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Should SEPTA reduce fares to attract riders?

As you may have read yesterday, SEPTA is hiking fares on July 1st. Over at Eschaton, Atrios bemoans the increase and argues that there might be a better way to generate revenue.

You know what would also encourage people to buy monthly passes... lower prices! The city zone only pass is overpriced. If they cut the price by 35% and heavily marketed it (and, of course, made it easier to buy one...) they might get good results!

While we agree with parts of the post, we have to point out that SEPTA would essentially be taking a huge gamble by drastically reducing prices to attract new riders. If the gambit didn't work, SEPTA would face serious cash flow problems and likely be forced to either cut services or dramatically raise prices.

It's not just the fare hike that's problematic. The type of ad campaign that Atrios is suggesting would be very expensive. To put it in context, the ad campaign for the state's tax amnesty is costing $3 million. Now, that's a drop in the bucket for SEPTA. But the ad campaign Atrios is proposing would be much longer, intense, and more expensive.

In some ways, the post highlights the problems that large public institutions have implementing outside the box ideas. Big agencies like SEPTA generally don't have the flexibility to do things like what Atrios is proposing. That's partially because they rely on so many different streams of revenue. For example, SEPTA gets money from riders, the state, and the city to stay afloat.

If decreasing fares failed, it could jeopardize the two other sources. Why? Well, if SEPTA tried something so risky, it could be seized upon by rural lawmakers as an excuse for shutting down the agency altogether.

All that said, of course we like the idea of reducing fares...if SEPTA can find a responsible way to do it.

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