University of California Transportation Center

Profitability has long eluded America's public transit industry. Today, few transit routes in the nation cover more than one-half of their fully allocated costs through farebox returns. Nor is profitability something that many people expect or even want public transit to achieve. Indeed, mass transit has a much larger social mandate -- to provide mobility to the poor, young, old, and indigent; to reduce traffic congestion along heavily traveled corridors, along with fuel consumption and air pollution; to encourage and reinforce relatively dense and environmentally efficient land development patterns; and to provide back-up transportation for even those who normally drive, such as during periods of severe oil shortages.

Interest in improving the fiscal health of public transit has heightened in recent years in the wake of federal subsidy cuts, greater competition transit's customer base, such as declining real gasoline prices and the suburbanization of jobs. While no one is calling for transit agencies to run in the black, it is encouraging nonetheless that some urban transit routes do make a profit. Given the financial pressures facing America's public transit industry, it is instructive to put these routes "under a microscope" and probe some of their service and ridership characteristics. The aim of this article is to do so.

As part of a larger study on competition in the urban transit sector, profitable publicly operated bus routes were found in three metropolitan areas: Philadelphia, Washington, D.C. and Minneapolis-St. Paul. While profit-making public transit routes surely operate in other places as well, such as New York City, the absence of reliable ridership, operations, and cost data at a route-by-route level restricted the size of the sample frame. In all, data on the highest ridership routes of transit properties in 25 of the nation's largest metropolitan areas were compiled for both local and express bus services. Based on the most models developed, less than 1 percent of all routes studied were found to cover their fully allocated costs (i.e., generate a profit). The bulk of this article profiles the profitable bus routes in terms of those attributes that appear to effect demand for service.