Cream Skimming Requires there to be Cream

Comment by a correspondent on the Washington (DC) Metro & Bus transit system

Let’s not forget the proliferation of local bus systems in Montgomery, Fairfax and elsewhere that also, in many cases, skim the cream off the Metro bus system.

Our response to an email list…

You cannot skim the cream off a losing transit (or other) operation, because there is no cream to skim. Virtually all services lose money (and that’s before considering the capital costs, which are always a 100% loss).

The systems in Montgomery, Prince George’s, Prince William and Fairfax have unit costs (per mile or hour) well below that of Metrobus and if Metrobus were to serve them, much of the service would probably have been cancelled long ago. Metrobus’s excessive costs have been the principal cost of this proliferation, which by the way has also occured in places like Los Angeles, Minneapolis-St. Paul and San Francisco. In each case, the result has been increases in transit ridership that could not otherwise have happened.

In the case of Los Angeles, when we moved major portions of service from the main transit operator to the Foothill Transit Zone and the city of Los Angeles, savings per hour were on the order of 50% (according to Price Waterhouse). These systems, both with more than 200 buses have flourished and a good part of the service was slated for cutback or even cancellation when the transfers were made (late 1980s). I had the pleasure of being chairman of the Service Coordination Committee of the Los Angeles County Transportation Commission (LACTC), and it was our work that led to all of this (in LA).

As I learned within 30 days of being appointed to LACTC, transit’s biggest problem is not a lack of revenues… it is a lack of cost control. In recent decades, transit costs per rider have risen at a rate well above that of any component of the CPI. The result is that the overwhelming portion of new subsidy money has been used to raise the cost of current services, with little committed to more service or lower fares.

Advertisements

Leave a comment

Filed under Uncategorized

Comments are closed.