This morning on a DC radio station I listened to an interview with the guy who heads up DC Metro. He was talking about the rail system and said that passengers fares cover about 57% of operating costs and about 40% of total costs. The rest is made up by federal and local government.
What are the economics of public transit such that it can’t be self-sustaining? Clearly the system could not exist without taxpayer subsidy.
The round-trip fare for me to take the Metro to work would be $8, plus the cost of driving to and from the closest Metro station, about 8 miles round trip. For me to drive 19 miles straight to work, it costs me under $3 in gas. So even though the fare is subsidized, there is not much motivation for me to use public transit.
Why doesn’t urban mass transit show stunning economies of scale?
The first issue is what you’re comparing Metro fares to. If one looks on edmunds.com, there’s lots of data on true cost of car ownership. I’d say each of those 19 miles of your drive to work costs about 45 cents, making your round trip cost really more like $18 or so. If you then factored in your taxes for road maintenence not covered by gas taxes, we’re easily talking $20 a day true cost. You just don’t pay for your car on a per trip basis, so you don’t feel those costs in the same way you would if you swiped a Metro card every day.
There are other factors. If you are commuting every day, a weekly ticket or a monthly ticket is probably cheaper than paying a fare every day. If you catch a bus to the station, then perhaps a two-car household can be a one-car household. At some places of employment, parking costs money, so if you’re getting it free, there’s a hidden subsidy for your employer or from someone else.
You’re not including all the costs of driving to work. You need to include the applicable fraction of the cost of your car, its maintenance, insurance and licencing, your driver’s licence, the cost of having a garage/carport/driveway as part of your house or as part of your rental costs, etc. You may also want to include “lost” costs for the time you spend driving when you could be doing something else (I use my bus ride to read, for example).
There are also costs you pay through your taxes for the additional roads, infrastructure, policing, etc. needed to handle all the extra vehicles. If you want to stretch a bit, add the added costs to you when you purchase local goods due to the merchants’ additional cost of advertising on local radio stations which need to recover their costs for operating traffic copters.
That last one can be huge, depending on what kind of car you buy, whether you buy it new, and what kind of condition it’s in when you sell it.
Seriously, put all those values in a spreadsheet and find the cost per mile for each item. You’ll be surprised.
The IRS allows a deduction of 55 cents per mile when you’re driving for business purposes. In most cases this is not a bargain, it’s actually about right.
Part of the problem with bringing economies of scale into it is that ridership numbers are often not high enough to achieve an economy of scale. If every single person used public transportation every day, then you’d start to see real economies of scale. As it is, many buses have just a handful of passengers at a time.
People prefer to drive. Public transportation is an “inferior good” in economics terms - even if public transportation was free to the riders, most people would still rather pay for their own car and gas. (Inferior in the economics sense doesn’t really mean bad or low quality, just that consumers prefer other options.)
This is compounded by the fact that public transportation is in fact more expensive for someone who already owns a car - they’re making car payments and interest payments whether they drive it or not. As you point out in the OP, an $8 fare looks cheaper than $3 in gas because your $15 in additional costs are sunk (that is, most of those costs are already paid for or already committed to, whether you use it or not).
Don’t ever forget that roads are taxpayer subsidized, too. Who pays for the city DPW, state DOT and state highway police after all?
If you really want to think about how much driving costs, you can decide for youself whether to add in things like lung damage from smog, accident fatalities and injuries, oil spills, and how our foreign policy is different (and more expensive) for oil-rich areas.
Others have done the “it depends what you want to count” as to hidden costs of the car. You can also play this game with public transit. Does amortizing the cost of (bonds for) building the network (rails, tunnels, etc.) get priced into Metro’s “operating budget,” or is it separately treated as a one-time capital expense? Is the Metro authority receiving federal and state subsidies that artificially lower the “DC Metro” cost-per-ride (as viewed only from the perspective of the transit agency’s own balance sheet)? Who owns the engines/cars, and if it’s the Metro, are we including depreciation? Are some of the drivers/attendants/cleaners being accounted for under some City outsourcing program or municipal laborer line-item? Not to mention (because someone would soon do this for the auto trips) the externalities (pollution, noise, construction delays) caused by building and powering the system.
And of course the most obvious point has already been made: Metro systems have to run with some non-infinite service interval, so – as ridiculous as it may be for you to be driving your 3,500 pound four seat car with only one person, it’s not all that clearly more ridiculous than a multi-ton train trundling into Wheaton or Vienna at 11:59 with a driver and two tipsy passengers or whatever on board.
One that puzzles me is Metro North in Connecticut. The fares are quite high, and crazy during rush hour, but the trains are full and they run very often. And yet they can’t afford to upgrade the trains from 1970’s models. It’s crazy.
In this regard, I’ve always wondered about the claim that street railways were replaced with bus lines because the latter were cheaper. It’s usually thought of as a strictly American phenomenon, but numerous examples can be seen in Europe as well, especially in small to medium cities that weren’t big enough to have any further rail infrastructure. Liverpool is an example, where Menlove Avenue used to have a streetcar line.
