Fare sensitivity at point zero: How fare-free transit riders react to fare reinstatement and service changes?

Transit users are considered insensitive to fare changes. Therefore, reducing fares is often viewed as ineffective for increasing ridership. However, removing fares has led to markedly different outcomes in practice. Fare-free transit (FFT) policies have resulted in substantial increases in ridership among the agencies that implemented them. This contrast between expected behavior and actual FFT outcomes suggests a gap between theoretical fare elasticities and the actual sensitivity of transit users in the FFT context. This study examines sensitivity to fare and service changes among FFT users, using 2024 survey data from five U.S. transit agencies. Four cumulative linked mixed models are applied, one for each of fare, in-vehicle time, waiting time, and walking time. Results reveal that riders are far more responsive to fare reinstatement than previously thought, with a 7.6 times greater likelihood of decreasing ridership per dollar increased in fare. Riders also respond more strongly to fare reinstatement than to travel time increases: a $1 reinstated fare was perceived equally as a ~ 20-min increase in travel time, while a $2 fare was perceived on par with an additional 35-min travel time. This research also examines the potential impacts of reinstating fares after operating fare-free for a while, and indicates that it could cause sharp ridership declines: 50% of new users in our sample could stop riding if fares exceed $1.30, and an overall 50% ridership loss is expected for the sample agencies if fares rise above $1.90. The study also provides key insights and recommendations for agencies considering the implementation or reversal of FFT policies.