D. Zone Fares Within The District There was discussion in this record, as in the last, about the feasibility of fare zones within the District of Columbia. There was, however, little dispute on the point. Company witnesses discussed in somewhat more detail the serious problems which such a proposal would raise. Their testimony was not seriously disputed by any other party. As in Order No. 984, we do not believe there is any basis in this record for requiring the institution of a zone fare system within the District of Columbia. We should note, however, that this question which we are also examining in the proceedings on remand of Docket No. 131R pursuant to Payne v. WMATC, 415 F.2d 901 (D.C. Cir. 1968). The status of that proceeding is described in the next section of this order. We are careful in each Transit rate case to consider the impact of the fares we authorize on the balance between Maryland and the District of Columbia. For several years, the Maryland and interstate service have provided about 15% of the company's passenger revenues, while D. C.. fares have provided the balance. In Payne v. WMATC, supra, the court of appeals directed us to consider whether this balance between Maryland and D. C. fares was justified by cost allocation studies. Pursuant to the court directive, we engaged the services of an independent consultant to study the question. In November, 1969, the consultant filed its report on the subject, concluding generally that the Maryland and D. C. services of Transit each met their properly assigned costs. This study must be subjected to the scrutiny of the hearing process before we will accept it as valid. Steps toward the hearing have been initiated. The study was made available to all interested parties and a period of time for their review was provided. Thereupon, a series of pre-hearing conferences was held, at which issues were defined and procedures for the hearing were established. The next step is the issuance of a pre-hearing order embodying the agreements reached and disposing of the disputed questions. The extremely heavy press of other Commission business, including the processing of three rate cases simultaneously, has prevented us from issuing that order to date. However, it will be forthcoming in the very near future and the remand proceedings will then move to their conclusion. In the meantime, we feel that the consultant's study, although we do not accept it as final, provides an adequate basis to adjust fares once again, as was allowed by the court in the Payne decision. We feel, however, that the same general relationship between interstate, Maryland, and D. C. revenues should be maintained. We have examined that question and find that the fares we authorize produce the following result: The new schedule of fares will have intra-D.C. riders (including the schoolfare subsidy) contributing 85.71% of total regular route revenue, intra-Maryland riders contributing 5.14%, and interstate riders contributing 9.15%, compared to the respective contributions by each segment of 84.95%, 5.69%, and 9.36%, if fares had remained unchanged. In no instance does the impact of the new fare schedule disturb the existing relationship between the major segments to the extent of as much as one percent. We feel, therefore, that these fares meet the requisite standards in this regard. With these questions resolved, we can turn to a description of the rate structure here authorized. We will raise the intra-District fare to 40 cents. The fares for Maryland local and interstate local service will also be raised by eight cents. In order to maintain the differential relationship between fares for local and express service, the interstate express fare will be raised ten cents. The other increases authorized are: Capitol Hill Express, 5 cents (to 75 cents); D. C. Stadium, 25 cents (to $1.00), but 20-ride ticket available at $15.00 (75 cents per trip). The company has requested authority to sell tokens in quantities of five for $2.00. It is our opinion that purchases by the public should be permitted in quantities of four for $1.60, as this permits the passenger to purchase quantities good for an even number of round trips; the purchase of any amounts beyond four should also be permitted. 59-996 O 7112 This fare structure will produce the following operating results: One item in the Table V projection requires further discussion. It involves a program requiring added operating expenses which Transit can afford to undertake at its authorized fares. We have repeatedly expressed our concern in recent years with the inadequacy of the company's marketing program. We believe that its efforts to maintain its existing ridership and to obtain new ridership have been impaired by its failure to promote adequately the use of its service. We should make it clear that we mean by marketing a soundly conceived and well-carried out program of imparting information to riders and potential riders about the specifics of the company's service its routes, its schedules, its terminal and stop locations, its transfer points and other items of similar information. We do not mean a program of "image-building" or "public relations" without substance. We think that the public would benefit greatly from such a program. We are well aware that the company's financial condition in recent years has been such that it was not possible to undertake any significant improvement in this area. However, we think that with the fare