Deep Discount Group Pass

THIS ARTICLE IS IN DEVELOPMENT

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.

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.