Farebox Recovery Ratio
The farebox recovery ratio of a transit system is the percentage of total operating expenses that are made up by passenger fares. The figure is calculated by dividing total passenger-fare revenue by total operating expenses. Farebox-recovery ratio is a key metric used to judge the financial health of transit systems, and varies heavily based on geography, fare structure, and ridership patterns.
Because farebox recovery ratio deals with operating expenses alone rather than total (capital + operating) expenses, the following types of transit systems tend to have higher overall farebox-recovery ratios:
- Rail-Based (particularly commuter or high-capacity rail)
- Distance or Zone-Based Fares
- Asian and European systems
Few major transit systems throughout the world have a farebox-recovery ratio of 100%. Within California, BART has the highest farebox-recovery ratio, and a variety of state laws use this metric to evaluate transit-system performance. For example, in order to qualify for funding under the state Transportation Development Act (TDA), urban transit agencies must maintain a farebox ratio of 20% and rural agencies must maintain a ratio of 10%. Exceptions are sometimes made for new routes or routes that serve disadvantaged populations. In the United States, California ranks seventh for farebox-recovery ratio, at 27.9% (behind New Jersey, New York, Washington D.C., Pennsylvania, Illinois, and Massachusetts). (Baselines 174-5). Within California, the Bay Area has the highest farebox-recovery ratio (60.9% within the MTC MPO area), while the Los Angeles area has among the lowest (21.4%).