Income outside the farebox: Unlocking additional revenue for transit agencies

Public transit keeps our cities moving, but today it needs more than fare revenue to stay sustainable. Transit agencies face rising operating costs and ongoing ridership gaps as demand rebounds slowly after the pandemic.

What non-fare revenue brings to the table

Forward-thinking transit agencies around the world have already discovered alternative and sustainable revenue streams to diversify income and improve financial resiliency.

Hong Kong’s Mass Transit Railway generates nearly one-third of its income through non-fare revenue streams under its rail-plus-property business model, including through advertising, commercial activities at stations, and property-related development and management at railway-linked properties. In North America, entities like the Toronto Transit Commission and New Jersey Transit have launched strategic planning roadmaps for non-fare revenue that link real estate development, commuter parking, advertising, and partnerships to long-term financial planning.

When designed well, non-fare revenue closes budget gaps and builds financial resilience through multiple revenue streams, creating near-term cash flow and long-term value that fit the agency’s capacity and risk tolerance. It also delivers visible public benefits by making transit station areas vibrant, enhancing digital messaging, supporting event travel, and developing adjacent real estate to add housing and improve the community while generating income. It sets clear recommendations that cover policy, procurement, partnerships, and trade-offs to help boards and executives act with confidence. Operations are protected because every opportunity must pass a safety-first evaluation with policies and standard operating procedures that protect the right-of-way, riders, and employees.

How to make it happen

No two agencies are alike, so begin by reviewing existing policies and agreements, interviewing cross-functional teams, and benchmarking market practice. This baseline helps to understand what already exists, what is workable, and where the risks and constraints sit. It also gives agencies confidence that recommendations are actionable and sound in today’s market as well as in the long-term.

From there, design a portfolio aligned with an agency’s assets, service plan, and capacity. These may include advertising and naming rights, special events, transit-oriented development and commercial leasing, fiber and telecommunications partnerships, or clean-energy assets like solar and energy storage. Structure these options into a coherent program grounded in operational, safety, and technical realities rather than abstract revenue targets.

Focus on timing by weighing capital and operating costs, political and operational complexity, time to revenue, and expected returns, helping agencies balance quick wins with longer-term opportunities that may take 5, 10, or even 20 years to mature.

Putting strategy into action for Caltrain

Caltrain provides commuter rail service along California’s San Francisco Peninsula, through the South Bay to San Jose and Gilroy. Ridership remains about 30% below pre-pandemic levels, as hybrid work patterns reshape commuter demand. At the same time, farebox recovery hit a low of 24.5% in 2024, and operating costs are rising as the agency electrifies its service.

Working with Caltrain, we developed a program that organizes diversified revenue opportunities across strategy areas and ranks them by complexity and return. Together we identified 10 priority actions and mapped realistic timelines, order-of-magnitude capital and operating needs, and key delivery considerations for the Joint Powers Board and its staff. It’s a roadmap for Caltrain that includes:

• Clean energy savings by leasing purpose-fit sites for solar while preserving future rail uses. Battery energy storage systems can shave peak traction power and reduce energy costs, supporting both financial and emissions-reduction goals.
• Telecommunications revenue by reactivating underused assets such as dark fiber. With targeted repairs and a clear licensing policy with sequencing that protects operations.
• Advertising and naming rights, expanded carefully to protect wayfinding and improve rider experience. Media packages (train wraps, station media) have potential to add hundreds of thousands of dollars per year, and naming rights can reach up to a million per year.
• Special event partnerships using peak demand and tailored agreements to generate incremental revenue without disrupting regular service.
• Transit-oriented development aligned with service vision, local zoning, and affordability policies, to grow ridership and generate multimillion-dollar annualized returns over time.
• Place activation through low-intensity pilots and interim leases on underused parcels that bring vibrancy to station areas while supporting near- and long-term plans.
• Updated utility agreements by auditing legacy crossings and easements, modernizing fee schedules, and enforcing compliance to recover lost revenue.

While non-fare revenue won’t singlehandedly solve the financial pressures transit agencies face today, it becomes a powerful lever for resilience, service protection, and community benefit when they treat it as a strategic portfolio.

Ready to turn “non-fare” into shared value?

If your transit agency is looking to build resilient, community-positive revenue without compromising safety or service, we can help you create a portfolio that pays back your balance sheet as well as your riders.