But how could buses, with each having its own engine, tires, and a plethora of wearable parts, be cheaper to operate than an electrically operated trolley that runs on a track? In particular, how is it possible that buses are so much cheaper that it was cost-effective to dismantle the systems that were already there…
They’re doing very well to get that much at the farebox. The national average is about 37%
Locally, Caltrain (inter-urban heavy rail) pulls in about 40% of its income at the farebox, and BART (inter-urban rail with an identity complex - is it a heavy-rail train or a light-rail subway?) makes 45%
Gobs of money compared to San Francisco’s Muni buses, which scrape by with only 20% coming in at the farebox.
As far as I can recall (no cite, sorry), the only urban rail transit system in the world that pays for itself is the Hong Kong subway, and that is only because it was able to sell the air rights above its stations.
That is not to say that urban rail transit systems are bad – New York or Paris would be unthinkable without theirs.
Perhaps the trolley cars, with their one simple electric motor, were proprietary designs that some small firm was charging an arm and a leg for, and complex busses are commodity items with very fair prices? Or maybe it’s something from a different end, like lawsuits over suspended electricity cables?
I’d guess this whole thing pivots on government inefficiency. Union wages, union work ethic, decision-by-comittee. But I don’t really know any of the numbers. Even if a car costs $20 per your ride, the metro seems like it should cost much, much less than $8. In principle, trains are extremely efficient. But perhaps I am wrong. Getting to the bottom of it shouldn’t be so hard, since all the finances are in the public domain. Would love to know the numbers for the NYC subway, with which I’m familiar.
In one word, flexibility. The buses might have had higher operating costs, but they could be shuffled around to wherever they were needed. Unlike a trolley system, a bus system doesn’t have to worry about acquiring and maintaining rights of way, doesn’t have to worry about population shifts away from its line, and if the street it’s running on gets closed for maintenance, it can shift the route over to a side street and continue running.
Looking hereI see that I can pick up a first-class used bus for less than $90,000. Let’s say that a brand new transit bus costs $180,000.
And here it says that Los Angeles’ Green Line cost $718 million to build. So for the cost of one 20-mile section of light rail, I could buy about 3,989 brand new buses and run them anywhere I want.
Around 1930, the presidents of the major transit companies in the US got together and designed a trollye car that they all agreed to use (it was called the PCC car, for something like Presidents conference commission) and they sold tens of thousands of them, if not hundreds of thousands. It wouldn’t surprise me at all if some of them are still in use in some third world country. Since then, most streetcar designs have been one-off with no economies of scale. Still, for all the reasons mentioned above, private cars are much more highly subsidized than public transit. One item not usually taken into account is all the real estate tax revenue lost when private land is converted into streets and highways.
If I ever moved to NY, which is whenever I can get medical insurance, the first thing I will do is sell my car. And take taxis when necessary. Although the outer boroughs must be, individually, the largest cities in the world without taxi service.
“Economies of Scale” don’t just appear because you’re doing something big. It really depends on what it is that you’re doing.
Economies of scale typically come into play when there are very high fixed costs of manufacture, but low variable costs. If you have to build molds, tooling, buildings, and spend huge sums on R&D, but the per-unit cost is actually low once you have those things, then the more you can sell, the cheaper each unit can be sold for.
Economies of scale also come into play when you can ramp up production of something so big that you can afford things like automation or large factory machines to replace manual processes.
Mass Transit doesn’t really benefit much from economies of scale, other than the construction of city buses. The problem is that the lion’s share of the cost of mass transit is on the operations side. There’s a limit to how inexpensive you can make a bus run. If a driver makes $30/hr, then a half-hour bus ride costs $15 in direct labor costs. If there are only 10 people on the bus, it costs $1.50 per person just to pay the driver. Then there’s the gas, maintenance, insurance, the salaries of all the support people, the bureaucracy, yada yada.
Autos are actually the vehicles that really benefit from economies of scale. A modern engine or transmission can cost a hundred million dollars or more just to design. But they’re affordable because that transmission or engine goes into millions and millions of vehicles. Auto factories cost hundreds of millions of dollars to build, but once built they can pump out cars at a very low cost per unit.
Bit of a hijack here. Above are several quotes of what percentage of the operating costs are supported by fares for various cities. Is there a good online source for these figures for all US cities with transit systems? Or even just for the larger cities? I’ve tried to find such in the past, but google fu is weak…
I think there is a flaw in this argument because even people who do take the train to work still own cars and are still going to be incurring these expenses.
So driving to work is not really causing these expenses if you are going to own a car anyway.
That’s a big problem with public transport. I travelled about 700 miles over Christmas, and looked into taking trains. It would have cost me more, taken longer and caused me a lot more inconvenience to do so.
When factoring in all the costs of car ownership, it probably would be cheaper for me to use public transport all the time. However, not by that much, and now I’ve invested in a car it rarely makes sense for me to use buses or trains, sadly.