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How To Hack Subway Fares Using Fare Arbitrage 240

Posted by Unknown Lamer
from the saving-pennies-the-hard-way dept.
KentuckyFC writes "Arbitrage is a way of making profit by exploiting price differences for the same asset. In capital markets, traders aggressively seek out and exploit these market 'inefficiencies.' Now one data scientist says it's possible to do the same with metro fares and has studied the fare-arbitrage potential of San Francisco's subway system, BART (Bay Area Rapid Transit). The idea is to swap tickets with another commuter during your journey to reduce the amount you both pay. BART has 44 stations which allows 946 different journeys and 446,985 unique pairs of trips. Of these, over 60,000 have arbitrage potential and commuters can save at least $1 on 4,666 of them. But there are good reasons why cities might want to maintain price differences for certain journeys — to encourage people to live in certain areas, for example. What's more, it's possible to imagine a pair of commuters who each travel from one side of a city to the other at considerable cost. But by swapping tickets in the city center, they could both pay for a short commute in each others' suburbs. But is that fair to other commuters?"
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How To Hack Subway Fares Using Fare Arbitrage

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  • by mark-t (151149) <[markt] [at] [lynx.bc.ca]> on Tuesday February 11, 2014 @04:11AM (#46215853) Journal
    Where I live, if you get caught selling or giving away a bus ticket to somebody else after using it, you can get dinged with a rather heavy fine.
    • everybody knows hacking is illegal.

      • But is this more ore less hacking that other arbitrage transactions that are mentioned in the summary? THAt should be considered "hacking", too and subsequently declared illegal, too.

        • by magarity (164372)

          There's no arbitrage involved at all. Arbitrage involves different prices for the same thing. In the summary's own example, a cross-city trip is the same price whether from east to west or west to east. This story is about cheating the system into thinking you are only travelling a few stops instead how far you really went. That's completely different from arbitrage.

          • "There's no arbitrage involved at all. Arbitrage involves different prices for the same thing. In the summary's own example, a cross-city trip is the same price whether from east to west or west to east. This story is about cheating the system into thinking you are only travelling a few stops instead how far you really went."

            It isn't even really that. That is to say, it is, but it depends on how you look at "how far you went". TFA has made an error in summarizing the situation.

            TFA implies that a round-trip commute to city center and back costs less than a full trip across town. But then it says that presumably the Metro wants to charge approximately the same per mile. Those are contradictory.

            If you take two people who swap tickets at city center, you don't even have to assume equal mileage for each round-trip. But let's d

    • by ILongForDarkness (1134931) on Tuesday February 11, 2014 @07:53AM (#46216445)

      Even if you didn't unless things always exactly lined up you'd end up waiting for the next train. I'm sorry even 5 min of my time is worth more than $1 to me.

      • Yeah, but if you set up a shop in the hub station, people could buy or sell from you on their way on or off the train. Of course, even if it's not illegal, the transport authority probably still has the right to kick you off their station, which they probably would do if you tried to buy and sell their tickets.

        • Still there would likely be a line. Standing in line to save $1 when it likely will just result in higher property taxes and cause you to pay for it twice doesn't make a lot of sense to me. Generally speaking arbitrage situations exist for a reason: the cost of buying and selling the good + getting it between the markets costs more than it is worth. Hubs are the obvious potential exception but for very low margin items you'd need crazy volume. Particularly good for expensive/highly taxed items (cigarettes,

  • Go for it (Score:4, Interesting)

    by Karmashock (2415832) on Tuesday February 11, 2014 @04:12AM (#46215855)

    Doesn't really sound worth the effort.

    And of course... screw the beta.

    • by DarkVader (121278)

      What if there were an app for that, to arrange easy swaps? It sounds like a daily commuter could save hundreds of dollars a year.

      And yes, screw the beta.

      • I wouldn't really care... and neither should the city or anyone else.

        Its marginal.

