Metrolinx drafted plans last year to dramatically hike fares on the Union Pearson Express in order to raise revenue and deter local commuters from taking the airport train service, the Star has learned.

Documents obtained through a freedom of information request suggest the agency considered raising the cost of a ride between Union Station and Pearson Airport to as much as $20, a price that would partially reverse an earlier fare reduction that was seen as crucial to making the service viable.

The proposed fare increase hasn’t been implemented, and Metrolinx, the provincial transit agency for the GTHA, has since said it intends to change how the UP Express operates by replacing its infrastructure rather than raising fares.

The report recommending the fare increase was “never actioned or followed up on as yet,” said Metrolinx spokesperson Fannie Sunshine in an email.

“We regularly undertake ridership and revenue reviews to ensure fares encourage ridership and deliver best customer value.”

The documents, which consist of more than 1,000 pages of emails, memos, and presentations related to an internal review of the airport rail link conducted in the first half of 2018, show Metrolinx officials came up with the fare increase proposal after concluding the business model for the $456-million line was broken.

They believed that just months after the UP Express opened in 2015 it had stopped functioning as intended — it cost too much to operate, and wasn’t performing adequately as either a premium shuttle for airport travellers, or as a local service for commuters.

“I’m fine with it being one or the other but in the past two years the service has struggled to be both,” Metrolinx’s then-chief customer experience officer Mary Proc told colleagues in a March 11, 2018 email.

A February memo outlining the review said Metrolinx had two main choices: continue to operate the UP Express as “as a standalone service” aimed at wealthier airport customers, or rebrand the service and gradually integrate it into the rest of the GO Transit network to serve local residents — the latter being the course the agency appears to be taking.

Matti Siemiatycki, an associate professor of geography and planning at the University of Toronto, supports integrating UP Express with the rest of the GO network to serve local commuters. But he says Metrolinx and the province got the project wrong from the start.

“I think trying to see this as a premium airport service essentially for business people and travellers to get out to the airport was always the wrong way to go,” he said.

“There are communities along the line that really could benefit from better transit.”

Drafts of the review memo and emails contained in the documents show Metrolinx officials stated the primary goal of any change to the UP Express should be to reduce or even eliminate the subsidy required to operate it.

Metrolinx redacted the dollar figures for the subsidy in the version of the documents released to the Star, arguing the numbers hadn’t been verified and may not be accurate.

In fact, the agency claims it no longer knows how much it costs to operate the UP Express because last year it stopped tracking its costs separately from the rest of the GO network.

But pressed on the issue, the agency agreed to provide the Star with a rough estimate of the UP Express subsidy. It said in the 2017-2018 fiscal year the service cost $57 million to operate, and generated $35.8 million in revenue from fares and other sources.

To make up the gap the line required a subsidy from the provincial government of about $21.1 million. With 3.5 million riders that year, the subsidy worked out to $6 per trip.

The $6 per ride subsidy is a significant decrease from previous years — in its first year of operation, the service required a subsidy of more than $52 per ride, before falling to $11 per trip in the fiscal year of 2016-2017.

However, the documents suggest the per-ride subsidy for UP Express is higher than for the rest of the GO network and Metrolinx officials were anxious to bring it down.

The UP Express entered service in June 2015, just ahead of the Pan Am Games, and was marketed as a boutique service for the jet travellers.

The Ontario Liberal government of the day directed Metrolinx to ensure the line would generate enough money to offset its costs, and to do so the agency set the price of an adult fare between Pearson Airport to Union Station at $27.50 cash, or $19 with a Presto card.

That price made the UP Express the most expensive airport train in North America, and it was soon clear the fares were too high.

For months the trains ran mostly empty, and by February 2016, daily ridership was just 2,000 people, far below the 7,000 required for the line to break even.

The following month, Metrolinx bowed to pressure from the public and the provincial government and cut fares between Union and Pearson to $12, or $9 with a Presto card. Ridership soon increased.

But while more trains were running full, the internal documents show that by early 2018 the agency had concluded the UP Express needed a fundamental rethink.

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A draft of a memo about the review titled “Future State of the UP Express” from February of that year outlined the problem.

“Reducing the UP Express fare (in 2016) produced the desired result — ridership increased, however it did not address the subsidy gap required to operate the service,” the memo said.

The lower fares meant that even with busier trains, the service was operating at a loss.

Not only that, but lowering fares had attracted commuters to the service, who could now take UP between GO Transit stations at Weston and Bloor and Union Station for roughly the same price as a GO Train.

According to the documents, by September of 2017, about nine out of every 10 UP Express trips during rush hour exceeded seating availability, with the average train at 131 per cent capacity. The crowding was only projected to get worse, as the portion of commuting riders was growing faster than airport travellers.

Commuters crowding the service not only made the trip less desirable for airport travellers, the original target market for UP Express. It was also bad for Metrolinx’s bottom line, because people travelling all the way to and from the airport paid higher fares.

As of early 2018, Metrolinx estimated airport travellers accounted for 75 per cent of UP passengers, but 85 per cent of revenue, according to the documents.

“Airport travellers generate more revenue which reduces the provincial subsidy needed; however the increased ridership is occurring faster for the non-airport traveller who generates less revenue,” noted a draft of the memo.

By June of 2018, the review concluded Metrolinx’s best option was to recommit to operating the UP Express as a distinct service geared to airport customers.

A draft of the memo prepared that month ahead of a presentation to Metrolinx senior management recommended the agency “increase the UP Express revenue by attracting the most profitable customer segment, the airport traveller.”

The report recommended doing so by increasing UP Express fares between Union and Pearson, accompanied by “proportionate changes” to fares for other stations on the line. Creating a differential between UP and GO fares would price daily commuters out of the airport train.

Metrolinx has redacted the dollar figure of the proposed new fare from the documents. But a February draft of the memo said studies had determined a price of between $15 and $20 was optimal. The increase would be phased in over up to three years.

As the Star has previously reported, since the review was completed Metrolinx has decided to make physical modifications to the UP Express, by overhauling the line’s infrastructure and getting rid of its 18 “bespoke” trains, to allow it to run standard GO vehicles to the airport.

That approach appears to have replaced the proposal to raise fares.

The agency has not said how much the physical overhaul will cost or when it will be complete.

“The massive success of UP Express with our customers today is the starting point for what an even better service to the airport could look like,” said Metrolinx president and CEO Phil Verster in a statement.

Ben Spurr is a Toronto-based reporter covering transportation. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

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