The transit industry loses $50 billion a year and transit use is falling

By Randal O'Toole of Cato.

"The transit industry loses $50 billion a year. It’s customer base is dwindling. Business in many regions has declined by 20 to 40 percent. Yet Bloomberg, one of the nation’s leading business publications, says, “The outlook for public transit isn’t all that bad.”

Sheesh. Just how bad does it have to be to be “that bad”?

According to Bloomberg columnist Noah Smith, light-rail and commuter-rail ridership “are at all-time highs.” Although his chart appears to show ridership increasing through 2017, according to the source of data in his chart, ridership reports from the American Public Transportation Association (APTA), both light rail and commuter rail declined in 2017 and light rail (which APTA equates with streetcars) was much higher before 1955 than it is today.

It is true that both light- and commuter-rail ridership in 2017 were higher than 2014, a time period during which, Smith claims, heavy rail (subways and elevateds) was “down only slightly.” The different scales on Smith’s charts disguise the fact that heavy rail lost almost nine times as many riders during that period as were gained by light and commuter rail together.

Moreover, the only reason light rail grew at all was the opening of new lines, and all of that growth was offset by declining bus ridership in the cities that opened the new lines. Between 2014 and 2017, buses nationwide lost 35 riders for every one gained by light and commuter rail.

Based on the charts, Smith concludes that “the decline in U.S. transit comes almost entirely from buses” and that “trains will still be a good bet.” It’s true that about 80 percent of the decline is from buses. But buses are the backbone of the industry, providing 100 percent of transit ridership in most regions and, until the recent decline, more than 50 percent nationwide, so a loss in bus ridership can’t be dismissed as irrelevant.

Smith’s presumption is that bus and rail ridership aren’t connected. In fact, one reason bus ridership is plummeting is that too many cities bet on trains and the resulting construction cost overruns, the high costs of rail maintenance, and debt service on rail bonds forced them to cut bus service.
Here are some hard facts. According to data just released by the Federal Transit Administration, nationwide transit ridership in the first two months of 2018 was 2.2 percent less than the same two months of 2017. In turn, 2017 ridership was 4.9 percent less than 2016 and 11.5 percent less than 2014. Nearly all forms of transit are declining.

If an 11.5 percent nationwide loss since 2014 doesn’t sound “that bad,” how about a 31 percent loss in Cleveland? Or 20 to 26 percent losses in Charlotte, Columbus, Miami-Ft. Lauderdale, St. Louis, Tampa-St. Petersburg, Virginia Beach-Norfolk, and Washington DC? Or 15 to 20 percent losses in Atlanta, Boston, Dallas-Fort Worth, Los Angeles, and Philadelphia, among many other regions? Since 2010, Memphis is down 40 percent!

These regions are all very different – some large, some small; some growing rapidly, some slowly; some with trains, some with only buses – but the trend is downward everywhere except Seattle. And Seattle’s upward trend may have more to do with the confluence of Millennials, university students, and Pacific Northwest weirdness than the kind of transit Seattle is offering, so should not be construed as an example for other cities to follow.

Trains are an especially bad bet because they represent an expensive 30- to 50-year investment, so if the bet proves wrong, cities will be stuck paying the mortgage on empty railcars and tracks for decades. Outside of Manhattan, buses can move more people than trains at a far lower cost, and in Manhattan, new rail construction is ridiculously expensive."