Cost of a Ride

Abstract

Problem: High costs and low ridership are the bane of fixed-guideway transit investments. The net capital and operating cost per passenger mile of recent investments ranged from $0.22 to over $10 in 2008. A better understanding of characteristics of the most successful transit investments can help inform future investment policy and improve the performance of existing transit systems.

Purpose: We evaluated the ridership, operating costs, and capital costs of recent transit investments and identified job and population densities that can support more cost-effective fixed-guideway transit service.

Methods: Combining investment and station-level data from over 50 American fixed-guideway transit investments with time-series data on 23 transit systems and surrounding land uses, we modeled the influence of job and population densities on transit ridership and capital and operating costs. Based on these results, we estimated the marginal costs per passenger mile of increasing transit ridership through system expansion, increased service, and decreased fares.

Results and conclusions: Controlling for neighborhood, regional, and transit service attributes, population and job density are positively correlated with both ridership and capital costs. As density increases, so do capital costs and ridership. Density, however, has an inverse relationship to capital cost per rider and total costs per passenger mile. Higher densities tend to improve transit's cost effectiveness, in spite of higher capital costs.

Takeaway for practice: Job and population densities around transit stations are frequently below minimum thresholds needed for cost-effective transit investments and operation. This contributes to high costs per passenger mile on many transit systems. We generate density guidelines for cities and towns to use as a point of comparison and a potential target for zoning around existing and proposed transit stations based on actual or projected capital costs.

Research support: This project was supported by a grant from the University of California Transportation Center.

Keywords:

• transit-supportive density
• fixed-guideway transit
• rail capital costs
• transit ridership
• public transportation

Acknowledgment

Daniel Tischler, University of California, Berkeley, assisted with the compilation of the dataset and provided general research support.

Notes

^aTransit agencies, Amodei and Schneck (1994), U.S. General Accounting Office (2001), Booz Allen Hamilton (2003), and Lewis-Workman et al. (2008)

^bAlthough service began in 1972, the entirety of the initial BART investment did not open until 1974.

^aCalculated using U.S. Bureau of Transportation Statistics (2010) and transit agency GIS files.

^ψ p < .10.

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^aModels 2, 3, and 4 cluster standard errors by system.

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^aModels 1, 2, 4, and 5 cluster standard errors by system.

^bDO indicates that service is directly provided by the transit agency.

^ψ p < .10.

^aAll models cluster standard errors by system.

^ψ p < .10.

*p < .05.

**p < .01.

***p < .001

^aAll models cluster standard errors by system.

^ψ p < .10.

*p < .05.

**p < .01.

***p < .001

1. All costs are presented in 2009 dollars. Initial cost estimates were taken from existing studies (Amodei & Schneck, 1994; Booz Allen Hamilton, 2003; Lewis-Workman, White, McVey, & Spielberg, 2008; Webber, 1976).

2. Capital costs were inflated using the Bureau of Labor Statistics’ Consumer Price Inflation (CPI) calculator. We opted to use the CPI instead of the Producer Price Inflation in order to avoid favoring projects built in more recent years.

3. Cost figures included right-of-way acquisition, construction, soft costs, initial rolling stock, required service station upgrades or construction, and infrastructure relocation and other unique costs. Amodei and Schneck (1994) and Booz Allen Hamilton (2003) adjusted capital costs using separate inflation adjusters for different types of capital costs, but detailed cost breakdowns were not available for all 59 projects.