THEPUBLICTRANSPORTATIONINDUSTRYINTHEUNITEDSTATES PROVIDENCECOLLEGE MBA JASONOBRIEN November16,2011

TableofContents
TableofContents................................................................................................................ 1 ExecutiveSummary ............................................................................................................2 Introduction ....................................................................................................................... 3 Findings .............................................................................................................................. 4 Conclusions ........................................................................................................................ 5 Recommendations............................................................................................................. 6 ReferenceList .................................................................................................................... 8

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ExecutiveSummary
ThetransitindustryintheU.S.consistsof7,200agenciesandin2009served

passengersonover10billiontrips.Thegrowingnumberofagenciescollectedover $12billioninfaresin2009,butincurredover$37billioninexpenses.Thisshortfallis coveredbygovernmentsubsidies.Thetransitindustryfacesnumerousadditional challengessuchasanagingandexpensiveinfrastructureandhighlaborand equipmentcosts. Whiletheindustryhasexperiencedrecordgrowthoverthepast15years,the

currenteconomicclimatethreatensthesubsidiesonwhichitdepends.Inorderto continuegrowingandservingcustomers,theindustrymustfocusoncuttingcosts, servingcustomers,seekingoutprivatepartnerships,andembracinggreeninitiatives toattractridersawayfromtheircars.

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Introduction
Themasstransportationindustry,asdiscussedinthispaper,referstothetransport ofpassengersviabus,rail,orothergroundbasedmeans.Itexcludesairtravelfor theobviousreasonthatcommercialairtravelisitsownseparateindustry.Thispaper alsoexcludeswaterbasedtransport,suchasferries,duetotheirrelatively insignificantridershipnationally.Researchonpublicridershiptrendsisoftencensus basedandthereforemuchofitisbasedon2000censusdata.Thisisimportantto noteduetotheincreaseinridershipacrossthenationinthelastseveralyears,as quotedinothersources.ThisresearchwillfocusontheUnitedStates,withonly peripheralreferencestotransportationnetworksinEuropeforcomparison.Thisis duetotheuniquecultural,geographic,economic,andinfrastructuredynamics affectingthiscountry.

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Findings
ThepublictransportationindustryinAmericacurrentlyconsistsofabout7,200 agenciesorcompanies,asreportedin2008bytheAmericanPublicTransportation Association.(APTA,2011)Thisfigureisupfrom6,000in2000.(TRB,2000)Thevast majorityoftheseorganizationsserveasinglemetropolitanareaorregion,utilizea smallnumberofbusses,andserviceareaswithpopulationswellunder200,000.In fact,in2000only588agenciesoftheestimated6,000reportedtotheFederalTransit Administrationin2000.Nearly90%oftransitusersintheU.S.areservicedbyjust4% oftransitagencies.Andofthose4%,theagenciesservicingtheNYmetropolitanarea accountforover35%ofthetotalUSridership.(TRB,2000)In2009,Americantransit systemscarriedpassengersonover10billiontripsforatotalof55.2billionpassenger miles.(APTA,2011) ItiswidelyknowthattransitusageinAmericaisalwaysgrowingandis correlatedtopopulationgrowth.However,theindustryalsoexperiencessurgeslike theonefueledbyaspikeingasolinecostsinthemiddleofthispastdecade.Inthat time,forexample,AMTRAKexperiencedrecordridershipgainsyearoveryearfor9 straightyears,includingFY11.Asawhole,theindustryisexperiencingthehighest ridershiplevelssince1956.Industrywideridershiphasgrown34%from1995through 2009,morethandoublethepopulationgrowthrate.Themostcommonuse,ashas beenforsometime,isriderscommutingtowork,representingalmost60%oftravel usage.(APTA,2011)Transitproliferationiscorrelatedtopopulationandjobdensity.

