Changes to ticket prices from 1 January 2023 due to increasing costs
There will be changes to HSL’s ticket prices from 1 January 2023. The Executive Board of HSL decided on new ticket prices on Tuesday 1 November 2022.
The changes are due to a sharp increase in HSL’s operating expenses, in particular in the compensations for the use of public transport infrastructure. Although the service level of public transport will improve with the new section of metro line and the light rail line being built, the projects will increase HSL’s costs far more than they increase ticket revenue.
The reason for this is the infrastructure compensation model in which HSL pays half of the capital costs of the public transport infrastructure it uses, the maintenance of the infrastructure in full and an annual interest rate of five per cent. Next year, these infrastructure costs will account for 23% of HSL’s expenses. HSL’s expenses will increase even more in the coming years as municipalities make new investments in public transport infrastructure.
In addition, general inflation and rising energy prices are put upward pressure on operating expenses: We estimate that next year, the increase in electricity and fuel prices will incur additional costs of EUR 30 million. Next year, HSL’s operating expenses will increase by a total of EUR 130 million compared to 2022.
On the revenue side, the decrease in the number of passengers caused by the COVID-19 pandemic is still a challenge. Passenger numbers are projected to remain permanently lower than before due to increased remote working. Currently, HSL’s passenger numbers are 22 percent below pre-COVID levels. We estimate that next year the number of boardings will be 12 per cent lower than in 2019.
Cost pressures force us to organize public transport even more efficiently and assess service levels. The ticket revenue goal of EUR 381 million is also extremely ambitious.
Effects of the removal of VAT
The temporary removal of value-added tax on public transport in January–April 2023, which is under preparation, contributes to alleviating the pressure on prices next year. We will allocate the discount resulting from the removal of VAT to prices evenly throughout the year. In this way, passengers will benefit fully from the VAT reduction, and HSL will not incur any extra costs due to changes to its systems. Without the removal of VAT, price increases would be 3.5 per cent higher next year. At the same time, this automatically means an increase of the same amount for 2024.
Proposed rise in the penalty fare
We have proposed to the Ministry of Transport and Communications that the public transport penalty fare be raised from the current EUR 80 to EUR 100. The penalty fare has been EUR 80 in the HSL area since 2007. During this time, the overall cost and salary levels have increased significantly, which has weakened the preventive effect of the penalty fare. HSL loses an estimated EUR 10–25 million in ticket revenue every year due to fare dodging.
Raising the penalty fare would significantly reduce the ticket revenue loss resulting from fare dodging: if the proposal was accepted, it would reduce the upward pressure on prices by 1.5 percent. As the Ministry of Transport and Communications has not yet decided on the matter, the raise has not been included in HSL’s calculations.
Lower fares for longer journeys
The prices of ABCD tickets, which cover the entire HSL area, will significantly decrease from 1 January 2023. For example, an auto-renewing saver subscription for the entire HSL area will cost EUR 91.40 instead of EUR 118.90. The price of ABCD single tickets will also decrease from EUR 5.70 to EUR 4.50.
The prices of AB and BC tickets will increase. A 30-day AB or BC ticket will cost EUR 70.60, or EUR 58.80 as an auto-renewing subscription. The price of single tickets will increase from EUR 2.80 to EUR 3.10.
The longest journeys have the greatest potential to attract motorists to switch to public transport through pricing, which would also reduce traffic emissions.
Changes to student discount and the discount for the over 70s
From 1 January 2023, the student discount and the discount for the over 70s will be 40 percent instead of 45 percent. The discount rate for students will still be significantly higher than in Turku, Tampere or Oulu, for example. In addition, only full-time students will be entitled to the discount.
Another change will be that we will no longer grant free tickets to event participants.
In addition, a payment method fee of 1.6 percent will be added to tickets paid using mobile payment for all one-off purchases under EUR 50.
School groups will continue to travel free of charge next year, but the Executive Board decided that from 2024, these journeys will be paid for by municipalities.