Presto to cost TTC millions more than current fare system

Thestar.com
June 8, 2018
Ben Spurr

Despite previous assurances that it wouldn’t result in additional costs, a new report says the TTC will spend millions of dollars more on fare collection each year by using the Presto smartcard instead of tickets, tokens and passes.

According to a TTC report published Friday that lays out a revised schedule for its conversion to Presto, the transit agency estimates its fare collection costs for this year will be $110.8 million.

By 2020, when the Presto system is fully implemented, that costs will rise about $9 million to $119.7 million.

In the intervening year, the fare collection costs will be even higher as the agency incurs “transitional costs” of operating parts of two different fare regimes at once. The TTC is planning for $19.5 million in transitional costs for 2019, which would bring its fare collection expenditures up to $130.3 million, almost $20 million higher than this year.

In an interview Friday, TTC chair Josh Colle argued that Metrolinx, the provincial organization that owns and operates Presto, should be responsible for any additional expenses associated with the fare card.

“We at the TTC clearly believe that we should not bear that cost, but that’s part of an ongoing conversation” with Metrolinx, he said.

“We are partners, I recognize that. But we’ve got to make sure that these burdens are fairly shared.”

The TTC and Metrolinx are already in talks over compensation for malfunctioning Presto readers. The TTC has said it believes it’s owed $4.2 million for revenue foregone because of unreliable machines, while Metrolinx has countered the TTC actually owes it money for additional work the Toronto agency requested as part of the Presto program.

The TTC board agreed to adopt the fare card in 2011 under pressure from the provincial government, which made the allocation of gas tax proceeds to the city contingent on the deal.

At the time, a TTC report said the fees the agency would pay to Metrolinx to operate Presto “would be offset by other TTC fare collection operating savings and should result in no net increase to TTC’s overall fare collection operating costs.”

Asked to explain why Presto will actually be more expensive than the current system, TTC spokesperson Heather Brown said the increased expenditures under the fare card include “updated costing information” for maintenance on new Presto-enabled fare gates, and a station staffing model that “was not considered in 2011.”

The TTC’s biggest expense once the Presto system is fully in place will be the 5.25-per-cent fee it pays to Metrolinx on every fare card transaction. The fees are expected to rise to $56.6 million a year by 2020.

By that time, the TTC will be able to save $10.1 million a year by no longer producing older payment media, and $42 million a year by eliminating fare collector positions at subway stations, but it will still be required to staff stations with “customer service agents.”

The customer service agents, who will help riders use Presto vending machines and give directions, will cost the TTC $35.6 million a year. That will wipe out most of the savings from eliminating the fare collectors and, combined with the Presto fees, be the main driver of the higher overall costs.

Metrolinx spokesperson Anne Marie Aikins said that despite being more expensive, Presto is still a “good deal” for TTC riders.

The fare card, which is also used by 10 other agencies in the province, allows for seamless travel between regions, she said, and enables features like the $1.50 discount on fares when transferring between GO Transit and the TTC, as well as the planned two-hour transfer policy being implemented on the Toronto network in August.

“I think when it’s fully implemented, people will see the benefits of it,” said Aikins.

As the Star reported Thursday, the TTC now doesn’t expect to phase out old forms of payment like tickets and tokens until the end of 2019, at least two years later than previously planned. TTC board members have said Metrolinx is responsible for the delay, while the provincial agency says accommodating TTC requests for changes to the program have pushed deadlines back.

Under the updated timelines, the TTC will stop selling tickets and tokens in August 2019, and stop accepting them at the end of next year.

Conventional Metropasses will be phased out at the end of 2018. Riders can already load monthly passes on their Presto cards.