      • by Golddess (1361003)
        If you are a daily commuter, wouldn't you have a monthly pass? Or does BART not do those types of things?
    • I agree. Also, the stupid study assumes that those who are doing the "hacking" are in the same network, would travel around the same time, and play nice to each other all the time as a team. Then the value/profit of the ticket they bought would also need to be shared among all of those arbitrators. A couple dollars here and there for each person is not worth the effort. Also, remember that the more people involved in the same activity, the more disagreements would show up!

      The case is valid in the theory, b

      • by unrtst (777550)

        Completely agree.

        Maybe if the difference you could save were significantly higher than $1, it may be more interesting. Ex. if you could do this on amtrack going cross country and swap along the way to save $100 on the trip, but it's just $1 on the daily commute. If you are that strapped for cash, you'd get a buck faster by just asking people for a dollar, or save more by just hopping the turnstyle (as phmadore points out below).

        If they're going to talk arbitrage of these tickets, they should at least inclu

        • by tlhIngan (30335)

          You want to encourage people to use mass transit, especially for long trips where they'd otherwise be driving into the city. Why charge them more!?!

          Well, a lot of places charge zoned rates - where travel is sort of based on distance.

          Let's say you need to go across 3 zones, 1-2-3. If you can team up with someone going the other way, 3-2-1, you can both benefit by swapping - because a 2 zone ticket (1-2 and 2-3) is cheaper than a 3-zone ticket. So you'd buy a 2 zone ticket for 1-2, and they'd buy a 2-zone tic

    • I thought you guys were boycotting /. this week?

  • by wilson_c (322811) on Tuesday February 11, 2014 @04:26AM (#46215893)

    Though these arbitrage opportunities may exist, the act of exchange would render them worthless. Even with a hypothetically perfect market established, the amount of effort required by two parties to submit ticket info, match needs, and go through an exchange outweighs the efficiencies gained by the transaction.

    • I feel like there could be designed an app for a lot of that that would automate it easily, maybe even integrate with something like hopstop
    • What is needed is an app to make the process efficient.
    • ...the amount of effort required ... outweighs the efficiencies gained....

      True on a one-shot basis, but if two commuters agree to do this every day five days a week so long as their jobs last, then the setup cost is insignificant. There would be significant long term gains.

      • by CastrTroy (595695)
        I imagine that this wouldn't be possible for monthly passes but only if you pay for individual rides. Usually there's a decent savings if you buy the monthly pass. This would probably negate any savings from this method. If you ask me, this fare system is too complicated. Where I live you pay, and get to go as far as you can get in 1.5 hours. Which is enough to get from one end of the city to the other. Or if your only going for a short shopping trip, you can often go both ways on one ticket. The only thing
    • by WarJolt (990309)

      Though these arbitrage opportunities may exist, the act of exchange would render them worthless. Even with a hypothetically perfect market established, the amount of effort required by two parties to submit ticket info, match needs, and go through an exchange outweighs the efficiencies gained by the transaction.

      A mobile app and some clever marketing goes a long way. GPS would make this easy.

    • by swb (14022)

      Even with an app, would you bother for just a dollar?

      It sounds like meeting up with someone on the train every day to swap tickets sounds like one more thing to deal with in a world of too many one more things to deal with.

  • by jklovanc (1603149) on Tuesday February 11, 2014 @04:30AM (#46215911)

    From the Bart website [bart.gov];

    When you enter BART, insert your ticket into the fare gate and it will be returned to you. Use the same ticket when you exit

    By using one ticket when you enter and another when you exit you are breaking the rules.

    • It seems quite obvious from the summary that what they propose is not arbitrage - it is fraud. It's caught by the rule that you state, but more generally they are using a single ticket to make two journeys. In the case of the two hypothetical commuters crossing the city they are both paying for 1/2 journey and then it is being made twice. That is not a price difference between two assets, it is double-spending.

    • by pla (258480)
      By using one ticket when you enter and another when you exit you are breaking the rules.

      Right of first sale. I can do whatever the hell I want with my little slip of paper (or do they use cards there now?), and to hell with their "rules".


      More to the point, FTS: "But by swapping tickets in the city center, they could both pay for a short commute in each others' suburbs. But is that fair to other commuters?"

