Incidentally, London has a "Freedom Pass" (free transport for retirees), which is funded in the way you describe.

Instead of TfL being forced to take the loss, they are reimbursed by local government cost of the transport.

As an aside, I also take some issue with this pass being completely free to use. In my experience, people end up using it to go a single stop just because it's free, so why not -- which slows bus service for everyone else. I think it should be 20p per journey or something like that.

Taking such a fee also has transaction costs, in the time if nothing else.

To liken this back to the old days - the difference in time between flashing a valid transfer slip (of paper) and having to drop change into the automated till.

Nowadays, both are “scan your card at entry and exit”, aren’t they?

Elderly will have to do that, too, because a) I expect they still want to track usage, and b) allowing some passengers to hop on a bus without checking in makes it too easy for those ineligible to do that (e.g. elderly who do not live in London) to try and do that, too.

Elderly in all of England have the equivalent of a Freedom Pass but just for busses (Freedom Passes include almost all Tfl transport, e.g. underground, trams, DLR and some Nationbal Rail inside London)

Unfortunately the bus passes and freedom passes are not interchangeable and sometimes have to be manually checked if not in the local region,

London buses are tap on entry only. For pay as you go riders the fare is not linked to distance travelled.

But for many old people walking that one stop is difficult. So this charge would partially defeat the object of the pass.

Fare-charging for public transit has significant frictional overhead. I think in Luxembourg they just made it all free and it didn't cost much money because they didn't need to spend anything on collecting fares. The D-Ticket in Germany too: in some cities, almost everyone has a D-Ticket so the frequency of ticket checks was drastically reduced.

Another counterpoint: if the bus isn't overloaded, taking an additional passenger costs next to nothing, while delivering significant value to the passenger. Don't we want to create as much value as possible?

The cost to taking an additional passenger is latency.

The bus has to stop, let the passenger on, and later let them off.

This affects everyone else on the bus and reduces the quality of service.

Then you need more doors.

You can see that a long-distance train has doors only at the end of carriages, and stops for several minutes, but a subway has doors about every 10 seats, and stops for 20 seconds.

I agree and disagree with this. Sometimes older people using the busses are what keeps the routes busy and makes it worth running a good service for everyone else. But on the other hand, I have seen abuses. Years ago I somehow got chatting to a fellow bus passenger who liked to ride the busses all day as a hobby. I think rather than charging I'd limit it to 10 free rides a week or something, where a ride is equivalent to a hopper fair - as many connections as you need within an hour of the first touch-in. After that it should use pre-pay credit at a normal rate.

Idk... If the tiny population of those bored "hobbyists" taking up space is the only reason a given route was overcrowded, I'd be surprised. If it's basically at capacity in general, I'd rather they add more busses than to crack down on the elderly, because I guarantee that if you just subtracted those "abusers" (and not elderly people who actually need to ride the bus for legitimate trips) the same bus would still be basically as crowded.