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London Transit Commission eyes fare hike for local riders to balance financial challenges

The London Transit Commission's satellite facility on Wonderland Road South. Andrew Graham / Global News

London Transit Commission (LTC) riders could soon be paying more money for a bus trip in the Forest City.

In preparing for the development of the LTC 2024-27 budget, a new report presented to transit commissioners at the end of last month showcases an array of financial challenges facing the bus system.

“The multi-year budget covering the period of 2020-2023 was approved prior to the onset of the global pandemic, and as such, did not contemplate the myriad of impacts experienced over the four-year period,” the report stated.

With the rising costs of general insurance and diesel, as well as transit improvements and route changes, LTC officials said maintaining the status quo is going to cost more, resulting in the commission looking for alternative methods of gaining revenue, including an increase to bus fares.

“During the past number of years, we were able to manage those costs within the previous multi-year budget through one-time options like use of our reserves. However, that’s no longer an option going forward because we’ve depleted those reserves,” said Kelly Paleczny, London Transit general manager.

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According to the report, service levels that remained in place throughout the course of the pandemic were able to do so through the Safe Restart Funding program provided by a partnership between the federal and provincial governments.

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“Over the period of 2020 through 2022, $27.9 million of Safe Restart funding was utilized to offset pandemic-related budget impacts, which avoided the need to seek additional funding from the City of London or reduce service levels to balance the budget,” read the report.

“While the Safe Restart funding provided relief from pandemic-related budget impacts, the significant inflationary pressures experienced during the pandemic period were not considered eligible for this funding program.”

At the same time, revenue generated from riders also hasn’t fully recovered from the pandemic.

“The 2023 conventional transit service operating budget includes a shortfall of $6.5 million resulting from a combination of decreased passenger revenues, increased expenditures and the desire to maintain the City of London funding at the original multi-year budget submission for 2023,” the report explained.

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Paleczny added that because of this, as well as other funding shortfalls and budget cuts, “it’s looking like a fare increase will have to be part of the next multi-year budget.”

“We always say the rule of the general rule of thumb in the industry has been that for every 10 per cent you increase fares, you can lose up to three per cent of your riders,” she said. “But there are ways to mitigate the increase in fare categories.

“We like to tie them to service improvements so that the customer feels they’re getting value for that increase,” Paleczny continued. “So that will continue to be our strategy going forward.”

She added that LTC ridership in 2022 was at around 90 per cent of pre-pandemic levels. But since this past May, daily boardings are around 120 per cent, with ridership at around 95 per cent.

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“What that’s telling us is the riders that we’ve got on the bus are using it more frequently,” she explained. “But with respect to fare increases and in terms of timing, nothing is imminent at this point. What we do know is there’s going to have to be some form of fare increase within that four-year window.”

The London Transit Commission is set to receive the draft budget submission by the end of August

“That then gets forwarded to city council,” Paleczny said. “Council deliberates in December and January, so we won’t even know our approved budget for 2024 until sometime in January.”

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