      Fair? How does it count as in any way unfair? You have stops A, M, and Z, with M at the cit
      • by gnasher719 (869701) on Tuesday February 11, 2014 @10:43AM (#46217403)

        Right of first sale. I can do whatever the hell I want with my little slip of paper (or do they use cards there now?), and to hell with their "rules".

        You can do with your little slip of paper what you like. But it is used as evidence of how far you travelled, and therefore how much you should pay, and if you pay less because you tamper with that evidence, it is fraud. You pay for the journey travelled, the piece of paper is just a device to measure the distance, and you tampered with that measuring device to pay for less than you should.

      • by jcochran (309950)

        Fair? How does it count as in any way unfair? You have stops A, M, and Z, with M at the city center and A,Z two outlying suburbs. If they consider it just peachy that I can ride A-M-A or Z-M-Z all day every day for $5/trip, it costs the system not a penny more to take A-M-Z and Z-M-A, yet they think they can charge more to do it? The same trains/buses carry the same number of passengers the same distance. Fuck that.

        That pig doesn't fly as you stated it. But let's look at the actual situation. Namely, that you don't have 3 stops involved. The number of stops is 5.

        A - B - M - C - D

        A = Suburb for 1st passenger.
        B = Destination for 2nd passenger
        M = Metro center/ticket exchange point
        C = Destination for 1st passenger.
        D = Suburb for 2nd passenger.

        Now the first passenger wants to travel from A to C and the second passenger wants to travel from D to B. But by having both passengers meet at M and swap tickets, they actually pay

  • How stupid (Score:2, Interesting)

    by Anonymous Coward

    This is about as juvenile as it gets. All of you know very well that transit systems are a public service that barely can sustain themselves. So, you think then that it's a great idea to work out a way to drain revenue? This is from the thought process of a child, not a mature adult. Adding further to the stupidity of this is that it doesn't take a rocket scientist to figure this out. It's not like it was some grand secret being hidden by the Gods of Transit, so from an innovative science standpoint, it's a

    • by Calinous (985536)

      Public transit systems are (usually) heavily subsidized. I remember the city of Tallinn (I think) introduced free public transportation, as the city did pay 75% of the real cost of the tickets anyway.

      • by TheLink (130905)
        Most shopping malls and commercial buildings don't charge you to use their elevators and escalators. They make their $$$$ elsewhere.

        So I'm thinking that at least in some places public transportation should be free, and there shouldn't be an assumption that users have to be charged for it.

        It actually costs a fair bit of money and other resources to charge. Imagine if a subway system didn't need ticket booths, turnstiles, etc and people to check that people pay. So how much more would it cost to run it for "f
    • by DarkOx (621550)

      I think the transit systems ought to charge a fare that correctly reflects the incremental cost of transporting a passenger down a given transport lane. There should be no arbitrage opportunity.

      A fee structure that enables this sort of arbitrage in the first place was the childish thing. Adults don't deny reality, and deal with facts. The fact is humans optimize activities around whatever resource they perceive to be the most scarce in the very short term, for a largish number of public transport riders

  • by burisch_research (1095299) on Tuesday February 11, 2014 @04:41AM (#46215947)

    This is, simply, fraud. It's the same as snatching a purse or looting a shop.

    • Re:Fraud (Score:4, Insightful)

      by wonkey_monkey (2592601) on Tuesday February 11, 2014 @06:43AM (#46216263) Homepage

      This is, simply, fraud. It's the same as snatching a purse or looting a shop.

      Except, of course, that neither of those are fraud.

      Unless you just meant because they're all illegal, in which case it's also the same as murder.

  • The major flaw in this assumption is the simple fact that swapping tickets in order to cheat the system and use cheaper tickets is not "arbitrage" nor is it "exploiting price differences for the same asset".

    The tickets ("assets") are obviously not the same when you switch them, and get away with using other tickets than you really should have.

