Farebox Revenue Costs
Keeping track of farebox revenue provides the authority with important financial management information:

• To construct the cost recovery ratio and other benchmarks and indicators that measure the bus system’s financial performance.
• To assist the authority to set and adjust the fare level.

Farebox revenue projection worksheet
The financial model will have a worksheet that forecasts farebox revenue. The contents of this worksheet and how it forecasts future farebox revenue will depend primarily on:

• Forecast passenger demand.
• Fare structure.

Authority’s legal and regulatory role in setting the fare level
In many countries that have a public monopoly bus system, the bus operator is also the regulator. This creates a conflict of interest (see legal and regulatory framework). As the urban transport system undergoes reform, it should separate the bus operation function from the bus regulation function.

Reliability of the database to forecast farebox revenues
In many countries the bus operator provides operating cost, ridership and revenue input data for authorities to adjust fare levels. It’s essential that the authority validate the bus operator’s input data to insure a reliable fare revenue calculation.

If the authority is currently responsible for bus operations, it will have direct access to the fare revenue database. Although this may appear to be a more efficient way to incorporate fare revenue into the financial model, it runs the risk of data manipulation due to possible conflicting authority and bus operator goals. The authority should separate the bus operating accounting function for fare revenues from its role as regulator of fare levels as soon as possible.

Farebox Revenue projection methodology
Farebox revenue projections can be very complex and will most likely involve some of the following factors:

• Ridership projections based on quality of service.
• Social objectives that dictate fare levels for certain bus passenger segments (e.g., seniors and students).

See also
Funding sources
Other revenue