The research reported in this document uses Total Factor Productivity (TFP) techniques, with which we develop measures of productivity performance of public transit systems of varying sizes and locations, and use this baseline to examine the potential contribution of alternative ITS applications. TFP aggregates outputs on the basis of their revenue contribution and inputs on the basis of their relative importance to total costs to calculate the overall firm productivity as a function of these quantities. The focus of this research was how the opportunities for improving efficiency via AVL are manifest in the transit operation, if at all, through the use of FTP. Overall, the results indicate a number of efficiency gains resulting from the use of AVL systems. As transit agencies across the country strive to offer the best service possible, the use of ITS and specifically AVL will be of the utmost importance. Since the number of agencies using AVL has increased greatly in the last few years, there will be excellent opportunities to revisit this topic in the years to come.