Buses Just Don't Make Money
Cities and Metropolitan Planning Organization (MPOs) don’t create transit authorities to make money; they’re there to serve the people. That being said, it’d be nice if our public transportation systems at least broke even. There’s not a large-scale (more than 200,000 people) transportation system in America that has a balanced budget solely from fares. Las Vegas maintained near neutral budgets with their effective bus system but then shot themselves in the foot (or buried themselves in the desert, if you like) when they built that stupid monorail.
The MBTA is a relatively typical transit agency: an above average subway system with a middling, bordering on subpar, bus system. The latter is what this post is about.
The average cost for a bus ride in Boston is $0.71. Now that is based on National Transit Database (NTD) 2008 calculations so let’s just say with inflation and potential changes in demographics it’s $0.75*. The cost to run a route ranges, but let’s take a basic example: the 59. We have a map below:
Now it goes from Needham to Watertown, so the expectation is that the ridership will be a little less robust than if it was downtown or along a population line so I’ll give two incarnations of the calculations below. Before I do that, let me explain what I’m doing here: these are basic calculations performed on Excel based on the National Transit Database spreadsheets and the MBTA’s schedule. The terms are self-explanatory except for “farebox recovery ratio” which is the percentage of costs covered by just the fares that passengers pay. So here are the first set of numbers:
This bus route loses $3,117.20 a day. Does it even matter how much that is over a year? That’s $3k every day. Now here’s something interesting: we can adjust these numbers to create a budget neutral bus route by increasing the average fare (not pictured here) until that 21% magically becomes 100%:
So the budget neutral fare here is $3.37 which is more comparable to commuter rail prices than bus fares. Is that too high a fare? Most likely yes. Public transportation demographics are especially sensitive to price spikes for individual rides. Low income and minorities dominate urban transportation systems and demographics among monthly pass holders, who by definition pay lower per ride fares, tend to reverse that trend though not in volume. An increase to $3.37, or the introduction of a variable rate model, would be an increase of nearly $2.00; beyond prohibitive for the typical T rider.
So what do we do? There’s a lot of answers and I’ll most likely be going through a few of them in detail in later posts. I’ll describe the two sides of the spectrum right now though.
1. We charge what it takes to neutralize the budget through fares instead of concessions and subsidies. I don’t think anyone expects the riders to cover the entire MBTA bill though; there’s a reason we pay sales taxes, gas taxes, etc. So let’s say we have a fare hike to $2.50, comparable to New York’s system. It’s a lot, and it will price out low income and minorities while bailing the MBTA out of its crippling debt services, but some one has to lose out in every scenario and raising fares is the simplest and most effective way of doing that. User fees are brutally effective and unquestionably fair.
2. We leave the fares where they are and leave the MBTA to their regularly scheduled fare hike calendar. Public transit is a necessity in a city; urban areas are by definition land scarce and personal vehicles costs are at a premium. By artificially suppressing mass transit fares the MBTA is able to effectively, and appropriately, subsidize those who cannot afford to suburbanize or use private transportation. These fees are better absorbed by those who can afford them through innovative finance vehicles such as congestion pricing and variable tolling. Commuters are a demographic that can and should bear a large portion of transportation costs. They benefit immensely from the agglomeration economies in Boston but do not pay the premiums of living in a densely populated area.
These are two options on either side of the gauntlet and each have clear cut losers and winners. Fare pricing isn’t simple, but it’s something we all deal with on a daily basis whether we like it or not. What’s the answer here? No one’s really sure, but with the MBTA suffocating from debt, letting fares and  user fees stay stagnant can’t be an option much longer.
*This takes some explanation. Because fares aren’t uniform across the board the calculation of average fares is more complicated than it sounds. Seniors, children, and the disabled receive significantly discounted fares and the weight of monthly, weekly, and daily passes count depending on trip volumes which is a tedious exercise at best. The NTD databases are excellent though, so I’ll trust those guys.
Radials 