Pros and cons of higher subway fares

Nevertheless, Beijing's subway system exemplifies that low fares do not necessarily attract more passengers, especially people from the high-income group who have cars. In other words, low subway fares do not necessarily reduce auto emissions and thus air pollution. In fact, the share of automobile trips in Beijing has risen from 25 percent to 33 percent since the beginning of Beijing's subway boom.

To a large extent, the success of fare reform in one transport sector depends on the fare mechanism in other (competing) transport sectors. If road usage remains "inexpensive" and companies subsidize parking fees for their employees, the distance-based fare policy could prove counter-productive. The need, therefore, is to make the fare reform a part of larger efforts to correct pricing distortions in the transport system.

Public transport vehicles are the most used mode of transport across the world. How transport fares are structured is of utter concern to not only transport operators but also urban residents.

So local Beijing authorities should realize that reforming the subway fare structure is only the first step toward a more integrated approach to improving the city's transport service, strengthening management (such as demarcating low emission zones) and, more importantly, devising an effective development strategy for the public transport system.

The author is director of EMBARQ China, World Resources Institute.