Until 1964, most transit in America was private. In that year, Congress responded to a “commuter crisis” that was limited to commuter rail in just four urban areas by offering federal subsidies to every transit mode and public transit agency in the country, leading to the rapid buy-out of almost all private transit. Yet there are still many examples of private transit today.
Flickr photo by Sean Davis
One of the most important is New York Waterway, which offers ferry service between New Jersey and Manhattan. Ferry service had disappeared with the opening of bridges and tunnels, but congestion led the owner of a trucking company, Arthur Imperatore, to test a ferry operation in 1986. It quickly expanded to numerous routes and offers its passengers bus service from its Manhattan terminals to various parts of the city at no extra charge.
NY Waterway has received some government funding. The city of New York provided assistance in setting up some ferry terminals. After 9/11, the company received a federal grant to expand to replace the PATH train route damaged with the World Trade Center. This almost led to the company’s bankruptcy when the PATH trains reopened again and NY Waterway couldn’t reduce its costs. This was solved by spinning off some its routes to another ferry company, BillyBey Ferries. In 2015, New York Waterway earned nearly $41 million in fares against $27 million in costs, while BillyBey earned $11.4 million in fares that exactly covered $11.4 million in costs.
Flickr photo by Stephen Rees
New York also has some twenty private bus companies offering commuter and other scheduled services, mostly without subsidies. In 2015, for example, Trans-Bridge Lines earned $22.3 million against $18.8 million in costs, while Hampton Jitney earned $23.0 million against $18.4 million in operating costs. Some of these companies receive subsidies from time to time, but at least a dozen of them operated with no subsidies in 2015.
There are also a number of private commuter-bus services in and around Boston. Another private company, Detroit Bus, has sprung up to fill in some of the gaps resulting from cuts to public transit service in that city.
Wikimedia Commons photo by WorldBook1967
New Jersey Transit trains connect Atlantic City with other parts of the state, but within the city it is served largely by a private bus system, the Atlantic City Jitney. The jitneys operate 24/7 on three routes within the city and at least twelve hours a day to the train station and airport. The 102-year-old Atlantic City Jitney Association‘s fleet of 190 buses are all privately owned by individual operators. Current fares are $2.25, but some routes are free thanks to hotel subsidies.
San Juan, Puerto Rico is served by both a public bus system and a heavy-rail train. But a private system known as publicos carries more passengers and more passenger miles than the public buses and train combined.
In many cases, these private companies are offering services that public agencies didn’t even think to provide. But some public transit agencies have elected to contract out routes to private operators. Although the private companies are often unionized and always pay taxes that the public agencies are exempt from paying, the savings from such contracts can be substantial.
Denver’s Regional Transit District contracts out about half of its bus routes. The half that it operates costs $10.81 per vehicle mile; the half that it contracts out costs just $5.77 per mile, or 53 percent of the agency-operated buses. Nationwide, buses that are contracted out cost 66 percent of buses that are operated by agencies. This suggests that, if transit were privatized, private operators could cut costs by a third to half without cutting service.
Private operators would probably not find it feasible to run trains, except perhaps in New York City. Nor would they be likely to run regular bus services to remote suburbs where every household has several cars. But they probably could profitably run commuters buses to many suburbs and regular bus service in urban cores.