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Distribution

Distribution would be made primarily through the

Metro Sales Outlets and Metrobus Division Offices. The current staffing level is sufficient to absorb the anticipated pass sales. The over-thecounter sales may be augmented by direct mail distribution. fulfillment house would be the recommended approach for this portion of The costs involved would be: first class

A bonded

the total distribution. postage - 13 cents, registration of mail - 15 cents, and handling $1,500 per month, plus an estimated $20 per 1,000 passes.

At various levels of pass sales, the costs would approximate:

(*factored on an assumed average pass purchase price of $24.00)

Promotion The pass program would significantly impact and bolster Metrobus promotion activities. No additional funds would be required for the program promotion.

Administration

The sales outlets are currently being serviced weekly.

Staff and internal audits occur monthly. The pass sales would fit this

schedule and would require no additional personnel.

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Training of Personnel

The passes will be so identifiable and

easy to use that bus operators would require no specialized training.
No special capability would be required beyond that needed for normal
fare collection supervision, except an awareness that the Authority
is selling and honoring monthly passes.
the operator's job.

Actually, passes would simplify

Opportunity Costs

Certainly the most difficult costs to quantify

are opportunity costs. Passes allow for unlimited rides during the month. The purchase price of the commuter pass is equivalent to 40 trips from a Maryland or Virginia zone to the District. The price of the base day pass is equivalent to 40 intrastate or 27 interstate trips. For those persons who currently pay fares in excess of these amounts, their pass purchase would result in a personal savings and a consequent revenue reduction. No revenue would be lost through the former non-rider's excess use of the service on a pass. New patrons attracted to Metrobus, and former irregular riders who increase their use of Metrobus because of the pass program generate compensating revenue to offset the excess use revenue reduction. The number of riders who would begin to use Metrobus as a result of the program is unknown. Similarly, it has not been determined how many current riders would increase their frequency of Metrobus use with However, research would be undertaken during the trial period to

a pass.

help determine the market impact of the monthly pass program.

Although both the revenue reduction and the increased ridership are unknown, the relationship between them can be shown. It is important to emphasize that the new rider does not contribute an incremental cost because

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no added service is anticipated.

The purchase of a pass by a newly

attracted patron compensates for the excess use revenue reduction by the number of inter or intrastate rides indicated in the table. For commuter passes, "pass zone" indicates the number of zones for which the pass would be valid. The "interstate" and "intrastate" columns show the number of rides for which compensation is made by the value of the pass.

This means that for every person attracted to Metrobus by the pass program and who buys a zone 4 commuter pass, 120 people can exceed the 40 intrastate base day rides and ride 41 times at no cost to the Authority. If the pass purchaser previously rode half the time, the impact would be only half as great, compensating for 60 rides instead of 120 as in the example above.

Carrying the relationship still further, the commuter from zone 4 who had been riding only half the time during rush hour but was paying for 60 rides during the base day, could buy a zone 4 pass with no revenue

reduction to the Authority.

Incidental Cost Avoidance

Ticket and transfer printing costs

would be reduced. There would be reduction in scrip handling costs. Improper fare and unpaid fare costs would be reduced, along with a decrease in farebox revenue available to handling fraud.

POTENTIAL PROBLEMS

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There are problems associated with any promotional fare program.

Many potential problems have been pin-pointed and considered in developing

these programs, although it is not practical to cover all of them in

this report. Some, it will be noted, lend themselves to solutions.

1. It will be necessary to develop a formula for allocation
of pass revenues to the jurisdictions, since it is not
possible at this time to predict which of the jurisdictions
will provide the greatest number of passholders. The
Office of Marketing developed an allocation formula based
on the deficit allocation formula adopted by the Board,
July 24, 1975. It is outlined in the ensuing paragraphs.

The formula distinguishes between dedicated
and non-dedicated revenue. These distinctions are
significant to the pass revenue allocation. Dedicated
revenue is allocated between the District of Columbia
and either Maryland or Virginia. Allocating between
Maryland and the District, Maryland receives the zone
charges and the District receives the base fare.
(Base-day operation under the new fare system will
result in the District receiving 40¢ and Maryland 20¢
from each 60¢ fare.) Allocating Virginia-District
non-dedicated revenue will be on the basis of the
ratio of passenger miles for the two jurisdictions.
(This ratio is currently unknown but is being calcu-
lated using the May passenger survey data.)

When passes are sold the jurisdiction of residence
can be recorded. The DAY TRIPPER or base day pass is
valid during the period when the vast majority of trips
generate non-dedicated revenue. For this reason, the
purchase price ($16) of the base day pass purchased by
a Maryland resident will be viewed as non-dedicated
revenue applying to the Maryland-District of Columbia
allocation ratio. This allocation formula for base-day
is 2:1, District to Maryland. Revenue received when a
Virginia resident purchases a DAY TRIPPER pass will be
apportioned through the agreed to passenger mile ratio.

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The EASY RIDER or commuter pass contains the same riding privileges as the base-day pass plus rush hour and Sunday family features. The value of the commuter pass is then $16 for the base pass (viewed as non-dedicated revenue) and a rush hour balance which should be dedicated revenue for Maryland and Virginia purchasers. This is due to the preponderance of dedicated service operating during the rush hours.

District of Columbia residents purchasing a commuter pass will have systemwide privileges during the base day. For this reason, District pass revenue should be allocated on the basis of District resident travel patterns.

The proportion of travel by District residents inside the District compared to rides in other jurisdictions will be available through the May passenger survey.

Because the District and Virginia allocations are based on the survey data which is not yet tabulated, only Maryland allocation figures can be cited by way of example.