    - Jesper

    • Here's a more palatable variation, if you can accept these premises:
      - a "fraction of a ticket" is a valid asset for the purposes of trading
      - my ticket from A->B->C contains a "B->C" fraction if I've ridden one stop and am currently at B

      Motivation:
      - Short subway trips are overpriced due to minimum prices
      - Trips of 2 or more stops are fairly priced
      - You want to travel 3 stops, A -> B -> C -> D
      - I want to travel 1 stop, B -> C

      Default procedure:
      - You buy a ABCD ticket (standard price per di
  • by ruir (2709173) on Tuesday February 11, 2014 @05:07AM (#46216019)
    Decades ago, the employees of our national highways that collect tools used this very same scheme of swapping tickets to defraud their own employer in millions. The scheme went that if you were paying not by credit card, but in cash, and coming say, from a city 300km away, they would swap your ticket with a city 10km away, and would pocket the diference. Colleagues on another posts in nearby cities would swap tickets already pre-validated for that effect. From the little we could heard about it at the time, this scheme went on for almost a year, until they got more greedy and careless and got caught.
  • by GauteL (29207) on Tuesday February 11, 2014 @05:28AM (#46216069)

    Go from Swindon to London at peak hours costs an extortionate £60.50.

    Book the ticket from Swindon to Reading and then Reading to London Paddington costs £34 + £22.20 = £56.20, saving you £4.30.

    The train from Swindon to London always stops at Reading anyway and you will spend your journey in the exact same train taking the exact same amount of time and you will stand just as uncomfortably for your slightly less extortionate fee. And as opposed to swapping tickets with someone, this is perfectly legit and not against the terms of service.

    There may have been some original sensible reason, but it sure feels like a scam to me.

    Also, some airliners (KLM, I'm looking at you), charge you MORE for a single flight than they do for a return flight. When I moved country (and consequently only wanted to book a single), I had to book a return ticket which I simply didn't turn up for, otherwise it would have cost me £500 more. There may be some logic in what KLM is doing, but it feels like a big "fuck you" to me.

    • by N1AK (864906)

      There may have been some original sensible reason, but it sure feels like a scam to me.

      Generally because train companies charge prices based on line demand etc but can only charge one rate across the whole journey. In your case the Reading-London section has a higher rate because it's more heavily in demand so if the ticket includes that section then will be charged at that higher rate. As Swindon-Reading is lower rate you can buy a ticket for that section for less as a separate ticket. Bizarrely I'm pretty

      • by GauteL (29207)

        "Bizarrely I'm pretty sure the system came about as a way to 'simplify' ticket costing and avoid companies abusing it :|"

        I have no doubt. The result is of course a system which appears blatantly unfair to people in the same way that buying two small packets of biscuits in the super-market may end up cheaper than buying the double size "economy, always better value, package". It is just not right. It should be dead easy to price the journeys to have the same price per "stage" regardless of whether you buy th

    • by jo7hs2 (884069)
      As for airlines, sometimes it cuts both ways. United's one-way price is sometimes less and sometimes more than round trip. Actually, often the same. Once, to use some flight credit for a pair of cancelled seats booked separately for the same flight, I had to book two one-way, multiple hop flights (at the advice of a CS agent) to use the credit, because it couldn't be combined in any way. The whole thing ended up being absurd. There was no price difference.
      • by geekoid (135745)

        You are almost always better off buying one way at the airport.

        IT's usually cheaper, something you can get first class for less then people paid for coach.
        The down side is the flight you want may be full so you need to wait for a seat.

        I stop doing that becasue the security of having a seat* out weighed the possibility of wait in an airport with kids.
        Now that I think about it, I seldom didn't get the flight I wanted. hmmm.

        *high level of probability, anyways

    • Airlines have a pretty good reason to charge almost the same for singles as they do for returns on international flights - having a return ticket is a big part of determining whether a traveller is not intending to immigrate illegally, so if you travel internationally on a single ticket then that triggers a lot more in the background than it would if you travel on a return.

      The airline is responsible (via international treaty) for the cost of removing you from the country if you are found to be in immigratio

      • by GauteL (29207)

        "Airlines have a pretty good reason to charge almost the same for singles as they do for returns on international flights"

        This is EU internal, so this is completely irrelevant. Companies such as RyanAir, Easyjet, Norwegian, etc. are more than capable of giving you a decent offer for a one-way ticket for the same routes, the same goes for some of the traditional airliners. I'm afraid this must be KLM internal policy.