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About80%oftransituseoccursinareasofover4,000persons/squaremi.(Pisarski, 2006) Despiteridershiplevelsreminiscentoftheglorydaysofpublictransit,the industrycontinuestostrugglewithrevenueandoperationscosts.In2009,justover $12billioninfareswerecollectedacrosstheindustry,howeveragenciesreported over$37billionintotaloperatingexpensesandanadditional$17.9billionincapital costs.(APTA,2011)Thisstaggeringgapiscoveredalmostsolelyfromtaxpayer subsidiescontributingtotheindustrysstruggletomaintainserviceforcustomers. Justastherecentspikeingaspricesaffectedridershipnumbers,sohastherecent economicrecession.Transitfundingisdecliningasmunicipalitiesandstatesstruggle tofindfunds. Inadditiontofindingfundingsources,theindustryisconstantlychallengedby competitionwithothermodes,mainlyvehiclesandairtravel.IntheU.S.thisis particularlychallengingduetoourmassivehighwaysystemandtheproliferationof motorvehicles.However,eveninforeigncountriesliketheUK,thechallenge remainsofincreasingtransitattractivenesstodrivers.(BalcombeR.,MackettR., PaullyeN.,PrestonJ.,ShiresJ.,TitheridgeH.,WardmanM.,WhiteP.,2004)

Conclusions
ThepublictransitindustryintheU.S.isexperiencingrecordridershipwhileironically facingmassingfundingdeficitsduetoastrugglingeconomy.Thedependenceof transituponsubsidiesshouldnotoutweighitsvitalimportancetooursocietyand MBA700 Page5

economy.Inmanyareaswheretransitisheavilyused,suchasNewYork,itaccounts forover80%ofthevolumeofpeopletravellinginandoutofManhattan.(TRB,2000) Inmanyotherlargecities,highwaysystemswouldbecompletelyoverwhelmedwith outtransitsupport.Transitalsoservesasagreatjobcreatorforlocaleconomies.In 2009transitagenciesemployedanestimated390,000peopleinoperationsand supportingtechnicalandadministrationroles.(APTA,2011)Thetransitindustry createsjobswhilesimultaneouslyadvancingproductivityandcostefficiencyforits customers. Despiteallthis,thefuturefortransitwillbechallenging.Increasing profitabilitywillrequirereducinglaborcosts.Increasingcapacityandproliferation willrequireupgradingoldinfrastructureandacquiringland.Theinfrastructure challengesintheNortheastalonearesimplystaggering.Therailsystemthatis knownastheNortheastCorridorisover100yearsoldandwasbuiltatatimewhen laborcostswereafractionoftodayswages.However,duetoitsimportance,these challengeswillnotovercomethisvitalindustry.

Recommendations
Inorderforthetransitindustrytocontinueexpandingtoserviceagrowing passengerbase,itmustturnitsfocusinternallytocostcuttingandcustomerservice. Seekingprivatepartnershipswillbevitalinaddressingbudgetshortfalls,howeverit willrequireaheightenedawarenessofcostsandreturnoninvestments.(USDOT, 2008) MBA700 Page6

Additionally,highlightingtheimportanceoftransitforgreeninitiativesand othercreativeenergysavingmeasureswillaidinattractingcustomersawayfrom theirvehicles.Investinginnewtechnologiessuchashybriddieselbussesandelectric trolleyswillfurtherthefuelefficienciesoftransitoverthetraditionalvolumegains. Whilethevitalityoftransitensurestheindustrysmereexistence,itdoesnot

ensurethatitwillthriveandliveuptoitspotentialofenhancingsociety.Thatis dependantupontheindividualagenciesandtheirdedicationtovision,growth,public benefit,andaccountability.

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ReferenceList
AmericanPublicTransportationAssociation.(2011)2011PublicTransportationFact Book,62ndEdition.APTA.721. BalcombeR.,MackettR.,PaullyeN.,PrestonJ.,ShiresJ.,TitheridgeH.,WardmanM., WhiteP.(2004)Thedemandforpublictransport:apracticalguide.TRLLimited.36. Pisarski,Alan.2006.CommutinginAmericaIII.TransportationResearchBoard. Excerpts. ResearchandInnovativeTechnologyAdministration.(2008)TransportationVision for2030.U.S.DepartmentofTransportation.511. TransportationResearchBoard.(2000)TransitCapacityandQualityofService Manual2ndEdition.TRB.2123.

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