44 North
Senior Member
Price elasticity is fairly simple. If the TTC increases fares a bit, it'll mean more revenue. If they increase fares a lot (i.e. from $3.00 to $9.00, as you're proposing here) it'll mean less revenue since nobody will take transit. And no matter what, if they decrease fares they'll lose revenue, because the TTC (unlike Go Transit) isn't competing with a cheaper transit provider. They're competing with wheels and feet, which are either free or fairly expensive.
Business cases basically ask "what is the cost of providing this service, and is that cost justified?" More revenue improves the business case, since the cost of providing the service is lower. Less revenue hurts the business case, since the cost is higher.
I'm certainly not proposing it. And am saying your concept is silly/flawed for assuming that increasing fares for long-haul riders automatically equates to more revenue, thus markedly improving the biz case of peripheral extensions. Yes more revenue *per rider*, but if it has a lot less riders than a flat fare would otherwise offer how would that affect the bottom line in this business case?
A fare policy that decreases revenue on short trips and increases revenue on long trips improves the business case for the long trips and hurts the business case for the short trips.
And what happens if there's a net increase in riders for the short trips, and a net decrease for long trips - which is obviously what would occur yet you fail to mention. And where do the existing revenue/subsidy discrepancies lie within the system? How about pass/km costs for new projects?