Accelerated Nation

Transit Thursday: Should We Privatize Public Transit?

Posted in Data, innovation, policy, transit by Ashley on 2009/05/14

Ever since humans decided they’d rather not walk, we’ve been debating transit.Potsdamer Platz S-Bahn Station, Berlin   How much cash to spend, where the trains/buses should go, and when to build the system frame most of these conversations.  But public ownership of transit systems is rarely questioned—and I’m not sure why.

I’ve gone back and analyzed NYC Transit subway fares from 1904, when the system opened, through 2008, the last year data is available.  Thanks to the nice folks at Measuring Worth, I was able to determine the current cost of NYC Subway Faresthese fares using the CPI (Consumer Price Index).  CPI enables comparisons of historical prices over time—in other words, how much money you would need in today’s dollars to buy a good in any given year.The cost of a NYC subway ticket (in 2008 US dollars) is shown in the graph on the right.  

But around the same time that New Yorkers took their first ride on the A train, they were also able to buy their first mass-marketed automobile—the Ford Model T.  The first Tin Lizzie rolled off the assembly line on September 27, 1908 and was, in the words of Henry Ford, “a car for the great multitude.”  With an initial sticker price of about $900 in 1908, by the mid-1920’s the Model T was rolling out of showrooms for an astounding $290.  That’s only about $3,562 in today’s dollars.

Public transit doesn’t operate in a vacuum—it must compete with alternate, privately-funded forms of transportation.  Very few people take the subway because they love the grime, the sweltering heat, the packed trains, and the shared misery.  They take it because it works for them—on affordability and convenience.  Unfortunately for transit enthusiasts, for most Americans the car works better.

Looking at our subway graph, the real cost of a NYC subway ticket in 2008 was about 5x what it was in 1948.  The cost of a Ford Focus today ($15,520) is only about 4x the cost of a Model T in 1925.  And the “value” is vastly different.  A 1904 New Yorker would find today’s subway remarkably familiar—the stations are about the same, the tiles are exactly what she would have seen 105 years ago, and the ceiling still leaks.  Only the cars and escalators give away 2009.

A Ford Focus, however, would strike a 1925 car shopper as a completely alien construction.  She would probably recognize it as a car, but A/C, cruise control, seat belts, an ignition, speeds over 35 mph, power windows and locks, quiet interiors, anti-lock brakes, air bags, and the sheer weight of the thing would shock (but the gas mileage wouldn’t—the Model T got 13-21 mpg).

The private companies that ran the NYC subway were bought by the city in 1940.  Shortly thereafter, the falling real fares that characterized the period from 1904-1948 were quickly replaced by sharp real fare increases.  And few would argue that these increases have been accompanied by significant improvements in service delivery.

Almost every other form of transportation that is subject to competition delivers superior service. Pan American Word Airway began regularly scheduled New York-UK air service in 1939.  The fare was $375 ($5,813 in 2008 dollars).  Today, British Airways will take you there on one week’s notice in a significantly safer jet for $964.  That’s an 81% drop in 70 years. 

We question neither the wisdom of privatized air travel nor a competitive auto industry.  We’re even comfortable with private space travel.  And Tata will deliver a $2,000 Nano beginning in July.  Because of high fuel prices and a struggling economy, transit is seeing renewed popularity.  But despite this success, it still appeals to only a fraction of the population.  To succeed in moving more Americans around, transit needs rapid expansion and service upgrades.  And it must match automobile innovation in terms of cost, comfort and speed.

Innovative cities, like innovative companies, put every option on the table.

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2 Responses

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  1. Bryon said, on 2009/05/14 at 19:11

    Now that I am back in Seattle, I find myself with many options to get around; public transportation, bike, walking, and friends. I would rather walk 95% of the time, so I guess I don’t really have an opinion on this. However, I must say, when I do find myself planning a trip out of town, I would much rather rent a car for the day or weekend, or whatever the case might be, than try and plan the trip via: Transit, Greyhound and cabs. With all this being said, I guess my comment is less of a comment on the blog and more a mini-story about myself…I feel a little vain.

    PS-That song was totally about me.

  2. WhatsInside said, on 2009/05/14 at 19:29

    It is such a shame that many of the nicest cities in north america lack in public transportation. But some cities (mostly East-Coast cities, Chicago and Portland, OR) are very well served by public transit. Of course, each system has its difficulties — in NYC the subway system is very old and needs a major renewing project, especially for the stations, but it has frequent service and is actually the only system that I’ve ridden where you can choose local or express service.

    Ideally we’d have a subway/train system as long as NYC’s and as modern as DC’s, supplemented by an easy-to-use bus system with buses as confortable as Chicago CTA’s.

    I am not sure that privatizing transit would bring all of these together. Nowadays the fare paid by the passenger is not enough to cover all of the operator’s expenses — the fare is subsidized in most cities. If privatization occured, the system would have to be profitable, otherwise there would be no company interested in purchasing the operating rights. Because the fare is the only “product” sold by the transit operators, they’d have to raise the fares to make their profit.

    I agree that the “value” of a Ford Focus nowadays is much higher than the value of a Ford T back in the 1910’s, whereas the value of mass transit remains pretty much the same. However, taking public transit is the more reasonable choice in a city like New York. With some $81 you get a 30-day all unlimited ride pass, good for subway and bus. Think abou the same Ford Focus in NYC: if you used two tanks of gas (being optimistic), you’d spend $ 70 per month to refill its 14.5 gallon tank twice a month. But that’s in gas alone — you still have to make your car payments, insurance, pay for parking and all the maintenance. When you take transit, you don’t have to drive and get all stress out in traffic and you can even read a book or the newspaper. Plus, it encourages you to walk, which is one reaseon why obesity rate in NYC is so low. So, at the end of the day, I’d day that public transit could offer much more value (i.e. modern system) than it does today, but it offers much more value than it did 100 years ago, even though the system has changed little, but because the city has changed a lot, it can’t live without it, making it one of the most important things in NYC.


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