- Farebox recovery ratio
The farebox recovery ratio of a passenger transportation system is the proportion of the amount of revenue generated through
fares by its paying customers as a fraction of the cost of its total operating expenses. Most systems aren't self-supporting, so advertisingrevenue and government subsidies are usually required to cover costs. The Hong Kong MTR Corporationis one of the few self-supporting transit systems in the world.
Need for government subsidy
There are several practical reasons for government subsidies of public transit. By subsidizing mass transit, it encourages ridership and subsequently lowers traffic congestion. Another benefit is lowering pollution from single occupant vehicles that are no longer on the roads. The third benefit is reducing infrastructure costs needed to build and maintain more street, highway, and freeway lanes associated with increased traffic congestion. These factors considered together also contribute to a better quality of life as defined by global quality of living measurements. [http://www.mercerhr.com/summary.jhtml?idContent=1173370>Mercer Human Resources Consulting QOL Reports c2005]
However, some argue that there would be no need to subsidize mass transit if gasoline (petroleum) were not also subsidized. In 1965, the landmark "Urban Transportation Problem" by John Meyers argued that the urban transportation problem was actually a pricing problem. Consumers do not pay the actual cost for congestion and the government subsidizes all modes. This creates a modal imbalance between all modes but particularly between subsidized urban highways and transit. A study by the
International Center for Technology Assessmentfound that after accounting for government subsidies, pollution cleanup and other costs, the real price of gasoline is estimated to be somewhere between USD|5.60 and USD|15.37 per gallon. [http://www.icta.org/doc/Real%20Price%20of%20Gasoline.pdf] Were gasoline sold within this range of prices, people might voluntarily drive less, choose more fuel-efficient vehicles, and use mass transit.
Farebox ratios around the world
The following table lists farebox ratios for some public transportation systems around the world.
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