Thursday, December 08, 2005
Does Light Rail Pay for Itself?
Rail advocates sometimes argue that the operational savings provided by light rail will cover its high capital costs. Rail skeptics counter that buses cost less to operate than light rail, and bus operating costs appear high only because buses tend to serve many areas with low-transit usage while light rail is built in high-transit corridors.
Prompted by emails from rail advocates, I examined this question in more detail by comparing the annualized capital costs of light-rail lines built since 1980 with the operational savings assuming that bus ridership in the corridors now served by light rail is no greater than the average bus run by that transit agency. Of seventeen light-rail systems (including several built before 1980), five actually cost more per passenger mile than buses, and two cost the same.
Of light-rail systems built since 1980, eight cost less than buses. But when capital costs of those systems are amortized over 30 years at 7 percent (the rate prescribed by the Federal Transit Administration), the annualized capital cost of all of them is great than any operational savings. If amortized at 4 percent, two -- St. Louis and Salt Lake City -- cover their capital costs with operational savings, though for Salt Lake City it is very close.
It is safe to say that buses in high-use corridors running on limited or express schedules (similar to light rail) would attract far more riders than average and therefore would have much lower operating costs. Anyone who claims that a new light-rail line will pay for itself in lower operating costs is engaging in wishful thinking.
Instead of building light rail, transit agencies should consider contracting out bus service to private operators. The agencies that contract out part of their bus services save 45 to 75 percent per bus-mile over the buses they operate themselves. Contracting out would allow agencies to provide much more intensive transit service, which will gain far more riders than rail transit.
Prompted by emails from rail advocates, I examined this question in more detail by comparing the annualized capital costs of light-rail lines built since 1980 with the operational savings assuming that bus ridership in the corridors now served by light rail is no greater than the average bus run by that transit agency. Of seventeen light-rail systems (including several built before 1980), five actually cost more per passenger mile than buses, and two cost the same.
Of light-rail systems built since 1980, eight cost less than buses. But when capital costs of those systems are amortized over 30 years at 7 percent (the rate prescribed by the Federal Transit Administration), the annualized capital cost of all of them is great than any operational savings. If amortized at 4 percent, two -- St. Louis and Salt Lake City -- cover their capital costs with operational savings, though for Salt Lake City it is very close.
It is safe to say that buses in high-use corridors running on limited or express schedules (similar to light rail) would attract far more riders than average and therefore would have much lower operating costs. Anyone who claims that a new light-rail line will pay for itself in lower operating costs is engaging in wishful thinking.
Instead of building light rail, transit agencies should consider contracting out bus service to private operators. The agencies that contract out part of their bus services save 45 to 75 percent per bus-mile over the buses they operate themselves. Contracting out would allow agencies to provide much more intensive transit service, which will gain far more riders than rail transit.
Comments:
The comparison of LRT costs PPM compared to that of Bus costs is very useful information as is much of what Randal offers for the serious transit planner.
It appears that the bus cost PPM remains unchanged in the comparison chart “one”, operational costs and the inclusion of capital costs in chart “two”, capital and operational costs. Or does it?
Buses would have their $300,000 capital, terminals and shelters to consider in capital costs as well. How was this accounted for?
Stephan
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It appears that the bus cost PPM remains unchanged in the comparison chart “one”, operational costs and the inclusion of capital costs in chart “two”, capital and operational costs. Or does it?
Buses would have their $300,000 capital, terminals and shelters to consider in capital costs as well. How was this accounted for?
Stephan
