Chesterton Tribune



NICTD proposes 5 percent fare hike to cover cost of operating new train control tech

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The Northern Indiana Commuter Transportation District’s Board of Directors is mulling a proposed 5-percent fare hike which would, if approved, take effect on July 1.

The hike isn’t a done deal yet-- “Nothing’s final,” NICTD General Manager Michael Noland told the Chesterton Tribune on Tuesday--but there’s no way around the fact that the South Shore commuter line will need to raise additional revenues to offset the estimated $1.5 to $2 million in new annual expenses associated with operating the Positive Train Control (PTC) system when it goes on line in 2019.

PTC is a federally mandated technology which relies on GPS, radio signals, and computers to monitor a train’s position and automatically slow or stop trains in danger of colliding or derailing due to excessive speed.

Under a law passed by Congress in response to a 2008 collision between a commuter train and freight train in Chatsworth, Calif.--a crash which killed 25 and injured 102 more--all passenger and freight railroads had until Dec. 31, 2015, to implement PTC. The cost and complexity of designing and installing the technology, however, subsequently prompted Congress to extend the deadline to Dec. 31, 2018.

NICTD will make that deadline, Noland said. That’s not the issue: in October 2015 the NICTD board awarded a $79,998,877 contract to Parsons Transportation Group to design and install PTC--funding for which NICTD bonded--and the project is moving along smartly.

The issue, instead, is this, Noland said: PTC is a complicated system and will require the hire of as many as 10 new technicians to operate it. Among other things, a 24/7 PTC Help Staff will need to be fielded in order to monitor the system, trouble-shoot it, and communicate with engineers on the ground.

Add to that the annual cost of a required purchase of “significant layers of insurance we do not have today,” which Noland estimated at $500,000 to $750,000.

Noland did cite one other reason for the proposed fare hike unrelated to PTC: on Jan. 1 Metra increased the fare for passengers boarding at Hegewisch, which is the South Shore line’s easternmost stop in Illinois but--because the facility is owned by Metra--is subject to the Metra fare schedule. NICTD accordingly needs to raise its own fares for the sake of equity, Noland said. “Otherwise the Illinois folks will migrate east to save a few bucks.”

Noland emphasized that before he makes a final recommendation to the NICTD Board of Directors at its March meeting, he and his staff, along with several board members, will be discussing other possible options. One of them: demand-based pricing. At the moment, rush-hour commuters--the South Shore’s “bread and butter,” Noland acknowledged--get a 30-percent discount at peak-demand times, while the off-peak discretionary rider pays full fare.

That arrangement, Noland said, goes against the grain, for instance, of pricing in the airline industry, which charges premium fares for the “highest demand time” while offering deals at “low demand time.”

On the other hand, Noland noted, the airlines are really only competing against themselves, while the South Shore is competing against passengers’ own “individual modes of transportation” as well as against ride-share services like Uber. Price the peak fare too high, he said, and commuters will simply drive themselves to work.

The most recent South Shore fare hike took effect on July 1, 2017: it was the second phase of a two-phase 5 percent hike enacted to raise additional revenues--estimated at $1 million annually--to be used exclusively for capital projects and investments. As Noland noted a year ago, NICTD exhausted its bonding capacity, what he called its “self-funding ability,” when it bonded for the PTC project.



Posted 2/7/2018




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