Household Economics of Transport: Hamilton’s Buses

This is the second in a series looking at the economics of transport in Hamilton. We’ll be comparing the dominant private vehicle mode with public transport and active modes. Today’s post tries to establish whether Hamilton’s bus service can compete with the private car.

In our first installment we looked at the costs of purchasing and running a car in Hamilton. The cost varied according to the expected mileage, but what emerged was that NZ drivers have it good, in fact one could say very good!

So let’s quickly revisit the costs of the car option. To simplify calculations, I’ve averaged the top and bottom figures of the range we calculated for the car option, giving projected costs as below:

Low mileage
(7,500 annual kms)
Moderate mileage
(15,000 annual kms)
Averaged total cost (5 year period), including fixed costs of $6,600 $12,899 $19,357
Average annual cost $ 2,580 $ 3,871
Cost per km 34c 26c

The Bus Option

Hamilton’s bus system is rather topical right now, with a proposal under consideration for Hamilton City Council to take over operation of city bus services from Waikato Regional Council. And a recent article declared Hamilton’s buses hold their own against cars, so the question we’re asking today is: “Well, do they?”


A Stagecoach bus (Auckland)

The American article that was the catalyst for this exercise compared car ownership costs in the USA with the expense of using monthly public transit passes. That a saving of US$10,000 per annum could be realised by going car-free in a country with such cheap gasoline was rather unexpected. So how does Hamilton compare?

Surprisingly, Hamilton has no equivalent monthly or even weekly public transport pass option. This is remarkable, given that many services are under-utilised, especially outside of peak hours. Auckland and Wellington both have monthly passes. Australian cities including Sydney, Melbourne, Adelaide and Canberra have monthly passes or monthly fare caps. I believe it’s likely concession fares could be implemented with little impact on farebox recovery, because it’s possible current fares discourage regular use of the bus service except for strict ‘work in the morning, home in the evening’ commuting.

For the time being, the only pass available for those living in the Hamilton metropolitan area is the City Explorer daily pass, which offers unlimited travel within the city boundary for $6.30 per day if purchased with a BusIt card. Of course, senior citizens and children are eligible for free or reduced bus fares, too.

So let’s consider for a moment a seemingly mythical creature: the full-time Hamilton bus user. Riding buses for almost all journeys, and let’s say puchasing a City Explorer pass 4 days a week (total $25.20), paying 2 single fares on 2 other days (total $9.60) and resting or walking/cycling on the 7th day. This gives a total of $34.80 each week, or $1809.60 per year.

At $9,048 for the 5-year stretch, this would cover mobility within Hamilton’s boundary, but in addition to go anywhere/anytime flexibility, the car option has the advantage of facilitating travel outside the city limits. However, we’re roughly $3,000 better off using the bus option over the low mileage car scenario, which surely leaves budget for some intercity rail, coach or air journeys, or use of a rental car.

Nonetheless, in light of the mismatch in convenience and comfort in daily usage between the two options, it’s hardly an attractive proposition economically.

Indeed, when considered along with the lack of services outside normal business hours, is it any surprise that relatively few people use buses in Hamilton? It would seem that for anyone wishing to travel most days of the week, the car would be preferable to the bus system, with the extra convenience coming at a relatively modest cost premium. Of course, not everyone can afford the initial outlay of purchasing a car, and some are unable to drive due to illness or disability; for the modest savings the bus option appears to offer over the car, it’s hard to imagine regular use being anything other than the preserve of the less fortunate. It seems highly unlikely that many who already own cars would opt to use buses on a regular basis.

But what if the bus service operator was to offer weekly and/or monthly concession passes for the bus service?

For the sake of argument, let’s assume a weekly pass would cost 60% of the cost of a week’s worth of daily passes, and a monthly pass 50% of 30 day passes (perhaps off-peak weekly and monthly passes could be offered at a bigger discount too, but let’s keep it simple for now). The concession prices would work out about $25 per week and $95 per month. By way of comparison, London Transport prices for weekly travelcards cost as much as 3 single day travelcards (a 52% saving), and monthly travelcards cost about the same as 13 single day travelcards (a 57% saving).

