Thanks to all who contributed to the fare discussion. It was illuminating. I think, though, that all/most of the commenters didn't answer my question -- what would be the appropriate fare for the target audience. Almost everyone commented about whether the fare was right for themselves. And, with very few exceptions, you're not the target audience, since you're originating in Toronto.
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If the target audience is people headed to downtown hotels or business meetings, then yes the current fare is something people will be willing to pay.
My model would be assume two people travelling together (fits both business and leisure scenarios), match the cab/limo fare to downtown, and treat the speed and reliability (especially compared to Gardiner at rush hour) as the competitive value. Maybe even charge a few dollars above the 2-in-a-cab fare, given the value of reaching downtown quickly and reliably. People who fly into Toronto on early flights to attend meetings, and people who are trying to get out of downtown late in the day when the Gardiner is clogged, will certainly pay top dollar for this service. Tourists in the downtown hotels will like the simplicity of a train to get them to Union, even if they have a short taxi or TTC ride from there.
What's a little iffier is whether other travellers, especially those headed to/from other than the central city, will pay this fare. Outside the downtown core, the convenience of a limo/cab door to door may outweigh price points. For those contemplating transit - outside of rush hour, once you have schlepped your bag to the subway, you might as well stay on to Kipling and grab the Rocket, and save the cash. My theory would be that people close to Line 1 might be willing to ride down to Union rather than transfer to Line 2, but few would get off Line 2 at Yonge or St George to do so.
So this leads me to believe that at current fare, UPX will be hugely popular at rush hour (business travellers) and moderately loaded off peak (tourists). An earlier poster suggested that UPX only needs to be 38% full to break even. If that's true, I do think they can meet this target with the above ridership audience.
What grates is a) no seat should be empty and b) the perfect target audience, as described above, is such a small subsample of travellers that the rest of us may never have a reason to ride UPX. I wonder how practical a peak-hours surcharge would be. I would love to see deep discounts off peak - it may not bring more revenue, but it would fill the trains.
Frankly, I don't mind if we gouge the Pan Am tourists to the hilt. So we should live with the current fares until year end, see how the longer term ridership develops, and see what tweaks can be figured out over time.
- Paul