous levels – around $22 per passenger.
One possible cause – the majority of these new passengers were commuters travelling at peak times, requiring extra services to be run into Melbourne each day and back home again at night.
Combine an increasing number of passengers and an increase in services run, the overall franchise subsidy – government funds to meet the gap between operating costs and farebox revenue – began to skyrocket.
This increase in overall subsidies to V/Line now appears to track patronage.
With an overall V/Line subsidy of $391 million in 2015-06, I wonder what the current explosion in suburban patronage from the likes of Caroline Springs, Tarneit and Wyndham Vale will do to this trend?
Source data
Here you can find my spreadsheet tracking V/Line’s franchise subsidy and subsidy per passenger year-on-year.
