Transit fares are going up. Why do Canadian cities struggle to keep it affordable?

With pass over fares on the rear in a list of canadian river cities, some experts say it’s clip to rethink how we fund public transportation.

Calgary hiked fares from $3.80 to $4 per ride earlier this month, and Ottawa just approved an increase of 10 cents, to $4.10. 

Earlier this year, Edmonton raised cash fares from $3.50 to $3.75 in February, while Victoria jumped from $2.50 to $3 in March and Vancouver went up from $3.20 to $3.35 in July.

The rising fares are a reflection of mounting pressures on transit systems.

Energy, maintenance and labour costs are up, while gas tax revenues that help fund public transit are declining, due in part to more electric and energy-efficient vehicles.

Meanwhile, transit organizations are still recovering from the COVID-19 pandemic, when ridership and fare revenues plummeted. Emergency government funds have dried up and ridership hasn't fully returned to pre-pandemic rates — in April, it had rebounded to 84.2 per cent of April 2019 numbers, according to Statistics Canada.

While this is a global problem, experts say Canada has additional challenges with urban sprawl and generally low population densities making it hard to keep routes in the black.

But while transit operators are feeling the pinch, Canadians are also struggling with rising costs of living, and the more fares go up, the more people can't afford to get around their own cities. 

“The easiest thing to do is to raise your fares to increase your revenue, but what that does structurally to society is really bad,” said Lawrence Frank, urban studies and planning professor at the University of California, San Diego, and president of Urban Design 4 Health, a research and consulting firm that works with government agencies.

Frank says some transit operators in Canada don’t really have a choice under current funding models, because they have to fund a certain percentage of their operations through fares. Passenger fares cover an average of 59 per cent of public transit costs in Canada.

But he says hiking fares threatens to reduce ridership and “price people off the system,” which predominantly impacts people who are low income and have no other options.

Frank, who studied the links between transit use and health at the University of British Columbia, says it’s time to change the framework we use to assess the value of transit, so it factors in health and social benefits that come from greater equity, reduced sedentary behaviour and less air pollution.

His research has found that using transit instead of driving reduces likelihood of obesity and other health concerns. 

“We simply can't have and create sustainable, healthy communities without transit, ” he said.

“If we just isolate its economic value to what the fare box generates, you've completely eliminated the major economic benefits that come from a healthier workforce.” 

Advocacy organizations have been pushing for governments to reframe how they view public transit, arguing it's an essential service and requires more stable funding.

A 2024 Leading Mobility Canada report found Canada's major cities are struggling to keep their transit systems running, and "a downward spiral" in service is "inevitable" without major new streams of operating revenue.

But in practice, making that shift is not likely to be politically popular. 

"What I've long been arguing is we need a dedicated revenue source for public transportation systems," said Jeff Casello, a professor with the University of Waterloo's school of public planning.

Casello notes that public transit currently competes against other essential services for property tax dollars, which makes it hard to argue for increased spending through taxes.

Internationally, he says places like London, New York City and Singapore have implemented road tolls to raise funds for improving public transportation systems.

Citing successes from some of these programs, including a measurable decrease in pollution and congestion in New York, he suggests Canadian cities could similarly impose tolls for driving into downtown areas — though he acknowledges this would also be a tough sell.

"It's politically unpopular, for sure," he said.

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To ensure transit users aren’t priced out of the system in the meantime, Casello says it’s important to focus on subsidizing costs for the lowest-income riders. This is something Canadian cities do in various ways, but he suggests something akin to the food stamp system in the U.S. He also cites a Philadelphia pilot program that gives key cards for free transit to people living near or below the poverty line.

Canada's federal government used to offer a tax credit for public transit passes, but eliminated it in 2017, which Casello says was a “mistake.” 

Some cities cap fares, so people who spend a certain amount on single fares ride free after hitting a monthly limit. Toronto Mayor Olivia Chow recently floated a 47-rides-a-month cap in Canada's biggest city — amounting to about $156, or the cost of a monthly pass. A global study from 2023 found Toronto's monthly pass is the fourth most expensive among major cities as a percentage of average net wage, behind only Sao Paolo, Istanbul and London.

In Durham, Ont., and starting Jan. 1 in Gatineau, Que., riders pay $4.75 cash to take the bus. Halifax has the cheapest single-fare price among Canada’s major cities at $3.

But some smaller municipalities have made public transit free entirely, deciding the extra municipal spending is a net benefit for residents.

Canmore, Alta., a mountain town of 17,000, has offered free transit since 2022.

But while this could be harder to scale up for a city the size of Toronto or Vancouver, American cities as big as Albuquerque, New Mexico (population roughly 560,000) offer free municipal public transit.

New York City's mayor-elect Zohran Mamdani has pledged free bus service for the city of 8.5 million, saying he would fund it in part by raising taxes on the wealthiest corporations and individuals.

Thiago Carvalho, a PhD student in McGill University’s school of urban planning, says rising transit costs are a global issue — very few public transit systems actually turn a profit — but the urban sprawl and lower density of most Canadian cities makes it especially hard to keep costs down.

"The more sparse your transit system is, usually the more expensive it is ... Because you need to provide more service," he said. 

In extremely dense Tokyo, Carvalho says developers have essentially constructed an entire "downtown" around most metro stations. Private companies often own the line and the land around their stations, so revenue from real estate, retail and other commercial properties helps sustain and expand the routes.

Carvalho says Canadian cities could do this on a smaller scale, and cities do typically factor in transit-oriented development when building out new rail routes, which can help keep transit costs down in the long term.

"Transit's not supposed to be for profit. It is an essential service. It has a very important social function of bringing people to work and bringing people to their desired destination," Carvalho said. 

"We need to define the secure streams of funding that are going to allow this service to be sustainable and going to allow service to thrive. And the better the service, more people are going to be using transit." 

Digital Writer

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