Since the start of the pandemic, Transport for London (TfL) has received close to £5bn in financial support from the Government to guarantee services in an environment of low ridership. The current package will expire on Friday (24th June).
With the current funding model and ridership levels, TfL may have to cut services to balance its finances. This would be deeply negative for London as a whole. So, how should the Mayor avoid this? And which lessons can we learn from other global cities’ transport networks?
London’s transport system is more reliant on fares than its international counterparts
The pandemic impacted mass transit systems across the world, and global cities like New York and Paris also faced massive drops in ridership over the last couple of years. However, due to the nature of its revenue models, London’s network has struggled more than its counterparts.
TfL’s reliance on fare revenues is relatively high when compared with other global cities. Figure 1 shows that more than 70 per cent of its income in 2018/19 came from fares, compared to just below 40 per cent in New York and Hong Kong, and 27 per cent in Paris. This means that a similar loss in ridership has hit London’s transport finances harder than the other cities.
Figure 1: London’s dependence on fares is much higher than in several global cities:
Share of income from fares
Source: TfL (2018/19); Île-de-France Mobilités (2018); Hong Kong’s Mass Transit Railway (2018); New York’s Metropolitan Transit Authority (2019); Singapore’s Land Transport Authority (2018/19). Methodology: Île-de-France Mobilités fare revenue accounts for 27 per cent after deductions from employers and local authorities (38 per cent without deductions).
While TfL’s dependence on fare revenue could previously be considered a strength that reduced its reliance on Government funding, it became a major weakness throughout the pandemic and the subsequent recovery.