Fares don't pay for Europe's public transport. What else can a ride pay for?

Jagadish V

Oct 30

6 min read

Commuter on a city tram using her phone during the ride — Cover image: AI-generated illustration.

On a Wednesday afternoon in 2025, few cities in Netherlands went quiet. Buses, trams and metros in Amsterdam, Rotterdam and The Hague stopped for 110 seconds.

The number wasn't random. The Dutch cabinet planned to cut €110 million a year from public transport in those three regions.

The cut was later reversed, for now. But it exposed a bigger problem: one of Europe's busiest transit networks was a single budget decision away from higher fares and fewer routes. Why?

The short answer: fares don't cover the cost of running public transport, almost anywhere in Europe. Subsidy fills the gap, so every budget decision lands on riders. Operators earn a little more from ads, shops and property, but all of that needs physical space. One asset still earns nothing: the ride itself.

That last asset is what we work on at LearnPerk. But first, why the gap exists.

Three terms used in this post

Farebox recovery ratio: the share of a network's running costs that ticket revenue covers.
Non-fare revenue: any income beyond tickets and subsidy, such as advertising, retail or property.
Transit Web: LearnPerk's commerce, content and rewards layer, built into an operator's existing app and used during the ride.

Why can't fares alone fund public transport?

Operators measure this with the farebox recovery ratio: the share of running costs that tickets cover. Very few systems reach 100%. Most of Europe relies heavily on subsidy.

Network	Share of costs covered by fares	Year
Zürich (ZVV)	~62%	2024 budget
Helsinki (HSL)	~42%	2024
Paris region (Île-de-France Mobilités)	33% (27% paid by riders themselves)	2023

Sources: Zürich cantonal parliament, HSL (about €372M in ticket revenue against €894M in operating costs), Île-de-France Mobilités.

Each network defines costs slightly differently, so treat these as a range. None of them include the cost of building new lines.

In The Hague, HTM gets roughly half its income from subsidy and half from tickets.
Amsterdam looked like the exception. In 2018, GVB covered 91.9% of its running costs from passengers.

Then the pandemic halved its ridership. GVB needed €156.9 million in government support in 2021 just to keep running.

Mostly subsidy means exposure to politics. Mostly fares means exposure to ridership. Either way, the network stands on one leg.

What the Netherlands' €110 million cut revealed

In September 2024, the cabinet confirmed a €110 million annual cut to public transport in Amsterdam, Rotterdam and The Hague from 2026. That's 10% of a combined budget of about €1.1 billion.

The operators had two levers. GVB's CEO warned fares would rise 12%. The companies said less profitable routes would go.

HTM's director put the consequence plainly: people who can afford it would go back to their cars (NL Times).

After a year of protests and legal action, the cut was dropped for 2026 and only partly reversed for 2027.

That's a reprieve, not a funding model. Price and service are still the only levers, and both push riders toward cars.

What do operators already earn beyond the fare?

Non-fare revenue isn't new. Operators sell advertising, rent out retail units, license naming rights and develop property. UITP, the global transit association, even runs training on it.

But each of these needs physical space: a wall, a screen, a shop, a plot of land. A station doesn't get more walls when ridership doubles.

Some Asian rail operators earn heavily from property around their stations. Most European operators don't own land at that scale, and won't.

So one asset is left. It grows with every passenger, needs no space, and earns nothing today: the ride.

What is the ride window worth?

An operator's revenue sits in four layers. Three are familiar. The fourth is the one nobody has built yet.

Four revenue layers of a transit operator: fares, subsidy, physical assets and the unused digital ride window

Every journey has a window: the minutes between boarding and stepping off.

Think of Lisa on her 35-minute ride to work. She's seated, phone in hand, and the operator's app is already open because that's where she checked her departure. For those 35 minutes, the network has her attention. Today it earns her fare and nothing else.

At LearnPerk, we call the layer that uses it the Transit Web. It's a commerce, content and rewards layer inside the operator's existing app.

Riders opt in and earn rewards to spend with merchants. Merchants pay for the attention and the sales it drives. The operator shares the revenue.

What could that be worth?

Take Amsterdam. GVB carries roughly 200 million journeys a year, and before the pandemic its passenger revenue was about €330 million.

Net revenue to the operator, averaged per journey	Per year, at ~200M journeys	Compared with ~€330M passenger revenue
€0.01	€2M	0.6%
€0.05	€10M	3%
€0.10	€20M	6%

Illustrative only, not a forecast. The average includes every journey, most of which would involve no engagement at all.

On its own, this won't close a €110 million gap. It isn't meant to. It's revenue that grows with ridership, not budgets, and adds nothing to the price of a ticket.

Isn't this just more advertising on transit?

No. Operators raise this objection, and a few others, every time. They're fair, so here are straight answers.

It isn't a fare increase. The money comes from merchants, not riders.
It isn't another app. It runs inside the operator's own app.
It isn't more screens. Nothing is added to vehicles or stations.
It isn't selling passenger data. Riders opt in, give consent, and are rewarded for taking part.
It isn't a replacement for public funding. It makes a network less fragile, not subsidy-free.

What should an operator see before piloting it?

We're early. The Transit Web is designed and being prepared for pilots. It isn't running at scale yet.

So instead of promises, here's what any serious pilot should measure:

Opt-in rate. What share of active app users choose to join, and do they stay.
No harm to the core journey. Journey planning and payment work exactly as before. App ratings and complaints stay flat.
Revenue per engaged journey, and a revenue split written down before launch.
Consent and data design reviewed and signed off by the operator's own data protection officer.
A clear integration scope the app team agrees to before anything is built.
A clean exit. If it doesn't work, it switches off without touching ticketing or the rest of the app.

If a pilot can't answer these six, it isn't ready. If it can, the operator learns what its ridership is worth beyond the fare.

Frequently asked questions

What is non-fare revenue in public transport? It is any income an operator earns beyond ticket sales and public subsidy. The usual sources are advertising, retail space, naming rights and property. Digital channels inside the operator's own app are a newer option.

What is a good farebox recovery ratio? There is no universal target. Published figures for large European systems mostly fall between about 30% and 70% of operating costs. In the Netherlands, a government commission in the 1990s recommended operators aim for 50%.

How are public transport operators in Amsterdam, Rotterdam and The Hague funded? The regional transport authorities, Vervoerregio Amsterdam and the Metropoolregio Rotterdam Den Haag, contract the city operators and receive national funding. The operators add passenger revenue. The mix varies: HTM reports about half and half, while GVB covered over 90% of its operating costs from passengers in 2018.

Can transit operators earn digital revenue without raising fares? Yes, in principle. A commerce and rewards layer inside the operator's app earns from merchants, not riders. It is still an early model, so results at scale don't exist yet.

Does in-app commerce mean sharing passenger data? It shouldn't. In the Transit Web design, participation is opt-in and consent-based. The operator keeps control of its app and its relationship with the rider.

Talk to us

If you work in commercial strategy, digital or finance at a transit operator or authority, and you want to explore what the ride window could mean for your network, write to us at learnperk@learnperk.com and ask for the operator pilot brief.

About the author: Jagadish Velagapudi is co-founder, leads strategy and business development at LearnPerk.

Transit E-Commerce Powered by Commuter Attention