Deep Discount Group Pass

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A sample of Denver RTD's EcoPass

Introduction

Deep discount group passes (DDGP) can be offered by transit agencies as an incentive for increasing ridership among large groups of typically centralized people while boosting agency revenue. DDGP programs are commonly offered to employers and universities. The employer pays for the privilege of offering its employees unlimited use of the transit system. The cost assessed by the transit agency to the employer would be significantly less than the employer buying passes for every single employee. However, it still generates new revenue for the transit agency because the lure of "free" transit incentivizes the employees to ride when previously very few probably used transit. Since effectively all of those riders are new, even if they are not individually paying the full fare, the partnership between the transit agency and the employer generates new revenue.

In setting fares, agencies are typically focused on the individual existing rider, whereas DDGP shifts the focus to groups of potential riders. Adjusting the base fare for service affects individual choice about how many trips they will make; raising the fare causes price-sensitive riders to make fewer trips while lowering the fare encourages people to ride more frequently. A group pass program encourages a large number of people to make effectively unlimited trips, but is typically extended to groups who might not have used transit at all. If these people were not riders previously, each one represents a revenue gain even though the agency sells the pass at a discount.

Benefits

DDGP programs have benefits for both the pass purchaser (employers, universities) and the transit agency. The employer can consider and market the pass program as an employee benefit, enhancing the image of the company as a progressive and environmentally-conscious business. Consider also that if most of these new riders have a good experience with the transit system, they may encourage others to try the service as well. Thus a DDGP can serve as a cost-effective marketing program as well.

Common Characteristics

DDGP programs typically define an eligible group, such as all benefit-eligible employees, all currently enrolled students, all city employees, etc. In some cases the employer pays for the cost of the pass and makes them available to eligible participants at no charge. In other cases the pass discount is negotiated between the employer and the transit agency with eligible persons paying the cost of the pass individually. For example, at UCLA, students pay each quarter for the discounted bus pass; while a significant savings over other options for regular users, it still requires students to pay for the pass individually. Other variations include the unlimited ride benefit at no cost to the user while the group at large pays a fee; this system is in place at the University of New Hampshire, where students and faculty pay a fee to fund the transit system and may simply present their university ID to board the bus at no charge.

Passes often have a photo ID to deter fraudulent use, given the high value of the benefit. DDGP typically confer unlimited use of the system to the pass holder for a year, although universities may divide pass eligibility by academic semester or quarter.

Some programs include a guaranteed ride home component.

Experience

Denver EcoPass

The Denver Regional Transportation District (RTD) was a pioneer in DDGP programming with the EcoPass. Participating employers are required to offer the pass to all full-time employees. The pass cost is determined by the employer location, number of employees, and transit options nearby. This flexibility allows RTD to charge more for employers downtown versus those in free-parking-rich suburbs who may have less incentive to participate. While pass holders receive unlimited use of most RTD services, there is an upcharge for the airport express buses and the pass is not valid on other specialized services at all.

Denver RTD also offers other variations on the EcoPass program to provide as broad coverage as possible. A more flexible version allows employers to choose the level of transit service employees may take advantage of under the pass, for example.

References

Brown, Jeffrey and Daniel Baldwin Hess, and Donald Shoup. “Fare-Free Public Transit at Universities: An Evaluation,” Journal of Planning Education and Research, 23(1), 2003 pp. 69–82.