Current Fare structure Weekly concession Monthly concession
Purchase of a City Explorer bus pass 208 days per year ($1,310 per annum) for 5 years
$ 6,552
Weekly concession fare
(5 years x 52 weeks at $25/week)

$ 6,500
(concession saving of $ 2,548)

Monthly concession fare
(5 years x 12 months at $95/month)

$ 5,700
(concession saving of $ 3,348)

Purchase of two single bus fares on 104 days per year ($499.20 per annum) for 5 years
$ 2,496
Subtotal for 5 year period
$ 9,048
Saving over low mileage car option
$ 3,850 ($ 770 / year) $ 6,399 ($1,280 / year) $ 7,199 ($1,440 / year)
Saving over moderate mileage car option
$10,309 ($2,062 / year) $12,857 ($2,571 / year) $13,657 ($2,731 / year)

The concessions improve the appeal of the bus proposition to some degree, and while they’re not earth-shattering, they would surely result in some growth in patronage. And we should remember that parking costs are not factored into the car costings either.

Of course there is little comparison from the point of view of amenity between the car and bus options. The convenience equation would depend to a large extent on one’s own timetable and movements versus distances from bus stops, service frequencies and hours of operation, especially outside normal business hours where Hamilton’s service is greatly reduced. Nobody should imagine that we are comparing apples with apples viz a viz the car option! On the other hand, many people find the lifestyle changes that tend to accompany non-car ownership rather refreshing.

According to the Stuff article, electronic ticketing for Hamilton’s buses will be introduced within 2 years. This should increase flexibility for whomever is the operator at that time, whether it be Waikato Regional Council or Hamilton City Council, and will allow for making the fare system more responsive to riders’ needs. Will it do anything to make the bus option a more appealing prospect from the money point of view?

We’ll be taking a keen interest in how the operator will make use of this increased flexibility, and would like to see weekly/monthly passes or fare caps to make the bus service more competitive with the private car option. I don’t see any reason why the introduction of weekly or monthly passes should have to wait for a new ticketing system either. What other initiatives could the council use to make the bus a better proposition for more citizens?

6 comments on “Household Economics of Transport: Hamilton’s Buses

  1. Great post Ash
    If I am reading this right, you are suggesting there could be $600 saving per year, for a person not owning a car and using Transit as main mode of transport.

    And Here is one of the options the WRC is looking at. its free to the rate payer and add choice.
    “20% off peak tertiary student discount or 20% off peak discount for everybody. The Busit card offered a further discount. Experience showed that the concessions during off peak would result in no more revenue (ie revenue neutral) but passenger numbers would increase.”

    • Peter, I calculated that under the current fare regime there would be a saving of $770 per year ($14 per week) for someone taking the bus, compared with the low mileage car option, which allowed for 144 kms per week.

      It’s hard to imagine many would choose to rely on buses instead of owning a car for a saving of only $14 per week, so the costs and hassles of parking may be vital factors for some who bus to work; others who use the buses often may not have the wherewithal to purchase a car, or may not be able to drive for other reasons.

  2. My workmates spend around $30-$40 a week on parking in the city. That’s bout the same as the total cost of the person using buses every day for all journeys.

    • That’s very pertinent to the discussion, Paul. Obviously it’s pretty hard to get an accurate picture of how much motorists pay for parking – I think a great number (esp. outside CBD) are able to park for free.

      I wonder if the proposed change to a capital value rating system would favour more car parking (capital value of a car parking area is probably not a whole lot more than unimproved land).

  3. […] The second post considers Hamilton’s bus service and is here. […]

  4. Parking cost can be low in Hamilton CBD; I suggest this is a sign of oversupply. I know of a person with 24 hour access to one of the car parking buildings, at a suggested cost of about $10 per week.

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