The Cost of a Bus "Fair"?

Driving Versus Public Transit Costs
from Todd Littman

I often hear debates over the costs of different modes of transportation, particularly between driving and public transit travel. Rising fuel prices have made public transit more attractive for some trips, boosting ridership, but critics point out that for most trips, transit fares are still comparable with fuel costs (for example, at $4 a gallon, fuel costs about $2 for a typical 10-mile trip, comparable to a bus fare in a typical city), and generally take longer. It is therefore legitimate to ask whether public transit really saves money.

The correct answer is "it depends." Although fuel costs are generally about equal to bus fares for a typical 10-mile trip, vehicle operation also imposes "mileage based depreciation costs" (vehicle wear-and-tear, including tire replacement costs, additional maintenance and repairs, and reduced resale value), so there are modest vehicle cost savings overall. For example, a 10-mile trip typically costs about $4 in total vehicle operating costs, which is more than typical bus fares. If the vehicle is fuel inefficient, or the trip requires tolls or paid parking at the destination, then financial savings are much greater, often totalling several dollars each day a commuter shifts to public transit. If commuting by public transit allows a household to reduce its vehicle ownership (for example, to get by with one rather than two cars), the savings are much larger, typically totalling a few thousand dollars annually. To put this into perspective, if a typical household shifts from driving everywhere (what we call, automobile dependency) to multi-modalism (using a combination of travel modes) and so is able shed one vehicle, the savings typically average about $5,000 annually. If these savings were invested each year over a typical 45 year working career, the household will retire about a million dollars wealthier.

Yes, it is true that for many trips, automobile travel takes less time and is more flexible than public transit. However, the travel time cost analysis is somewhat more complex. Unit travel time costs vary significant - with higher costs for driving under congested conditions, higher costs for public transit under uncomfortable conditions, and lower costs for public transit travel under relatively comfortable conditions. As a result, under urban peak conditions, travel on a comfortable transit vehicle (such as a clean and uncrowded bus or train) is often cheaper per minute than driving. In other words, many travelers would prefer to spend 40 minutes traveling on a comfortable bus or train, during which they can rest or read, than 30 minutes fighting traffic and searching for a parking spot. This has important implications, because it suggests that much of the money currently being spent to increase traffic speeds, for example, by widening urban highways, could be better spent on improving public transit travel conditions and therefore unit costs. This is discussed in the article, "Valuing Transit Service Quality Improvements" (Journal of Public Transportation, Vol. 11, No. 2, Spring 2008, pp. 43-64).

It is also important to consider "effective speed," the total time devoted to travel and paying for transport equipment and services. A typical household spends about 20% of its total expenditures on automobile, so a typical worker is spending about 90 minutes a day driving and another 90 minutes a day working to earn money to pay for their vehicle, so the effective speed is about half the perceived average driving speed. If shifting to public transit allows a household to reduce its vehicle ownership, the financial savings and effective travel time savings can be substantial.

Is transit cost effective from society's perspective? Virtually all forms of motorized transportation rely on various subsidies (roads and services funded through general taxes, parking facilities financed through general taxes and incorporated into development costs and therefore building rents, accident risk imposed on other road users, and pollution emissions). Compared with the full costs of accommodating additional urban-peak automobile trips, accommodating the same trips by public transit is often much cheaper overall, but conventional project evaluation only considers a portion of total costs. For example, when comparing transit and highway investments, transportation agencies generally ignore the parking cost savings that result when travelers shift from automobile to public transit. Similarly, conventional economic evaluation ignores the household cost saving that result when public transit improvements allow household to reduce their vehicle ownership.

Although it is not optimal to shift all travel from automobile to public transit, for many trips it is cost effective, particularly when all costs are considered.

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* Submitted by Chad Lopes