'90p deducted' said the Oyster card reader display as I boarded the bus today. I was pleasantly surprised as the flat fare for London buses is normally GBP 1 per journey regardless of distance; there has been a 10% reduction in fares (though only for Oyster card users; buying a ticket with cash costs GBP 2).

Mayor Ken Livingstone, who had also implemented the Singapore-inspired congestion charging system in London, has proudly claimed credit for this largesse: 'The reduction in bus fares has been possible because London's economic growth led to more passengers and higher fares income than expected. The Mayor decided to give this back to Londoners in the form of a bus fares reduction.' (The Londoner, Oct 2007, p.1)

Eh? I thought if economy good, then it is the perfect opportunity to raise bus fares? On the other hand, fares have increased from an average of 53p (with an overall subsidy of 24p) per journey in 2004 to current levels today [1]. Nonetheless, prices are often sticky upwards - you know the drill, this year increase because oil price go up but when next year oil price go down, bus company tiam tiam, or if asked, will cite some other area of cost increase. It's rare to see bus fares go down.

The fare reduction could be one of Livingstone's attempts to consolidate his support before the 2008 Mayoral elections. There is a unlikely risk that he could be criticized for the fare reduction in terms of jeopardizing future revenue and investment for London buses but, as noted above, fares have gone up considerably in the past few years so revenue should still be higher relative to 2004. Even without this announcement, Livingstone was still the hot favourite to win, according to this gambling website. Whatever the economics and Livingstone's motives, I'm sure bus-taking Londoners won't complain about getting some fare relief.

[1] Figures from 'Fares, please', The Economist, 2004-12-29.