February 2, 2009
Extra, Extra! Dramatic Fare Reduction in Rochester, NY
By MARK R. AESCH
In September of 2008, Regional Transit Service Inc. (RTS), the largest subsidiary of the Rochester Genesee Regional Transportation Authority (RGRTA), lowered its fare to a price last seen in 1991: from $1.25 to just $1.
In this time of financial insecurity, the question is obvious: How did one transit agency manage to reduce its fares?
Changes in Philosophy, Approach, and Service
Four years ago, RGRTA faced a $27.5 million deficit, a massive operating gap that had the new management team initially considering significant across-the-board fare increases, many layoffs, and wholesale reductions in service to the community.
Refusing to accept these options, we made a commitment to sound strategic planning and focused performance measurement systems, looking for the end result of dramatic improvements in productivity.
In the past, performance measurement tools used by RGRTA, such as the Customer Satisfaction Index (CSI), first implemented in Fiscal Year 2005-2006, focused on only one subsidiary and on only customer service.
The Transit Organization Performance Scorecard (TOPS)—a comprehensive measurement instrument—reflects RGRTA’s desire to monitor continuously the overall health of the organization. TOPS combined measurements of the financial success, quality of customer service, productivity of service, and employee success to generate a single comprehensive measurement. With a measurement index for each pillar of our strategic plan, TOPS incorporates various metrics to measure, on a quarterly basis, how RGRTA is operating as a whole.
These measurement systems provide a true, accurate, and comprehensive picture of the way RGRTA functions compared to the strategic plan and how each employee contributes to the plan’s successful implementation; it also provides a clear blueprint to achieving excellence.
The TOPS Customer Satisfaction Index was a significant improvement over the previous one because it measures the satisfaction of customers served by all of RGRTA’s subsidiaries. Within TOPS, the highest weight was assigned to the Financial Performance Index because financial stability ensures adequate resources to achieve the other elements of our strategic plan.
The CSI combines 11 different customer service components. Since its inception in the fourth quarter of FY 2005-2006, RGRTA has achieved a 30 percent improvement in customer satisfaction.
The Route Productivity Index (RPI), consisting of Revenue per Revenue Mile and Customers per Revenue Mile, provides a measure of the effectiveness and efficiency of scheduling service to meet customer demands. In other words, how much money does RGRTA see in each revenue mile it drives and how many people is RGRTA serving in each mile it drives? This index balances service to the customer with the productivity demands of the taxpayer.
The Employee Success Index (ESI) focuses on our employees—our greatest asset—taking into consideration employees’ interactions with customers and personal achievement through the authority’s incentive pay program for the accomplishment of specified goals.
After developing the comprehensive measurement capability, RGRTA first focused on improving route productivity. Over the past four years, RTS has seen the number of people it picks up per mile increase by more than 40 percent. This pickup also meant a “pickup” in revenue, which increased more than 70 percent.
Second, RGRTA changed its philosophy about service, no longer picking up “passengers” and instead picking up “customers.” We realized that, while “passengers” are people who merely ride the bus, “customers” are people that make an economic decision to buy our product. As a result, we implemented substantial improvements in customer service:
* Increased on-time performance from 77 percent to 85 percent;
* Installed Trip Planner software on the authority’s web site;
* Completely altered a 35-year-old six-zone fare system and replaced it with one price for every customer; and
* Developed a nationally recognized Customer Satisfaction Index (and found that customers are happier with service today than they were four years ago).
Third, while productivity and customer service are critically important elements to any successful program, the inherited $27.5 million operating deficit was still present. Through the efficiencies from improving route productivity, relationships with major business partners that provided an appropriate return to the organization, and achieving equity in the distribution of state aid, RGRTA turned that projected loss into a $19 million gain: a turnaround of $46.5 million.
Thanks to the increased ridership and investments in customer service, we have been able to pass the savings on to our most valuable partner, the customer. Further, by lowering the fare to just $1, we effectively announced to the community: “We are open for business!”
Dramatic Responses to Fare Reduction
All these efforts paid off. Today, RTS no longer faces the thunderclouds that threatened its ability to provide much-needed service to its 50,000 daily riders. In the first month of the fare reduction, ridership at RTS increased 23 percent; in October that number rose to 30 percent, compared to numbers in the previous year.
RGRTA’s business plan, which projected a $44,000 loss with the fare cut, nevertheless gained nearly $10,000 with the ridership increase. This soaring increase speaks to the quality of service that regular—and new—customers experience every day.
All these efforts of providing a public-sector service with a private-sector mindset have resulted in successes beyond anyone’s expectations.
When gas prices were consuming more and more of a working family’s household budgets, many Rochester residents opted for the new customer-focused public transportation system as an affordable alternative.
Our plan, developed four years ago to operate the organization in a more businesslike fashion, used data and quality performance measurement systems to drive the decision-making process. The great news is—our plan worked!