I like the principle underlying Melbourne’s two zone public transport fares system – if you travel further, you pay more. Travel within roughly 11 km of Flinders St Station is a Zone 1 fare and travel within the area beyond that is a Zone 2 fare. Those who travel between zones pay a Zone 1-2 fare. Sensibly, there’s a three station ‘grace’ overlap between zones.

The logic of the tariff is premised on the idea that trips are to the CBD. If you live in Epping (say), you are 19 km from the CBD and in Zone 2, whereas someone living near Bell station in Preston is only 9 km out and is in Zone 1. The standard Two Hour Zone 1 fare is $3.80 and the Zone 2 fare is $2.90. If you cross zones, the fare for the longer distances expected with Zone 1-2 trips is $6.00.

That all sounds good, but inevitably there are anomalies. For example, a traveller boarding a train on the Epping line at Reservoir station can travel through 15 stations to Flinders St for a Zone 1 fare. However anyone boarding at the next station out, Ruthven, must pay a Zone 1-2 fare to travel to Flinders St.

Residents who live near the overlap stations and make short trips face a very high marginal cost. For example, someone boarding at Bell station on the Epping line can only travel 3 stations away from the CBD before incurring a Zone 1-2 fare.  Similarly the four station inbound trip from Ruthven station to Bell is a Zone 1-2 fare. The same pattern happens on other lines.

Another anomaly is the cost of Zone 1-2 fares compared to Zone 1 and Zone 2 fares. With so much of the cost of operating a rail service tied up in capital items, it’s hard to see why a Zone 1-2 fare costs 60% more than a Zone 1 fare and over 100% more than a Zone 2 fare. That might possibly make sense for buses but seems a real stretch for trains.

These sorts of anomalies could be seen as unfortunate but inevitable compromises – after all, most travellers are bound for the city centre. However as discussed here, the great bulk of jobs are now in the suburbs, not the CBD. Moreover, most Melburnians live relatively close to their key travel destinations, usually in the same or a contiguous municipality.

We should expect that public transport travellers will increasingly be seeking to make intra-suburban trips via a grid of well coordinated train and bus services. Indeed, many advocate such an approach. A two-part tariff based on distance from the CBD makes less sense in that situation. While the CBD will remain the main market for trains for a considerable time yet, they nevertheless are likely to have a growing role in intra-suburban travel. Policy-makers should be thinking about how to make them work harder in this role.

An alternative would be simply to have a single zone system. That doesn’t appeal to me intuitively, but it has the virtue of simplicity. If I assume that 25% of fare box revenue comes from Zone 1-2 travel, then I estimate guesstimate an average fare in the order of 16% higher than the existing Zone 1 ticket would be needed to maintain revenue. Zone 1-2 fares would fall by a similar amount.

But a better approach would be to charge according to the level of system resources used by the traveller – in other words by actual distance travelled, irrespective of direction or destination. A convenient measure of distance would be the number of stations passed through on a trip.

The great advantage of well-designed smart ticketing systems is that they permit this sort of flexibility. Hence if I travel 20 stations I would pay proportionately more than if I travel only 3 stations. For example, assuming a fixed charge of (say) $3 per trip inclusive of the first five stations for a Two Hour ticket, the variable component might be $0.15 per station thereafter up to a maximum fare of (say) $7 (these numbers are of course meant to be illustrative – tariffs would need to be modelled to see their effect on revenue).

Extrapolating to buses and trams adds a degree of difficulty, but in principle it should be possible to devise a simple equivalence table. For example, the flag fall might include 10 – 15 stops with subsequent stops charged at $0.05.  Travellers would of course be required to touch off.

A tariff based on actual distance travelled would better reflect the demand, be more equitable and eliminate some of the gross anomalies of the current system. No doubt it would have its challenges – some people would feel better off, some worse off.