Personally if we're talking pricing I'd rather it was done by distance with each bus stop price accordingly something on these fares rounded to nearest 10p:

Children: 40p + 10p per mile, capped at £2.50
19 - 25 Fares: 60p + 15p per mile, capped at £3.50
Adult: 80p + 20p per mile, capped at £5.00
Pensioner: 50p per trip

Just to pick some typical fares:

Sunderland to Durham, 14 Mile - Child: £1.80, 19 - 25: £2.70, Adult: £3.60
Newcastle to Whitley Bay, 10 Mile - Child: £1.40, 19 - 25: £2.10, Adult: £2.80
Newcastle to Low Fell, 4 Mile - Child: 80p, 19 - 25: £1.20, Adult: £1.60
Newcastle to Durham, 17 Mile - Child: £2.10, 19 - 25: £3.00, Adult: £4.20
Newcastle to Washington, 8 Mile - Child £1.20, 19 - 25: £1.80, Adult: £2.40

They're all fair fares to me rather than mess that is now.