The business case for SkyTrain faregates and Compass

It looks like at least one newspaper editor in the Lower Mainland is not doing his or her research. In particular, the South Delta Leader baffled me last month with an editorial claiming that the Compass Card fare system is a blunder, and that it will cost TransLink.

TransLink estimates that fare evasion costs the local transit authority $7 million annually. If that’s the case, it will take TransLink close to 25 years just to break even on the Compass Card program, given the $170 million it has spent.

From the South Delta Leader – [LINK]

An even more baffling letter appeared in today’s issue of the Surrey Leader newspaper.

…The above figure assumes that there is no cost for money, which is unrealistic. The money invested in the project is undoubtedly borrowed by the different levels of government. Assuming a four per cent interest rate, the discounted payback period is nearly 91 years, a relatively long time to recover the cost of installing the new fare gates.

From the Surrey Leader – [LINK]

I think that this is a key misinterpretation that people are making when Compass is involved.

Adopting a smart card system had been planned for years before the SkyTrain faregates. No thanks to the likes of former B.C. Transportation Minister Kevin Falcon and the media’s push on the faregates as being a tool to reduce fare evasion, I’m not surprised that many people still believe that the sole reason for the installation of faregates has to do with that. However, there are plenty of other benefits to the faregates and Compass – they just haven’t been publicized as much.

For example, the trip tracking that will be made possible with Compass Cards allows TransLink to work from solid data for the first time when optimizing bus services. No more guesswork. This generates benefits because bus service is better allocated to bring more reliable service to customers, which can increase ridership while lowering costs.

Shorter payment times will also significantly improve reliability on buses, as I explored in my earlier write-up on the matter: [CLICK HERE]

As early as 2010, there were editorials written slamming TransLink for “not having a business case” for installing faregates and Compass. But, a business case was indeed developed, all the way back in 2009. You can view it by searching the document library on TransLink’s website or at this link: [CLICK HERE]

A 15 year net present value analysis, as part of the business case for the Compass smart card system and the SkyTrain faregates.
A 15 year net present value analysis, as part of the business case for the Compass smart card system and the SkyTrain faregates. Apparently, the projected benefits in this chart are only partial: they do not include not include future revenue through commercial arrangements nor the cash flow benefits due to the new card process.

Also, with $70 million of the funding for the Compass and Faregates system coming from senior levels of government, a business case would be a requirement for the project to have gone forward at all.

With no business case or a poor business case, this project would not exist. It would have never gone through the TransLink scrutiny and auditing imposed by the same provincial government that wanted to make this system a reality.