structure here authorized, there will be funds available for this purpose. We think that the program, if it is to provide real benefits should be of significant magnitude. Hence, we feel that the company should spend at least $150,000 on new marketing efforts in the future annual period. To this end, we will require that amount to be earmarked and set aside in an escrow account to be spent only for those purposes. We have in mind efforts of the following kind, among others: 1) Constant availability on each bus, time tables for the specific line on which the bus is then being operated; 2) Forms available on each bus which riders can mail in to obtain timetables for other lines; 3) Route map or maps which are substantially improved and are readily available to riders again perhaps by mailing in a card available on each bus; 4) A program of signing at bus stops which makes available at that point route and schedule information; 5) Pamphlets listing current locations where tokens can be purchased; 6) The creation of information displays to be placed in public locations; 7) A substantial upgrading in the telephone information service so that all calls are promptly and efficiently handled. There are undoubtedly other types of marketing activity which would be helpful. To the maximum degree possible, they should be oriented to the dissemination of hard information about routes and services. We will allow the escrowed funds to be used to a limited degree to obtain the services of top quality qualified assistance in creating marketing programs. The use of the funds for any given activity will be subject to our review and approval. The staff and company will be directed to work out procedures toward this end. We are firmly convinced that significant strides can be made in the marketing area and we will expect a first rate performance by the company in response to this directive. For the reasons discussed above, we find these fares and these projected results to be just, reasonable and not unduly discriminatory. We must discuss at this juncture the arguments presented to us that no increase whatever be authorized despite the financial facts we find. IV ALTERNATIVES TO FARE INCREASES We face once again in this proceeding, as we did in the last D. C. Transit rate case, the contention that we should take no action to adjust fares despite the clear and urgent showing of financial need. Once again, the District of Columbia Government, through its Deputy Mayor, appeared before us to urge that we take no action on fares because of the pendency of legislation permitting public takeover of the bus system. He was joined this time by representatives of the Amalgamated Transit Union, which represents Transit's workers, who urged upon us the same course of action. We discussed the possibility of pursuing this course at considerable length in Order No. 984, our last D. C. Transit rate order. Much of that detailed discussion is applicable to the questions which have been raised here, and we herewith incorporate it by reference. See Order No. 984, Pp. 24-32. however, Some further review of questions raised would be appropriate, The Deputy Mayor, Mr. Watt, strongly opposed any further increases in fares until such time as the public takeover legislation is passed. We asked for his views on the very difficult question which this suggestion raises, i.e., what should we do about the prospect that our failure to act could lead to a cessation of service due to the company's deteriorating financial condition. However, in Mr. Watt's view this question need not be faced. He made it very clear that his position was based on the specific premise that there is a reasonable prospect for prompt enactment of that legislation by the Congress.11/ Unfortunately, this is not a premise which we are in a position to accept. We informed Mr. Watt at the hearing that the Chairman of the Commission had met with members of the House District Committee, which must pass upon the takeover legislation. It is the Commission's judgment, on the basis of the Chairman's discussions, that there is little, if any, chance that the House will act on public takeover at any time in the immediate future. Certainly chances of action in this session are almost non-existent. We are not even certain of a possible change beyond that period. Our assessment of the situation, as expressed at the hearings, was confirmed by press reports concerning subsequent contacts with key members of the House. Moreover, having informed District representatives as to our assessment of the situation, we urged them to demonstrate otherwise, if possible. No action has occurred in the House since that time. Since we cannot accept the premise on which the District's position is based, we must face up to the consequences of our failure to adjust fares. The union, in its presentation, frankly acknowledged what those consequences would be. The company would eventually be unable to continue operations. Further, the union urged us not to let that fact deter us from refusing a fare adjustment. Only such a threat, they urged, would produce action by Congress. We discussed this proposition at length in Order No. 984, at pp. 29-30. We will not repeat that discussion. Suffice it to say that we will not pursue the course suggested by the union for two reasons: (1) We do not have the legal right to do so. Both the Compact 11/ At this juncture, the Senate has passed a bill but no action has been taken in the House. |