        • Not really, since not every country in the EU is part of the common Schengen Area, and even then you can still be deported for immigration reasons, so its still a valid point.

          Its also not KLM specific at all, its airline industry wide. Just because some low cost carriers choose to eat the costs themselves (they don't actually, the costs are hidden to you) doesn't make it airline specific.

    • There have been stories about the US airline price structure where people find that a plane trip from A to B costs more than a ticket from A to C with a layover in B, and people have bought the ticket from A to B and just not made the leg from B to C.

      The airlines were unhappy and I think were threatening or actually refusing to honor the round trip portion of the ticket, regardless of the fact that the capacity from B to A was spoken for and that they saved fuel costs between B and C on both legs of the fli

      • by geekoid (135745)

        If you get round trip from A to C, then the return must be from C.

        airline pricing is screwball.
        To begin with it's too dam cheap, and this is killing the airlines, and making t a miserable way to travel.

        • by gl4ss (559668)

          not on all airlines.

          if you buy finnair to asia and back, one way ticket costs more than going both ways.

          but you can buy it so that you for example fly from helsinki to hongkong and then from bangkok back to helsinki.

    • Also, some airliners (KLM, I'm looking at you), charge you MORE for a single flight than they do for a return flight. When I moved country (and consequently only wanted to book a single), I had to book a return ticket which I simply didn't turn up for, otherwise it would have cost me £500 more. There may be some logic in what KLM is doing, but it feels like a big "fuck you" to me.

      I don't know about airlines, but if you do that on one of the Dover-Calais ferries, they state explicitly that if you don't turn up for the return trip, they will charge you the price of the single fare if it is higher. They also charge you more for a one week return ticket than for a one or two day return ticket. Slashdotters would be up in arms and thinking of clever ways to avoid it, but reality is that there's no legal way and no easy illegal way around this.

    • Also, some airliners (KLM, I'm looking at you), charge you MORE for a single flight than they do for a return flight. When I moved country (and consequently only wanted to book a single), I had to book a return ticket which I simply didn't turn up for, otherwise it would have cost me £500 more. There may be some logic in what KLM is doing, but it feels like a big "fuck you" to me.

      The "hidden city" fare. As long as you used it on a return or one way with no checked luggage you were OK even ift the airlines didn't like it. Although they could catch it they never seemed to do anything. Back to backs ( booking a trip for two weeks and another round trip back and forth from the origin) to take advantage of Saturday stay fares designed to make business travel expensive and leisure cheap were another story. We used them a lot until our airline of choice caught on and threatened to cancel

  • Public Transportation should be free or heavily subsidized more than it is.

    Pay politicians less, cut out zoning pricing crap and don't pay the unions so much or give them so much leeway.

    • by geekoid (135745)

      So your argument is tax people who don't use them and have them operated by slaves?

  • "...to encourage people to live in certain areas."

    Then make those areas not suck. Don't (effectively) tax me and everyone else because they want to live somewhere that doesn't suck.

    How is making people who can't afford to live some place that doesn't suck live in sucky areas going to make them suck less?

    Unless what you really what to do is enforce economic stratification by forcing all the poor people to live in the undesirable areas, instead of damaging the delicate sensibilities of the more well off?

    • by daknapp (156051)

      But the entire purpose of mass transit is social engineering. It has nothing to do with getting people from one place to another safely and efficiently. That's just the bait they use to get voters to approve the systems.

      • Kinda the opposite. The entire point of modern transit-less suburbia is social engineering. The entire idea was to force automotive usage, largely because a particular breed of crackpot libertarian (and unfortunately not even out-of-the-mainstream type - even Margaret Thatcher spoke in support at times) believes cars are "pro-freedom" and obsessed about that in the first half of the last century.

        Transit developed pretty naturally in the last half of the nineteenth century and when implemented in an organ

      • by geekoid (135745)

        That's a bunch of crap brought up by tin foil hat wearing people who blame 'them'' for all ills.

