Quote:
Originally Posted by MalcolmTucker
Walk up LRT users are pure profit too, and have almost no marginal cost unless the line is at capacity, or there are enough to require an incremental LRV on a train, or an incremental frequency.
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Indeed, but as I stated earlier, if you regard marginal costs only under the premise that you've sunk costs into building and operating the system, then yes, every rider - those on feeder buses as well, is what you term "pure profit".
I'm not trying to disregard marginal cost pricing, as it can be used to increase revenue, but I do believe framing it in terms of this idea that it is pure profit confuses things - least of which, remembering that the system as a whole is not directly turning a profit in pure monetary terms.
At the end of the day, before implementing a new transit service, the average user cost has to (or should) be given at least some thought. Well, it usually is especially at an aggregate level - that is Capital Cost. You can't just spend 3-4 billion to implement a line and start running transit vehicles to then deem the first fare purchase as profit because the money for the line has already been spent. A purely marginal cost perspective would actually dictate that the fare in this case should be effectively zero; a large part of the economic basis for 'free' transit.
Indeed, charging fares at all basically speaks to the fact that it is acknowledged that a user imposes an average cost onto the system, whether they access by walking, PnR, or feeder bus. This average cost does then vary, and starts to build a rationale for why distance-based faring (or other faring structures based on time of day, user willingness to pay, etc) is ultimately a better blend of both worlds.