        In the US they where created for 1 reason. So poor people could get around. Everyone else had a car.
        That's why they are so screwed up now when other wise car owning people use them. It made sense to have them at a county level then. Today? that make no sense oat all. Mass transit need to be ran, architects, and paid for at the state level. Ending the cross county bullshit, and a lot of problem go away.

        What they u

  • Public transportation should be free.

    The utility function of the marginal costs of a (not small) fare + inconvenience + timing + freedom of movement vs. the cost of owning a car is enough that most of us are effectively being paid not to take it in the first place. Being free would up ridership for people on the edge.

    The whole idea that it's a profit center is pretty stupid, as all public transportation is subsidized anyway, and exists as nothing but a cost center to generate pension paying positions for g

    • Here in NYC the Metropolitan Transit Authority (subway, buses, regional commuter rail, bridges and tunnels - anything you pay a fare or toll for) had a 2013 budget (PDF) [mta.info] of $1,357,806,000. And that's still bleeding damn near another billion a year, with 25% fare increases and 25% service cuts. You could probably slash that overrrun quite a bit more by stopping all current and planned construction/improvements and going to a minimal-maintenance schedule, good luck with that.

      Yeah, free transit is a great idea

  • I don't think it is arbitrage in any way. If you read wikipedia beyond first sentence it is
    " an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after transaction costs"

    For all real-world use cases of arbitrage, it was about net _profit_ after the arbitrage, not about savings. Example of arbitrage would be buying two tickets which are cheaper that

  • by Malc (1751)

    They still use physical tickets in San Francisco? I thought it was supposed to be a high tech centre. All over the world cities are using contactless cards to do this. The Oyster system in London for instance even discourages the use of tickets by making them much more expensive.

  • In france, on some highway, if you exit then re-enter the highway in the middle you may pay less. That's because private highway compagnies must, by contract, have some average price. So to make more money, the most used fares are more expensive and the less used ones are less exepensive, and in average, that match the contract they signed with the governement. Threre's a site dedicated to calculate how much you may gain by doing this : http://www.autoroute-eco.fr/ [autoroute-eco.fr]
  • ... and more like fraud. TZ
  • First, dealing with some idiocy:

    But there are good reasons why cities might want to maintain price differences for certain journeys — to encourage people to live in certain areas, for example.

    I would *imagine* that BART charges more the longer you're on the subway. Just as pretty much every other system does that's not flat-rate. I wonder if the author thinks that AMTRAK charges more for tickets from DC to NYC than from DC to Philly because he thinks they're trying to encourage Pennsylvania tourism.

    With that out of the way, yes, you could save a BOATLOAD by doing this in DC, although I'm sure it violates some ToS and would probably end up with you getting banned f

  • And generally, people who can do math this well aren't using it to save a buck on bus fares.
  • Of course it's not fair.

    As constrained as we sometimes feel we are by laws and regulations, the bulk of our society still works on the honor system - people simply doing what they're supposed to, and not doing what they're not supposed to.

    Simply because something CAN benefit you, and you CAN accomplish it with little chance of being caught, doesn't mean you SHOULD do it.

  • When I saw "How To Hack Subway" I thought it was going to be about lunch.

  • take into account the price of Public transportation when deciding where to live? I could save a buck by living in a crappier neighborhood! I'm in.

    Interesting idea. I suspect the person the implements an easy way to find and exchange using an app will become a millionaire.

  • If this were to become popular, metro authorities would just raise fares to compensate.

    Who wins then?

  • Stuff like this was done on the ticket toll roads but now days with EZ-pass you can't really do it (well they still have the tickets but the EZ-pass rates are lower) and some ticket toll roads are gone / have there ticket zones cut down with more parts as an barriers system.

  • A few dozen people are saving a few dollars! Better spend 10 million to stop it!
  • IMO NYC does it right - $2.50 gets you into the subway and you can ride to your heart's content. Yes, it is unfair to both ten-block-hops and massive city-spanning expeditions, but two wrongs make a right - the short Midtown-confined trips that businesspeople and tourists take in droves balance out my cross-metro trips from northern Manhattan out to the Rockaways in the summer (over an hour and close to 30 miles). Also vastly cheaper in terms of implementation and operation - if a card has adequate fare or

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